Refinancing and obtaining a HELOC (same or different bank?)

[Jorge Galvez]

Hi BP-ers - 

I am located in Los Angeles, CA.  I would like to ask for your advice. 

I am looking to refinance a non-owner occupied investment property to obtain a lower interest rate. However, now is a good time to also pull out equity to invest in other multi family out of state. Not all banks offer a HELOC, only a select few like Wells Fargo and some other smaller ones in CA (Union Bank).

What is the best strategy when trying to do both refinance and obtain a HELOC? Refi / obtain HELOC with the same bank simultaneously or can I first refinance with a bank with the lowest interest rate out there that I can find and then as a step two, obtain a heloc with the banks that offer the HELOC? I assume it is easier doing it with the same bank and I also assume it is cheaper, but I could be wrong. I do want a low interest rate first and obtaining a HELOC would be secondary to move on my investments.

Thank you very much.

Jorge

[Andrew Postell]

@Jorge Galvez while receiving a HELOC on your primary home is pretty easy when seeking one on an investment property it will be quite challenging. Many banks don't even offer HELOCs on investment properties and many of the ones that do will only lend to 50% or may not want to be in 2nd position with their product. I would certainly try a smaller bank for greater success and don't be surprised if they just give you one Line of Credit with a balance on it. Meaning, they will grant one Line of Credit for 70% of the value, take your current loan, and roll it into the current LOC. So their LOC will be in first position on the loan, and you'll have a payment to the bank. Also, be very cautious with the fine print on these. An investment property LOC will carry a significantly higher rate than a primary residence LOC. 5% might be the lowest you can find...and it will be a variable rate....and it will likely mature into something else after 10 years. Lots of details to be aware of. Try to find 3 banks to compare so you can measure the pros and cons for each. You may have to call 20-50 banks to find what you are looking for though. Good luck!