All Forum Posts by: Andrew K.

@Michael Cohen thank you for this point, Michael. I still have about 30 months more of PMI payments. Just doing a simple payoff calculation, if I borrowed $8900 from the HELOC, it would take about 121 monthly payments of $90 to pay it off with a total interest charge accrual of $1916.

So, if I did this... borrow $8900 from HELOC to pay down mortgage, I would be paying $90/m for 10 years (I would almost certainly try to pay it down quicker) to the HELOC balance, accruing $1916 in interest charges, then saving $91/m for 30 months ($91 x 30 = $2730). Plus, my new outstanding mortgage balance would be reduced by $8900, so the portion of the new monthly mortgage payment going to interest would be reduced about $22/m. Does this sound right?

@Melvin List That helps a lot! Thanks for clarifying that, Melvin. Thanks everyone for your responses!

@Melvin List Ahh! Thanks Melvin, I get it now. I was thinking about the LTV all wrong!

@David Dachtera 

"Remember that your HELOC counts against your total LTV. Just because it's not the 1st loan doesn't mean it doesn't count against your equity."

David, does that mean that if I debit my HELOC $8900 and then credit my mortgage $8900, that it would be a "wash" from an LTV standpoint since I'm not really reducing my LTV on the property, and the PMI would stand, because in effect, I'm not reducing the total lien on the property? But on the other hand, Bank A holds the superior note, so would they really care? Thanks for bearing with my ignorance on this one, gentlemen!

@Christian Wathne @Bob Okenwa @Corby Goade thanks all for the replies. The loan originated in 2010, and when I called the bank they said that because it was an FHA loan, certain rules apply to remove the PMI. One was that the loan had to age at least 5 years, and another was that the balance had to reach a certain point (which I didn't ask how it was calculated). I even asked them if I could pay for a bank-approved appraiser to make a value judgement on the property to show them the current LTV, but they declined. We purchased for $238k and estimated value now is around 415-430k. Outstanding loan balance is around 196k. I even argued with them that the raw land value itself is worth about $250k. It sounds like that it's all because it's an FHA loan that orginated during/right after the mortgage industry reform?

Greetings! Scenario: Bank A holds my mortgage with a 2.875% interest rate. My mortgage has private mortgage insurance (PMI) on it with a monthly charge of $91. My current LTV is approx. 45%. Bank B holds my HELOC with a adjustable interest rate, currently set at 4%. Currently zero balance. Upon any draw from the HELOC, required monthly payments are 1% of the remaining balance (i.e. $10k balance would require a $100 payment for Month 1, then $99 payment Month 2, etc..). So, I called Bank A to inquire about eliminating my PMI. They told me that my loan balance would have to be down to a certain point, then PMI will drop off automatically. To get to that certain point, I can either wait till it naturally occurs by making my normal monthly mortgage payments, or I could accelerate it to that point by making an additional principle payment of about $8900 now. So I thought about it: what if I draw $8900 from my HELOC to use to pay down my mortgage balance. That would eliminate my PMI (saving 91 monthly), and I would be paying $89 a month ($30 of which would be interest charge). So, I'd be paying down my HELOC principle balance every month (as required). The way I see it, is that I'd be effectively replacing a $91 interest charge with a $30 interest charge. And at the same time, I'd be paying down the principle on both loans, thus reducing the interest charges on those as well. I have a habit of getting "analysis paralysis" and I think I'm at that point now. Does anyone have any thoughts/advice about this? Am I thinking about it right? Sorry for the long post, just wanted to be thorough. Many thanks! Andrew

Jeff V. I am on the journey for my first deal as well. Just wanted to say thx for the steps you posted, and the George Antone book recommendations. Andrew

Hi all,

I have been an aspiring RE investor for many years, but more recently decided to act on my desire to free myself from the corporate 9-5 that was taking its toll. Fortunately, I've got a loving wife with a good job that affords us the opportunity for me to explore REI more. I recently obtained my Florida RE license as a way to become more familiar with the transactional aspects of RE. I've always been a DIY kind of guy and hope to source and market my own properties one day, but would like everyone's advice about using a Realtor for my first go.

Specifically, I would like to focus on fix and flips/rehabs to gain some additional working capital, then look into buy and hold rentals. I have done a lot of work myself (plumbing, electrical, trim, finishing) on our 1924 bungalow that we purchased in 2010 that was a duplex at the time. Since then, we have converted it to single family and have enjoyed a good amount of appreciation, allowing me access to a decent HELOC balance to fund my first flip.

I have enjoyed reading BP thus far and look forward to contributing to the community as well. I have picked up J. Scott's book and am making my way through it. I also look forward connecting with other Tampa area investors to network with.

Cheers,

Andrew