HELOCs to fall to 65% LTV

[Naushy]

Hi Adam,



My notes are not a strategy but more of an FYI / cautionary note. A person has to weigh out the pros and cons: they can keep using HELOCs to finance investments and get the tax deductibles but keep in mind that lenders may put a cap on how many properties a person can buy (of course JVs become an option then). At some point, an investor asks if the taxes they save are worth more than the risk of not getting another property.

 

[MarkRivers]

Had a meeting with my banker today to get our HELOC increased. We were going through all the required steps and our banker was talking about 80% LTV. In the back of my mind I was thinking that this didn't jive with what I heard from REIN. At the end of our discussion I asked her about the 65% change, and with that she basically said, "your right"..."I forgot". She explained that it was hard to keep track of all the changes, but seemed pleased / relieved that I had brought it up. A couple of things that I think are worth highlighting:

1. I am very thankful that I learned this from REIN. I came across as being relatively knowledgeable regarding the changes, and my banker didn't submit a file that was going to bounce, saving her face to some degree.

2. Having caught this issue before submitting the application, we (my banker and I) are now able to come up with a strategy to get up to the 80% (mortgage 15% and LOC 65%) or some other approach, proactively rather than reacting to a bounced application.



Thanks REIN!



Mark