HELOC To 125%
Hello,
To all of you senior investors...please bear with me for asking a stupid question. I hear people getting 125% HELOC. How do you get this when those that I ask will only go to 80%-85% and get squirrely that I'm overleveraged. I have three properties that I'm holding and all have equity that I could use. Thanks for the help! 
BethE,
Glad to meet you.
There are plenty of mortgage brokers out there that have lenders that will loan 125%, however this is not on a first postion loan. The leverage comes from a 2nd position lender, this is not undeard of.
You have evidently been talking with conventional lenders that will loan as a first position lender 80% - 85%. You need a second postition lender for the 125% HELOC.
John $Cash$ Locke
I am ready to be more aggressive with RE but don't know what is considered a "safe" or reasonable limit to leveraging properties. What do you suggest.
I personally have been using Lines of Credit and more recently HELOC to buy everything from rental property, rehab rentals and even new cars. Typically as John indicated many lenders go to 80% LTV. The question you must ask yourself is, are you ready to bet the family farm and go to 100% or even 125% of the value of the family home. One of the beauties of HELOC is that when it in on your owner occupied residence you can deduct the interest just like with your primary mortgage. However the % above 100% is no longer deductible.
You can (with some lenders) extend the LOC to the equities in other properties you own. But as always have a long term plan and always a contingency plan should something interrupt your income stream.
I always keep enough left in my HELOC to provide a cushion in the event something unforeseen transpires or a really really good deal.
JBW
<IMG SRC="images/forum/smilies/icon_biggrin.gif">
_________________
Wintent[ Edited by wintent on Date 09/26/2003 ]
I've warned elsewhere, so I will warn here as well.
Be careful w/ Uncle Sam. He doesn't like people writing off interest on more loans that are more than value of home.
I understand that this may not be your intent - forewarned is forearmed.
To whom it may concern:
Is there really such a thing as a 125% Home Equity Line of Credit where you make payments only on what you use, as opposed to a 125% LTV loan where you must make monthly payments?
Yes there are 125% ltv heloc available. You will have to be well qualified and because of the higher risk involved, the cost and rates are a little higher than your regular 125% ltv loan. Also the product is only available for o/o properties.
Thanks for the reply. Do you know off hand, what a typical rate might be for a 125% HELOC? Is it prime plus some margin? Do you know which institutions offer this program in the state of California?
Gumby,
Just a rule of thumb on these forums when you have a question you should post your own topic. You just took the attention off of beth.
No offense taken...I know how it is to get wrapped up in conversation. Besides, I'm onto another deal. Good luck!