All Forum Posts by: Stepha L Lockwood

Thanks everyone for your responses - it's a lot to think about, especially now that I've realized I might have to also pay $5K toward the loan on my primary residence to remove the MIP on my FHA loan (my loan originated before 6/13) before I can rent it out - I wasn't aware it might not be possible to have MIP removed on non owner-occupied properties.

@Jay Hinrichs - You're right - the tax implications are definitely something to think about in case I were to decide to sell the house at a later time when it's not owner-occupied, so thanks for the reminder!  And, yeah, the assessment ratio does jump from 4% to 6% for non owner-occupied, though there is a 15% cap on market value appraisal increases, so that definitely helps!  

Thanks for the insight @Sean Tagge - I really would hate to sell a property that has such great cash flow potential. I'm going to keep watching and hope to find lower priced properties that would be suitable for BRRRR that are also in one of only two good school districts. I sure hope people will stop shooting and killing people in the bad pockets around my little neighborhood bubble so the house will continue to appreciate - if I have to sell, I can at least use that as consolation!

@George Pauley - I'm definitely looking into refinancing as well, but I already refinanced once to get a 3.25% interest rate, and I just hate the cost of all those closing fees!  Plus, then I'd be increasing my interest rate on the $114K I still have left on my loan, so I'm not sure the numbers would work out in the end, but I haven't entirely written off the idea.  Thanks!

@Jennifer T. - I had no idea banks would treat the HELOC like that, even if there's not a balance, so thanks for the heads up. If I get the HELOC and use that to purchase the property, it looks like I would need to be prepared to pay those payments until I could get a bank to recognize the payments from the tenant at the CHS townhouse as covering that mortgage debt, thus reducing my overall debt, and then adding to my income through the net profit so the bank would refinance with a mortgage?

Hi all!  I started my RE investing journey about a year ago but was majorly derailed by job and family circumstances, and now a huge decision has brought me back into the game fortunately, and I could really use some advice/perspective as I try to figure out what to do :).

The situation is that my townhouse in N. Charleston, SC has doubled in value since I bought it eight years ago - yay! I was originally planning on staying in the house and taking out a HELOC to fund any investments, but now I've decided to move back to my hometown - hopefully within the next two months to be near more family - especially my aging grandmother. I also have a 9 year-old daughter, which complicates things, because any property I buy in for us to live in initially when we make the move has to be in a good elementary school district, and investment properties in those areas are being snatched up like hotcakes of course, and the prices of rehabbed/newer properties have skyrocketed! It's been difficult so far to find anything in a great elementary school district for under $100K - pretty much everything has been rehabbed to some extent and is running $110K - 150K (at the low end) or much more for nicer properties.

At first, I figured I could still take out the HELOC on my Charleston home and then rent my house out, as gross income (rent - PITI+PMI+HOA) would be $660 and the house is only 8 years old, so I would hope no major repairs/expenses would be on the near horizon. I have good connections here in Charleston to oversee things when needed and would only be 3 hours away, so I would just manage the rental myself for now. The "problem" is that the value of my townhome is so high now, that my W-2 income can't support the debt of the maximum HELOC I could take out on the home (so I can't take the equity out by refinancing either), and I could most likely only get a HELOC for $100K (which is still awesome of course), but, if I sell the home, I could make approx. $146K in gross profit (absent realtor commission,etc.) and have that money free and clear to take with me and buy another primary residence and begin investing when I move.

So, I'm first trying to figure out if I should keep the Charleston house and get the $100K HELOC, while the CHS house is still my primary residence, to use for investing either in my hometown or possibly long-distance, because it seems like the house would be a great cash flowing property to have, and someone else would be paying it off for me :), or if I should sell the house.

And if I keep the Charleston house, because it might be difficult to find a property in my hometown to move into and rehab in a great school district in the short amount of time I have, I'm wondering if I should even bother using the HELOC to obtain the property my daughter and I would be moving into or should I just straight up and apply for a mortgage if the house doesn't need a lot of work, as my W-2 income could currently support a mortgage for a couple of the homes I've been seeing like that; or can I make an offer on a home I see now and let the seller know that I'm currently in the process of obtaining funding from a HELOC and funds will be available in three to four weeks and have a good chance of having my offer accepted and then be able to go to a bank and get a mortgage? I don't want to miss out on any opportunities that might come along while I'm waiting for this HELOC funding to come through, but of course, I don't think I could get pre-approved for another mortgage at the same time I'm trying to take out a HELOC, right?

Thanks for reading this long post!  I surely do appreciate any insight/advice as I try to figure out the best course to take, and if any of the above is confusing, I can definitely try to parse out the details.  Thanks so much!!

Stephanie

Lana, what a great deal! Variable rates do worry me, especially with more planned increases this year. It seems like most fixed rate HELOCs with good terms require 1% of the balance as monthly payment. I'm really hoping to find an interest-only HELOC on my primary to keep costs low while I'm rehabbing my first investment property. Is your HELOC interest only, and did you go through a local bank? Thanks!

@Lana Leeundefined

Hi Craig,

Thanks for your response.   I had looked into Suntrust online before, and the terms you describe sound great, but it didn't seem like there was an interest-only option.  Do you know if there is?  I hadn't thought about HeritageTrust but will look into that one as well.  Thanks!

Hi all! I'm a total newbie here and in the process of researching HELOC terms/rates from different banks for a line on my primary residence. I hope this isn't a dumb question, but when comparing rates and terms for HELOCs from different banks, is it possible to provide my income/current expenses/credit score or SSN to run a credit check and estimated home value to different banks and get a good faith estimate of what the rate would be without having to apply first, since, from what I understand, I can't apply at more than one bank at a time because it would be considered mortgage fraud. And is it better to just get this info in person, if a local bank/union, to start establishing a relationship?

I keep seeing "APR as low as yadda, yadda" but it really doesn't help in my comparison, as I have no idea what rate I would actually qualify for.

Also, I’m in Charleston, SC and a member of the NFCU, and I’m currently comparing NFCU, BB&T and South State Bank, but I’d welcome any other suggestions of banks/credit unions with great rates/terms!

Thanks so much for any advice! I’ve already learned so much from the community, and I’m sure this is the first of many posts as I start my RE investing journey!