How to setup up a HELOC

[Seth Matherne]

Any one know of a really good guide for evaluating and setting up a HELOC?

[Chris DeMello]

@Seth Matherne are you looking to get a 1st or 2nd position HELOC? Usually You should have at least 15-20% equity, which will be determined by an appraisal. DTI ratio under 45% and credit score at least 620.I'm sure it's not standard, just a general idea of what banks look for.

I like 1st position HELOCS for a variety of reasons. 1) it allows you to pay it down a lot quicker if you you structure it right. 2) It also increases your cash flow because you're eliminating the mortgage and you don't have to stick to the banks schedule. 3) You'll save thousands or even 10's or 100's of thousands in interest, again, only if you use it properly! Most banks push 2nd position only because it's less risk for them. Just wanted to share other options available to you. My wife and I used 1st HELOC's for our primary and rental properties that allowed us to get ahead quicker.