Author Topic: HELOC's not allowed for Condos?!  (Read 2990 times)

alaskadad

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HELOC's not allowed for Condos?!
« on: May 18, 2015, 04:55:45 PM »
My wife and I have a condo paid off, and want to buy a house and rent out the condo (due to a bunch of condo construction recently in my area, nobody seems interested in buying it).

We need to borrow money for a down payment on a house. My wife just got offered a job out of town, we are moving, it is a good time to buy for us even though we don't have much saved up. I figured I could use a HELOC.  I was wrong. My local credit union says that due to federal regulations, I can't use a condo to back a HELOC, only an actual house.  Well SHIT.

There is this thing called a residential equity loan, the banker says, but the IR is almost 7% (screw that!), and the origination fees are ridiculous (appx $3,000 for a measely $40k loan.

Any advice fellow mustachians?

Update: My lawyer friend says it is because the HOA owns the land on which my condo sits.
« Last Edit: May 20, 2015, 06:06:49 PM by alaskadad »

zephyr911

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Re: HELOC's not allowed for Condos?!
« Reply #1 on: May 20, 2015, 11:07:30 AM »
My wife and I have a condo paid off, and want to buy a house and rent out the condo (due to a bunch of condo construction recently in my area, nobody seems interested in buying it).

We need to borrow money for a down payment on a house. My wife just got offered a job out of town, we are moving, it is a good time to buy for us even though we don't have much saved up. I figured I could use a HELOC.  I was wrong. My local credit union says that due to federal regulations, I can't use a condo to back a HELOC, only an actual house.  Well SHIT.

There is this thing called a residential equity loan, the banker says, but the IR is almost 7% (screw that!), and the origination fees are ridiculous (appx $3,000 for a measely $40k loan.

Any advice fellow mustachians?
You mean, other than a mortgage?

Are you sure you want to rent it out? Lack of sale interest {at the price you want} isn't the best reason to become a landlord. Why not just lower the price.

--Devil's advocate

DeepEllumStache

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Re: HELOC's not allowed for Condos?!
« Reply #2 on: May 20, 2015, 11:19:23 AM »
You mean, other than a mortgage?

I'd assume an issue with not getting a HELOC would be having to free up a downpayment while the prior condo is still in the process of being sold.

I did not know about the no HELOC issue for condos... hopefully someone has good advice.