Low HELOC Amount Offer From Bank Of Am
Folks,
I turned my principal residence in the DC metro
area into a rental.
I have 300K in equity. I walked into a Bank of Am
branch and requested a 200k heloc.
BoA is the holder of the only mortgage on the
property as well.
Wheni had it as a primary residence, they were ok
with lending 200K, but i never closed.
This was in May/June. Now,
since i turned it to a rental, they want to offer only
100K. I walked away from BoA asking them to
drop the application. Credit is excellent(high 700s)
Just want to get the HELOC to use for down payment
to purchase other rentals.
The reason quoted to the bank for the HELOC is
home improvement on 2 homes and purchasing
SUV 
Any insight.
Thanks
Krish
It difficult to get a line of credit on investment houses. I am surprised they even offered you 100k. Let us know what you find out.
I called in again. I was told that they have a max of
100K loan amount on rental. Also it helps if one has
an advantage checking account with them.
I checked with Citi bank and they do NOT offer a
HELOC on rental property.
So i figured that 100K is not bad to have on hand to
make deals. The only caveat is that it is about 0.5%
higher interest rate.
-Krish
The bank did try to sell me the idea of a cash out refi or do a combo of both cash out refi and a HELOC.
Well, never wanted to keep paying higher interest on
a loan when the money is idle. So i was afraid of
going with that option.
-krish
What is the value of the investment property?
We were talking to our Mortgage Broker today about some strategies and one option he was telling us about was a 90% HELOC on NOO properties available at National City. Need good credit and income verification.
I can get you up to 80%LTV / with no closing cost - Prime+0 (6.25%) on investment Property
(800)929-9262 ext.1147
FMV is around 550K.
Mortgage around 197K
Just want a check book on the equity and pay
interest only when used.
-Krish
Would combined LTV of 1st and 2nd of 80% work ? ? ? value :$550k loan totaling 1st &2nd not to exceed:$440k
Agreed!
An interest only loan can cut your montly payment in 1/2. Remember, since you are not going to live in the house you want to keep the payments low. Had you wanted to buy and keep the house for yourself, then you would want a conventional 15 or 30 yr loan.
Interest only means that you only pay the interest of the loan. The original principal does not change and will be the same at the end of the loan.
Before you commit to a 4 month turnaround, I would make sure that your house will sell. Check comparable homes in the area and make sure they are selling and then price your home underneath recent sales. This should improve your chance of getting someone to bite who is looking for a deal on a permanent home for themselves.
Greetings darogo,
I’m sure people may disagree with me, but I think they can be an excellent investment tool when used right.
For starters, they are often at a lower rate than other loan types, even when fully indexed. And they can definitely enhance monthly cash-flow.
Granted, any deferred interest is added to the principal. But that isn’t necessarily a bad thing if you get the right deal going in, or are in a high appreciation market. Besides, that’s what the “option” is all about – allowing you to decide what you want to pay on a monthly basis. You’re going to pay the interest one way or another – but you decide when you want to do it.
And if you’re going to do one, I like the MTA, as it’s less volatile and will move slower than something like a LIBOR.
By the way, there are lenders that will do an 80-10-10 with a pay option first. Which is unusual, because most don’t want to put a second behind a potentially neg-am first.
With all that said, I wouldn’t recommend them for everyone or every situation, as they can be risky for someone who can barely qualify, or is depending on appreciation, or planning to keep the property a long time.
Just my 2 cents
I agree with Mcole, if cashflow is your main objective, the pay option arm is a good tool. For those that do concentrate on paying properties off, you have that option. Where you may get into trouble with this tool is in depreciating areas.
[addsig]
We used to do 30 year fixed on everything as well, we plan on holding all of our units for at least 5 years, possibly much longer. Running the numbers of doing interest only is much more attractive as you are building your rental empire =)
[addsig]
cjmazur, on the bill front of most pay option arm, they will keep a tally of how much in interest you would need to pay to avoid neg am. You can choose to pay that at any time.
[addsig]
The actual interest rate is figured by taking the index and adding the margin. In the example that I stated above the 3.99 margin. I use this number because it allows me to help with some of the closing costs for my client. There are variables that determine the margin. If you want to pay more closing costs then it could be slightly lower. I look at these as 3 year loans and once they are up you would refi with very little closing costs and start over again.........
Have a great day
Savannah,
Possible? Yes, but if the seller of the property wanted to sell the note anytime soon, no way.
Do the terms of your 1st note allow for the lender to call it due at any time they feel like? Read your 1st position contract - your answer is in there. They may not be able to call it due unless you do something really screwy, like stop paying.
I know a lender who does 100% investment loans if you need it.
not really a question, more of a statement right? You want legal advice, info on the company...?
Is your land got utilities, fencing, any paved roads, is there septic or sewer, well or city water? These are things that note investors like to know up front in dealing with raw land. Whether you sell the note or note make sure you structure the note to your liking. Make sure the appraisal is on the money, the buyer has good credit, and he has at least 20% down. A good term and a good interest rate will help your cause as well. Perhaps a 20 year term with 8-10% interest rate with 20% down.
Also you can sell that note to a private buyer at the closing table using a simultaneous close. You would have to take a discount on the note but you would be free and clear of the property and have the money you want. A simo deal means that you close on both the raw land to the buyer and the selling of the note to a buyer. Food for thought.
Nate
You can get financing and use the note as collatoral. It will be about 9.00% and the MOST about 60% LTFV(Loan to Face Value) [ Edited by roboxking on Date 03/17/2005 ]