Does HELOC Affect Debt Ratio?
How does most lenders look at HELOC when it comes to debt-to-income ratio? I have 4 rental properties and was thinking of getting a 25k HELOC for emergencies until I build up my cash reserves. Will they look at the entire debt even if I have a zero balance thus affecting my debt ratio and cause me not to qualify for more properties?
If there is no balance it should have a minimal effect. There is no debt to calculate if there is no balance.
Okay....I was under the impression that since this money is readily accessible that the lender would use the entire available balance in the debt to income ratio.
it would probably help your utilization of debt for your credit score.
Debt to Income ration is just a ratio and should not be confused with your credit score. I have great credit score, but my debt to income ratio is off the charts because of my 18 rental mortgages and my available lines of credit. Yes, lenders will look at your available credit when calculating your debt to income ratio.
You will probably get a better response in the Commercial section. It is the tab on the top left of the page. Good luck.
Find a good Broker... there are business lines of credit that you could work with - I know that PNC has a good business line of credit (stated income)...
Good Luck!
[addsig]
can you indicate some more of the specific parameters of your situation?
Indicate purchase price, Fair market value, amount owed to note holder,Have you owned similar business before, credit rating, etc...
If I know more, I can perhaps make some suggestions to you.
That is the best stratgey to unlock the equity and use it for other investment opportunities. The key is to find a lender that will allow you to use the new appraised value with 1 month of seasoning.
I would not refinance, I would look for the first loan to be based on the appraisal. Why pay loan osts twice?
GFous:
I actually have to two reasons why I would like to use this approach:
1) By refinancing, I can quickly admonish my debt. Use the additional proceeds to acquire additional properties; or
2) After all my debts are satisfied, use the resources to pay the note until the home is sold. Who knows how long that will take?
[ Edited by hiho24 on Date 12/18/2005 ]
I understand, but if you can find a bank to refi an unseasoned title, you can find a bank to loan you the larger amount now.