All Forum Posts by: Justin Phillips

@Kenneth Burdick Absolutely. Our website has some great info on the loan and how it works, but it isn't geared towards investors. 
Being an investor, that's really my passion for unlocking the value of this loan. Feel free to reach out anytime you'd like to chat!

@Eric Schultz Exactly. This loan is basically what Velocity Banking wants to be when it grows up :) It's nice because you can set it on auto pilot with direct deposits/bill pay.  
@Kenneth Burdick It is indeed! That's where I first heard about it, and got it set up on our property. I then moved to Arizona because that's where the company is based, but we're licensed in CA/AZ/CO. The loan style is available in every state though. 

@Brandon Shaffer My wife and I set-up a first position HELOC on our property, and it's been great! I actually loved the loan so much that I left my job in Medical Sales to join a broker that specializes in them.
The LOC is tied to a ZBA (Zero Balance Sweep Account) checking account. So all of our deposits sweep to the balance of our credit line at midnight. So all of our income/idle funds can go towards bringing that balance down, and saving us interest cost. We retain full access to that equity to pay bills, and make investments. We're going to have our property paid off in 4 years, and we'll retain access to our equity for 30 years. So whenever a deal comes up, we'll simply write a check out of our line and purchase in cash. The best part, each new property pays off quicker than the last with the additional cash flow.

It's been a great tool for us, so I always encourage everyone to educate themselves on the loan. 

@Yaroslav Tashak Welcome! Market has been hot as we continue to grow. We're getting a lot of people moving from other states for tax/freedom reasons. Definitely exciting times for Real Estate in the valley! 

If those home is paid off and the equity is only needed for a short time, taking out a more traditional HELOC might make more sense. For properties with a remaining balance or if the goal is snowballing debt, this loan style works much better. The biggest difference is that ZBA (Zero Balance Sweep Account) that's tied to the line. You'll set up your direct deposit to that checking account, so all of your deposits sweep directly to the remaining balance, saving you interest cost. So you can pay down principle with all of your income, but without any fear, because you still have full access to all of that money to pay bills. 

Traditional HELOC aren't meant to be transactional, so those transfers need to be done manually which gets very laborious. Additionally, if the HELOC is being used in 2nd position, you'd don't have access to any of those extra payments without selling or refinancing the 1st position mortgage. 
The only downside to this loan style is that it's tough to qualify for. For those who qualify though, it's the best loan option out there. 

@Axel Meierhoefer Hey Axel, I’m with a lender that focuses solely on this one specific loan. You can actually have up to 3, one for each property type. So one Primary, one Investment and one Vacation/Second home.

We recommend starting with your primary, as it usually gives you the biggest line, and has a slightly lower rate.

@Christopher McConnell
1. With HELOCs, you'll typically get a slightly lower rate and a slightly higher max LTV on a primary vs investment. So if the property is currently your primary, set it as a primary.
2. You'll want to set the credit line to the highest amount that you can, so you have access to as much equity as possible. For example: $400k Value with $250k outstanding, you'll want that credit line at the full 80% LTV at $320k. That way at close, you'll have $70k available on your credit line and a balance of $250K. 

3. It will have an impact, but less of an impact than a conventional loan, because HELOCs are interested only. So it doesn't hit DTI as bad.

Where are you located? I'm just licensed in CA/CO/AZ but the loan is available in every state. Let me know where you are, and if I have a contact, I can get you in touch. 

@Sarah West

This Program is with a 1st position Heloc that replaces your current mortgage. Part of what makes it so different is that it’s tied to a zero balance sweep checking account. So that checking account becomes your depository, with every deposit sweeping to your remaining balance on your loan. Since it’s a credit line, you still have full access to pay your bills etc.

It’s a very specialized product, which is why the broker I’m with focuses only on this loan.

@Kevin Romines Did a great job explaining the principles!  
The only thing I'll add is that through the 2008 meltdown we didn't have any of our client's lines of credit frozen or called. I'd always recommend leaving some room on your line in case of another crash though. I do still keep my old bank accounts open for incidentals, I just don't keep much money in them, because I'd rather it be working for me on my line. 

@Stacy Voss To answer your question, it really depends on the situation. It doesn't really make sense to have two of these loans open with balances, because that just dilutes your cashflow. However, if one is paid off, it might not be a bad idea to open another so you can access the equity on that property as well. Being that the rate is slightly lower on primary residences, a lot of clients look to maximize their leveraging off that line first. 

@Ashley Hambrick I lived on Oahu for a few years, and I can't recommend it enough if you have the opportunity. 
The biggest downside, it's very expensive. That being the case, you'll probably be very hard-pressed to find anything cheap, much less free. Although some islands might be easier than others. Hawaii doesn't allow STRs under 30 days, so a 90 day STR might be your best bet, but they're typically very expensive, at least on Oahu.
My advise, move for the experience and the fun. Living in Hawaii is tough on the finances, but amazing on the experiences!