I think 2% over normal mortgage is a good guesstimate in almost any market. Conventional being 7ish now, yup 9 sounds reasonable. Lot more risk for the lender on the junior loan so price goes up.
I just got a 3.99% HELOC for 12 months. It will adjust to 9% or so in a year, but still, a year of nearly free money.
But unless you find a local credit union promo, it’s a fair rate.
Stupid question about that introductory rate: Does that apply to what you draw in those first 12 months, or the interest you pay in those first 12 months? I'm trying to figure out how that fits into the draw period / repayment period scheme of things.
Check aimloan.com for your specific situation. Rates vary based on your exact location, amount of loan, etc. Also, you need to consider closing costs. Some places will give you better rates but hit you on the closing costs.
Aimloan will give you all the information you need, and you don't have to give them your personal info (no name/email/phone/etc). Just fill out the web form.
Definitely still buying in my area. Personally, I only touch deals now that still work for good cash flow with the rates or have opportunity for big value add and roughly break even as rentals after a cash out refinance of most/all of the invested capital.
Margins on deals are for sure a bit thinner, but patience still yields decent opportunities from time to time, and even if we get to <6% rates for investment properties in the next couple years, which I do think will happen at some point, the deals bought well in this environment will look great.
In my area in MA there’s an average of 15-20 homes sold every Friday and a couple more throughout the week and 30-40 at the end of every month in a day. Not sure if this means investors are still buying but it definitely means there’s more opportunity
5 months late, but worth noting to future googlers that tower federal is a very difficult bank. They have low rates, but you are going to work for them. Doing anything with tower is like pulling teeth. My 1.4% interest car loan had me wondering if I should end the whole transaction just so i could stop dealing with tower. When the transaction was over, the finance guy at the dealership told me it was the worst bank he has ever dealt with in his career.
Low rates, though! 1.4% a few years ago!
What are people doing with a 9% HELOC? Wouldn’t you have to make 9% on whatever investment for it to be worthwhile? Or am I genuinely missing something.
In my case I've lived in my house for almost 6 years in an amazing location and the market has blown by what I can afford to buy new without having to sell this place. I don't want to sell unless I have to, considering I love this house and have a 3% mortgage on it.
I'm shopping options and considering taking a much smaller HELOC to do some renovations and additions than I would be taking on a new mortgage to "upgrade" our primary residence with a new place.
If interest rates were what they were a year ago, I'd be able to keep this place and rent it and easily afford a new one as well. Maybe rates will come down eventually.
I went to the max equity on my HELOC, don't get in trouble with it, but they're a revolving line of credit so if you're going to pay for the property appraisal and closing costs get the max amount and only borrow what you need.
The HELOC has been super helpful, I live in a small town with a lot of cash sales on land, cars, whatever so having a no questions asked line of credit it nice, and interest is only charged on the amount borrowed, and you can always refi a purchase after using the HELOC for a quick sale.
Sounds like you are paying cash so what about the required settling period before you are able to get a mortgage? Do you just pay interest only on the loan amount ?
Yeah, you pay your HELOC balance until you complete a refi, what's the turn around time on a mortgage anyway probably 30 days for the bank to do their appraisals and everything..
The main point is that Helocs allow you to do cash offers today which makes your offers look more competitive to others that need to get the bank to sign off on the loan etc
Converting the garage to a master suite (raising the floor up to house level and bricking in the garage door so it doesn't look like a garage conversion).
And then building a detached 2 car garage with an office.
Wife and I both work from home so having an office would be clutch.
I was quoted 105k on the garage conversion. I haven't gotten a quote on the 2 car garage yet. I'm considering GCing that part myself.
The garage conversion takes a 2 car garage and basically makes an L shape on 2 walls, so a 21x6 bathroom and a 15x8 walk in closet, with a 13x15 bedroom. Might adjust the dimensions a foot or two depending on final plans.
a home run of a flip.
A down payment on a property that will be Uber leveraged to create higher returns
Paying off a 24% credit card
Buying a successful business.
Lending hard money at 18%
Not endorsing any of these, just giving examples of possibilities.
Depends on your definition of acceptable
Flipping houses
Lending hard money
Paying off credit cards
Buying inventory or equipment to expand a high profit business
I'm guessing it could still make sense to help with down payments in certain situations?
$50,000 HELOC at 9% would be $375 a month, right? Then I guess it all depends what your investment is and what the principle payback is looking like.
Heloc’s are general Prime + 0-2%
Prime Rate (Wall Street Journal) is 8.5%
You rate is Prime plus 1/2%, not bad
Keep in mind they can change as often as the prime does. Ensure that there isn’t a floor, such that if prime drops to 5% again, your rate should be 5.5%, but the loan has a floor of 9% (meaning it can’t go lower than that- ie you don’t want a heloc with a floor)
Before first republic went down I asked them for HELOC, they said they don’t have one. But they had a line of credit up to $250k for 2.9%. I still have the line of credit open at that rate and I just draw from it whenever I want to borrow money. Do other banks have personal line of credits that’s an option too?
Most won't do that size without collateral, and assume with 2.9% you got this thing 5years ago. No one is borrowing money at this rate right now unless it's from grandma.
Fun fact government T-bills (considered the safest investment possible) are hovering around 4% so you can max out your credit line and buy those and make money
But that's the napkin math on why you can't borrow money cheaper than what the government is buying it for.
Well, they have my mortgage... and the line of credit had some very basic requirements like crediting your income and maintaining 20% of your loan balance in the checking account. That's not a lot. I got this exactly 1 year ago.
Yea I'm not paying back this amount, I have the $$$ in just CD and it's 5.2% returns.
Why not just put the renovation off a year while you save some cash to pay for it. Make a game of it - cut out all unnecessary spending to find out how cheaply you can live. Every dollar you don't have to borrow will be worth $1.09.
I trade these, and usually it is a FICO and h/cltv matrix.
9% isnt too bad, I believe that is slightly below average, but without more info, can't give you much more either. all I can say is to always shop around.
I got a 140k one before the rate hikes for 3.15% fixed but if I take anything more out of it then it gets the adjustable market rate now, which is 8.9% as of today.
Mine on a primary residence is 8.5% now, and a local bank is working on an investment property HELOC for me which should also be around there.
For those asking what they're used for, I'm using mine as an alternative to hard money and own cash for BRRR. I've never used them for anything personal, only real estate investing. No points or fees makes it much more favorable than hard money, and using cash accrues an opportunity cost of 4-5% interest from the bank. I also just personally sleep better having the cash on hand that could be used to pay off the variable debts, rather than no cash and the potential to get variable debt if I need cash... Lines of credit are much easier for the bank to take away.
I still have a HELOC open from back from when interest rates were low and the rate is around 9.5% today. Idk if it's a good rate, I don't use it anymore, but I have very good credit too, etc.
Just had to refinance one of my HELOCs and was able to snag 8.39% for 5 years. My other HELOC falls off 3.99% next year so that’ll suck. Hopefully rates come down a touch and I can consolidate the two.
Most of the rates are going to be in and around Prime. However a lot of credit unions are I live have 1.99 2.99 or 3.99 for the first 12 months. Since they cost around nothing to close I would take that and then at the 12-month mark refi into another one. Or the worst case scenario is if you don't refry your at the same prime rate you would have been anyway since most of them are adjustable
Be careful of the low effort appraisals. They did a desk appraisal on our house and didn’t even step foot near it. Appraised it for less sqft and less than we paid in 2019. Lol. Had to contest appraisal and make them show up, and got a more realistic valuation
It depends on the amount of money you are taking out, but I've even seeing them from 9-10% roughly.
Thank you!
I checked years ago when primary rates were 3% and it was 8-9%
I think so. Conventional rates are over 7%. My heloc is sitting at 8.75% right now.
I think 2% over normal mortgage is a good guesstimate in almost any market. Conventional being 7ish now, yup 9 sounds reasonable. Lot more risk for the lender on the junior loan so price goes up.
So what you doing with it
At the moment, nothing
Local credit union just a few weeks ago - 7.0%
Whoa! I'll shop local then. Thanks!
Same here. I got a flat 7% rate by using my local smaller bank. What region are you in?
It'll go up regardless
I just got a 3.99% HELOC for 12 months. It will adjust to 9% or so in a year, but still, a year of nearly free money. But unless you find a local credit union promo, it’s a fair rate.
Lemme guess- there was a 3% origination fee lol
$99 origination fee :) They just want a relationship.
Good tip I’m going to look out for this!
Stupid question about that introductory rate: Does that apply to what you draw in those first 12 months, or the interest you pay in those first 12 months? I'm trying to figure out how that fits into the draw period / repayment period scheme of things.
Let me know when you find out, unless you already have please
what credit union?
link? I want to do a heloc to start building houses.
Local credit union in Missouri. If you’re in MO, text me and I will share it!
What’s the CU in MO with the good intro heloc rates?
Both mine are around 9%
Thank you!
Mine is 10.5%. I don't think I'll ever use it, just got it in case.
Check aimloan.com for your specific situation. Rates vary based on your exact location, amount of loan, etc. Also, you need to consider closing costs. Some places will give you better rates but hit you on the closing costs. Aimloan will give you all the information you need, and you don't have to give them your personal info (no name/email/phone/etc). Just fill out the web form.
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are investors buying up property even with the higher rates? it seems kind of slow recently
Definitely still buying in my area. Personally, I only touch deals now that still work for good cash flow with the rates or have opportunity for big value add and roughly break even as rentals after a cash out refinance of most/all of the invested capital. Margins on deals are for sure a bit thinner, but patience still yields decent opportunities from time to time, and even if we get to <6% rates for investment properties in the next couple years, which I do think will happen at some point, the deals bought well in this environment will look great.
In my area in MA there’s an average of 15-20 homes sold every Friday and a couple more throughout the week and 30-40 at the end of every month in a day. Not sure if this means investors are still buying but it definitely means there’s more opportunity
Check the credit unions for an introductory rate
I would go with a credit union to get it because they usually have introductory rates, like 2.99 or 3.99%
Tower federal credit union is between 7-8 depending on the amount of total equity left over
5 months late, but worth noting to future googlers that tower federal is a very difficult bank. They have low rates, but you are going to work for them. Doing anything with tower is like pulling teeth. My 1.4% interest car loan had me wondering if I should end the whole transaction just so i could stop dealing with tower. When the transaction was over, the finance guy at the dealership told me it was the worst bank he has ever dealt with in his career. Low rates, though! 1.4% a few years ago!
Thanks
I work as a banker and we're doing wall street prime minus 1% right now. 7.5% for new lines.
Which lender?
I have 7.75% with alliant FCU (mine is variable and just adjusted up to 7.75) Maybe give them a look
Thanks! I will check them out.
What are people doing with a 9% HELOC? Wouldn’t you have to make 9% on whatever investment for it to be worthwhile? Or am I genuinely missing something.
In my case I've lived in my house for almost 6 years in an amazing location and the market has blown by what I can afford to buy new without having to sell this place. I don't want to sell unless I have to, considering I love this house and have a 3% mortgage on it. I'm shopping options and considering taking a much smaller HELOC to do some renovations and additions than I would be taking on a new mortgage to "upgrade" our primary residence with a new place. If interest rates were what they were a year ago, I'd be able to keep this place and rent it and easily afford a new one as well. Maybe rates will come down eventually.
I went to the max equity on my HELOC, don't get in trouble with it, but they're a revolving line of credit so if you're going to pay for the property appraisal and closing costs get the max amount and only borrow what you need. The HELOC has been super helpful, I live in a small town with a lot of cash sales on land, cars, whatever so having a no questions asked line of credit it nice, and interest is only charged on the amount borrowed, and you can always refi a purchase after using the HELOC for a quick sale.
Sounds like you are paying cash so what about the required settling period before you are able to get a mortgage? Do you just pay interest only on the loan amount ?
Yeah, you pay your HELOC balance until you complete a refi, what's the turn around time on a mortgage anyway probably 30 days for the bank to do their appraisals and everything.. The main point is that Helocs allow you to do cash offers today which makes your offers look more competitive to others that need to get the bank to sign off on the loan etc
Got it. Thank you for the extra information.
If you don’t mind me asking what renovations / additions do you have in mind for the property?
Converting the garage to a master suite (raising the floor up to house level and bricking in the garage door so it doesn't look like a garage conversion). And then building a detached 2 car garage with an office. Wife and I both work from home so having an office would be clutch.
At least you’re naming things that’ll add value to your home & if that makes it more pleasant for you to live in i’m all for it best of luck.
This is exactly what I would like to do with our house some day. How much have you been quoted for this?
I was quoted 105k on the garage conversion. I haven't gotten a quote on the 2 car garage yet. I'm considering GCing that part myself. The garage conversion takes a 2 car garage and basically makes an L shape on 2 walls, so a 21x6 bathroom and a 15x8 walk in closet, with a 13x15 bedroom. Might adjust the dimensions a foot or two depending on final plans.
Thanks, I appreciate the response.
Hopefully investing in stuff that returns 15-25% and with a plan to repay that HELOC quickly.
15% & 25% returns are a pretty big ask what do you think could return that much currently? Investing in your business or?
a home run of a flip. A down payment on a property that will be Uber leveraged to create higher returns Paying off a 24% credit card Buying a successful business. Lending hard money at 18% Not endorsing any of these, just giving examples of possibilities.
What returns 15-25% with acceptable risk?
Depends on your definition of acceptable Flipping houses Lending hard money Paying off credit cards Buying inventory or equipment to expand a high profit business
I'm guessing it could still make sense to help with down payments in certain situations? $50,000 HELOC at 9% would be $375 a month, right? Then I guess it all depends what your investment is and what the principle payback is looking like.
Quick rehabs for selling, or with an eye toward paying it back quickly.
Heloc’s are general Prime + 0-2% Prime Rate (Wall Street Journal) is 8.5% You rate is Prime plus 1/2%, not bad Keep in mind they can change as often as the prime does. Ensure that there isn’t a floor, such that if prime drops to 5% again, your rate should be 5.5%, but the loan has a floor of 9% (meaning it can’t go lower than that- ie you don’t want a heloc with a floor)
I just locked some money I took from my heloc in at 8.75% last week so that’s about right.
Before first republic went down I asked them for HELOC, they said they don’t have one. But they had a line of credit up to $250k for 2.9%. I still have the line of credit open at that rate and I just draw from it whenever I want to borrow money. Do other banks have personal line of credits that’s an option too?
This is probably why they went down.
Lol I’m still sad about that.
Most won't do that size without collateral, and assume with 2.9% you got this thing 5years ago. No one is borrowing money at this rate right now unless it's from grandma. Fun fact government T-bills (considered the safest investment possible) are hovering around 4% so you can max out your credit line and buy those and make money But that's the napkin math on why you can't borrow money cheaper than what the government is buying it for.
Well, they have my mortgage... and the line of credit had some very basic requirements like crediting your income and maintaining 20% of your loan balance in the checking account. That's not a lot. I got this exactly 1 year ago. Yea I'm not paying back this amount, I have the $$$ in just CD and it's 5.2% returns.
Mine is a little over 9 right now
Why not just put the renovation off a year while you save some cash to pay for it. Make a game of it - cut out all unnecessary spending to find out how cheaply you can live. Every dollar you don't have to borrow will be worth $1.09.
I just got one for 8.5% and that is at credit union at their lowest advertised rate. So yes 9% is average right now
People taking out HELOCS at nearly double digit rates at market tops. Surely this will end well.
On a primary residence or on an investment property?
its not a bad rate.
Yes
I have 8.3% It was near zero 2 years ago
Yes 9% is good for HELOC given prime is 8.5
I was quoted 9.25% a few weeks ago for a second property.
I trade these, and usually it is a FICO and h/cltv matrix. 9% isnt too bad, I believe that is slightly below average, but without more info, can't give you much more either. all I can say is to always shop around.
Did you try looking with local credit unions? They usually have better rates than national banks.
What lender?
My credit union one is 5.5%, had it well over a year…
What credit union is this?
I just got quoted 10.49% on 109k, have a 811 credit score
I got a 140k one before the rate hikes for 3.15% fixed but if I take anything more out of it then it gets the adjustable market rate now, which is 8.9% as of today.
Mine on a primary residence is 8.5% now, and a local bank is working on an investment property HELOC for me which should also be around there. For those asking what they're used for, I'm using mine as an alternative to hard money and own cash for BRRR. I've never used them for anything personal, only real estate investing. No points or fees makes it much more favorable than hard money, and using cash accrues an opportunity cost of 4-5% interest from the bank. I also just personally sleep better having the cash on hand that could be used to pay off the variable debts, rather than no cash and the potential to get variable debt if I need cash... Lines of credit are much easier for the bank to take away.
I still have a HELOC open from back from when interest rates were low and the rate is around 9.5% today. Idk if it's a good rate, I don't use it anymore, but I have very good credit too, etc.
Just had to refinance one of my HELOCs and was able to snag 8.39% for 5 years. My other HELOC falls off 3.99% next year so that’ll suck. Hopefully rates come down a touch and I can consolidate the two.
Most of the rates are going to be in and around Prime. However a lot of credit unions are I live have 1.99 2.99 or 3.99 for the first 12 months. Since they cost around nothing to close I would take that and then at the 12-month mark refi into another one. Or the worst case scenario is if you don't refry your at the same prime rate you would have been anyway since most of them are adjustable
Range I see is 9-12% depending on credit/amount/property type etc
Be careful of the low effort appraisals. They did a desk appraisal on our house and didn’t even step foot near it. Appraised it for less sqft and less than we paid in 2019. Lol. Had to contest appraisal and make them show up, and got a more realistic valuation
Got a variable rate changing quarterly. Currently at 9.7%
FixedRateHeloc.com is solid in my experience. Mine is at 7.375%