All Forum Posts by: Aaron Scharnweber

This method is called Home Equity Optimization. The key component is that the HELOC is based off of the average daily balance and the mortgage is amortized. By using the HELOC, you are lowering the overall amount in interest you will pay due to the difference in calculation. Run some scenarios in Excel using current rates where you make an additional payment of, $5,000 annually on a $100k fixed rate 30-year mortgage and do the same for a $5k HELOC. The results will show you what this method can do.

Hello Everyone,

I have a house that I am looking to purchase that appraised at $206k as a residential home. The area it is in is in the process of being re-zoned as commercial office, and the commercial assessment came in at $347k.

The lender I have been working with will allow me to take out a loan of up to 75% of the sale price I have negotiated, which is $210k, or 75% of the commercial assessed value, whichever is lower. In this case, I would like to take out $260k so I can use $50k to fund my next project.

I am looking to hold the property and rent it out until a commercial offer comes my way, which I anticipate being between 1-5 years. The property is located in a capital city and has had strong growth. The county this property is located in is one of the 20 fastest counties growing in the US, and is in a very desirable area.  In other words, I am very comfortable in this investment.

How would you seek to close the deal and in doing so, leverage some of the equity on the property in order to close on the deal?  Is there a better approach to the deal that I am overlooking?

Thank you,

Aaron