Posted by Sharon on September 14, 2003 at 19:00:52:
on owner-occupied property. Those that will consider an equity loan on an investment property, will only do it on a second home.
Since the lender will “treat” the investment property as your second home for lending purposes, this means that any rental income from this property can not be used in determining your debt to income ratios. Additionally, since this is a “second home” and not your primary residence, the combined LTV will likely be limited to 75% - 80% of appraised value.
You can probably accomplish the same thing by doing a cash out refinance on your rental property.
I have a home that I’ve owned for 16 yrs. I got married about two years ago and we decided to buy a new home about 3 months ago which we did, Well… our excellent credit score and fairly good savings allowed us to buy the new house without having to sell my original home which is being rented for $ 925 mth. the mtg. pymt. is $745 mth. the appraised value is 87k the loan balance is 50k…since I’m new to real estate I would like to use the equity in that rental property to open a line of credit and start looking for more rental properties…is this the right next step, who do I contact for the line of credit, my bank or my mortgage co.?
Sharon, first of all thanks for your response, I was excited to try out your suggestion, however I researched the HELOC alternative and the regulations state that I can only get a HELOC on my primary residence and not on my rental property, can you think of any other suggestion…again Thanks…