All Forum Posts by: Jeff Dulla

@Marc Ward Welcome and congrats on the strong comeback. If you need to bounce any info on the financing end, just let me know. That is what I am here for. 

@Cassandra Sifford If you do not intend to have the HELOC very long then perfect. However, the way people on here talk about HELOCs worries me. There is a ton of misinformation on here about them. They are not magic. They carry rates that are typically higher than that of a refinance. As long as you know you will be able to pay it off very soon, then great. If not, you are putting yourself in a much worse situation down the road.

It is a question of timing and aggregate interest rates. Yes, your current rate is lower than the market rate and maybe something you do not want to give up. But depending on how much you put on a HELOC and how long it is out there for, your aggregate rate between the first mortgage and the HELOC could be much higher than 4.375%. There is a fairly simple analysis you can do to figure out what your aggregate rate would be like.

@Jayme Carlson You need a portfolio product for sure, unless your current property kicks off a large income  figure on your tax returns. 

There are portfolio products with slightly higher rates that will allow you to qualify based on the cash flow of the property. Just PM me if you would like details. 

@Matt Madalis You can pay down anything you borrower on a cash out, right away, and not pay interest on it.

If you have a $200,000 loan and cash out to $250,000, then take $50,000 a year later and apply it towards the loan, you do not pay interest on the extra $50,000 you borrow.

In fact, if you want to take it a step further, you can do a recast when you come up with the $50,000. They will then lower your P&I payment when you apply the $50,000 but keep you at the same amortization you were currently on. 

@Cassandra Sifford @Matt Madalis There are plenty of fixed rate second options. They will all be significantly higher than the rate on a cash out. So I am not certain why anyone would choose to do that over a cash out refinance. 

@Cassandra Sifford I will respectfully disagree with Peter's post for most people.

Typically, HELOC rates are not lower than a conforming cash out refinance. The advantages of a HELOC is that you can draw on it, pay it down, and draw on it again. As Peter said, just like a credit card.

Here are the major issues with it:

- The payment is interest only. If you aren't disciplined enough or make a good amount of many, like many, you may only make the minimum monthly payments. You WILL not pay off the loan that way since it is not amortizing. 

- The rate is tied to PRIME rate which will rise this year and for the foreseeable future. It is typically an uncapped product or with a cap of something crazy like 18%. 

- You are presumably going to be leveraging yourself even further on a product that could go to rates as high as 6%/7%/8% and so on. One way to protect yourself from the downturns that are certain to happen during normal ebb and flow would be to lock that rate in. The cash out will allow you to do so.

Long story short, I would not do a HELOC unless you could confidently tell me that you could pay off anything you pull out within 12 months. Basically if you utilized it for down payment on a BRRRR, finished the property, cashed back out and paid off the HELOC, I would say go for it. If not, do the cash out.

@Warren Edward @David Walls When I started doing this almost ten years ago, I had a realtor that did most of her business in the Chatham/Auburn Gresham area. I know it can vary from block to block for sure or more so based on a grouping of blocks, but the open houses we always did down there were really well maintained homes. The homeowners were always ridiculously welcoming, over the top happy to have people sitting open houses for them. Some really nice looking blocks. I don't know a ton about it anymore because it has been a while but I am certain there is some really solid, well maintained inventory down there. 

I would find a realtor that specializes in that area and start picking their brain. 

Chance is from Chatham so it's gotta be on the way up. 

Seriously though it's been a stable south side market as long as I have known it. One of the more solid areas on the south side. But honestly I have no idea on the upside potential and would be curious to hear myself.

@Meghan McCallum If you are feeling courageous, go to Slippery Slope in Logan Square. It's a cool joint. My company is doing a home buyer/investor happy hour. I am not there but the owner, four of my coworkers and about forty random people are there hanging out and talking shop.

@Kyle Cuppy If you want to take it to PM because of personal info, just let me know. But why are you having trouble? The structure of the home?

Why do you view the jumbo too risky? The sheer size of the loan or the actual loan options?