Heloc options and advise

[Edwin Zamora]

Hi bigger pockets community! Im hoping someone can throw some advise my way. Here's my situation. I am currently working on buying a second home to house hack. I plan on using the equity I have in my current home to fund part of the down payment and renovations needed to get the building rent ready on the second deal. I've spoken to multiple banks on getting a heloc but here's my dilema. I don't want to pay interest on money that I don't need until  I find the property, but the majority of lenders I've spoken to require me to take out a large initial withdrawal at closing  $15,000 $20,000, $45,000 etc. 

Ive only managed to find one bank that offered me me a no initial withdrawal amount required which was Citizen Bank. The issue is that looking at online loan reviews of that bank a lot of them are bad. No communication, App would not work, people could not access their funds etc. 

Has anybody used this bank before? Or could anyone recommend a bank that does helocs with no initial draw at closing?

Here are the details on the loan 

Amount borrowed-$110,000

Variable Interest Rate starting at-7.25%

10year draw period 15year repayment period 

No closing cost, early repayment fees, early termination fees, or any other fees besides a yearly $50 account fee waived the first year. They cover the appraisal, title exam and recording fee.

Another option I have is a fixed Heloc from Spring EQ

Amount borrowed-$80,000

Fixed rate-10.875%

10 year draw period  20 year repayment 

Origination fee-$1395

Full Appraisal fee-$540

Closing cost-$2864

Initial draw of-$20,000

Any thoughts, comments and advise is appreciated!

[Steve Vaughan]

Quote from @Edwin Zamora:

I am currently working on buying a second home to house hack. I plan on using the equity I have in my current home to fund part of the down payment and renovations needed to get the building rent ready on the second deal... the majority of lenders I've spoken to require me to take out a large initial withdrawal at closing  $15,000 $20,000, $45,000 etc. 

 Can you take the initial draw and pay it right back, or after 30 days? That wouldn't cost very much interest. 

Mine didn't have an initial draw requirement but did cost $825 total in title fees and lender's insurance.  I used a local bank I had an account with already.  I'd focus on local banks and CUs.