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When And How Do I Open A Home Equity Line Of Credit?

quinn profile photo
  • Sunday, October 19, 2003 @ 06:00 AM EDT
  • 8 Comments

I am currently bidding on a bank owned property, it's priced 30% fmv. Hopefully, I win the bid on the property. I plan on L/O to sell the property but I want my money up front instead of waiting until the t/b purchases the property. Can I equity line of credit to pull money out of the house and if so, how long after aquiring the property can I do so? If it is possible, how do I go about doing that?

Also, if I wanted to refinance to pull money out how soon can I refi after acquiring the property.

Thanks everybody
quinn

Comments(8)

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    dgtop13th October, 2003

    Due to new seasoning rules. You will have to wait 1 year before you can have the house valued at appraisal price instead of purchase price. You may be able to get around this buy purchasing all in cash then getting a first mortgage on the appraised value.

    dave

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    BAMZ16th October, 2003

    Hi quinn,

    My experience has been that if I have a 75% LTV, that my local banks will not put a 2nd or line of credit on a rental. If the 1st is under 75% LTV, they will do the balance up to 75%. Keep in mind that all banks are different and have different guidelines.

    Best of Success!

    BAMZ

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    MrsMeltzer16th October, 2003

    I puchase the home and take the mortgages subject to, then immediately start the refi process with a HELOC.

    Go to your local bank, ask if they do HELOCs. My bank takes 2 to 3 weeks to close and pays off all the mortgages. My bank also pays for all of the closing costs (except for intangible tax). I can draw up to 80% of the appraised value of my non-owner occupied home.

    Hope This Helps,

    Mrs. Meltzer

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    destinyhomes16th October, 2003

    Hi
    I have a question also about this situation. If I buy a property all cash say $10,000 can I get a line of credit against the property in order to fix it up? I would appreciate the help. Thanks

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    bjsmooths17th October, 2003

    Yes. But instead of using all your money to buy the property outright, why don't you use less money down, and the remainding of the money used for repairs and backup just in case unexpected events happen.

    good luck

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    destinyhomes18th October, 2003

    Thanks for the response. I dont know if I stated it wrong but the whole house cost $10,000 total. How much line of credit can you get against the property? It is a brick duplex with ARV $60,000+ needs $15,000 work. I dont want to sell it but I dont want a much at all of a payment. Also how is the interest on equity line of credit (high or low) or what payoff options do you have?

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    destinyhomes18th October, 2003

    Thanks for the response. I dont know if I stated it wrong but the whole house cost $10,000 total. How much line of credit can you get against the property? It is a brick duplex with ARV $60,000+ needs $15,000 work. I dont want to sell it but I dont want a much at all of a payment. Also how is the interest on equity line of credit (high or low) or what payoff options do you have? [ Edited by destinyhomes on Date 10/20/2003 ]

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    bjsmooths19th October, 2003

    Some lenders may require a year before you can refinance and pull out cash.

    You can take a second on the house immediately though.

    Understand that seconds are higher in interest rate and terms are shorter, but it maybe worth it depending on your situation.

    FHA also has a loan called FHA 203(K) which gives you money to purchase rehab homes and also gives you money to fix the property up.

    These loans are usually in areas that the Government is trying to rehabilitate and/or offer loans to people who are first time buyers. You don't need to be a first time buyer though for this type of loan.

    good luck,

    Beau[ Edited by bjsmooths on Date 10/19/2003 ]

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