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Just registered – that's my question above. We got the house with a promissary note for $60,000 and we need to pay the back taxes owed on it which are about $20,000, I think. Other than that, the house had no mortgage on it when we got it. It's worth about $250,000. We want a HELOC to pay the seller her $60,000, pay off the back taxes ( collections company willing to negotiate that down a bit) and to clean up our own collections and credit. We were hoping for $100,000.
So a total of 100k on a home worth 250k. I gotta think there's a lender willing to to 40% LTV on this. It would be a new 1st mortgage at this point since you're paying off all liens.
Sue, what State is the property in?
Sue,
You're going to need a small common sense lender. Most banks won't touch the loan. Well I mean what is the credit score? Is it possible to get the money from another source, improve the credit and then get a loan? That much equity something should be possible.
I hate to see you with a hard money lender but that may have to be something you consider. Is it your primary residence?
We live in Illinois.
We do not live in the house we are trying to get a HELOC on.
My husband and I live in and are renting another house in a nearby town. The seller of the other house, who hasn't paid the property taxes in 5 years and was about to lose her house 11/1, is still in it. We expect her to move out in 6 months so that we can get a paying tenant.
My lowest credit score is 620. the other two are in the 670's. My husband's are slightly lower.
I can't think of another source to use to pay off the debt so that we can get a loan. We've pretty much exhausted all our options. We had hoped this house was the answer to cleaning up our credit and being able to purchase the one we're currently renting, but it hasn't worked out that way. 
Well I don't know any lenders out in Illinois. But hard money lenders are everywhere and I know they sound sleazy but they fill a need. With those credit scores it would be tough to get a HELOC. Investment properties are tougher also to get loans on these days. But hard money lenders generally like investment properties to lend on versus a primary home. I would ask a local lender/bank if they know anyone that does these type of loans. The fees and rates are high and they can not be bargained. Hope this helps and let me know if you need more.
Thank you for your suggestions.
What about other ideas? Would a regular mortgage work? Are there requirements I don't know about, such as the house needing to be a primary residence or that we have to own it for a certain amount of time? This isn't my area of expertise – any creative ideas you come up with are worth consideration.
Thanks again!
You actually may have a better chance of getting a first mortgage. If the scores are low perhaps an FHA cashout will work? Lenders work off middle scores so if you have 670 scores and your husbands are just a little lower you actually wouldn't need FHA more than likely.
Wait wasn't thinking FHA and investment property don't go together. It must be a conventional loan. I have asked a friend if he can lend in Illinois. Will advise.
I may have found a loan for you. Please contact me for more details. bmendelson@monarchmtg.com
is my email address. Or my direct office 240-403-1970
Thanks,
Brent
Answer #1
For HELOCS, your credit will need to be even more spectacular than qualifying for your first mortgage. As much as it stinks for your situation, I don't think you'll find any lenders who will do otherwise.
What do you owe VS. what is your appraised value? How much $ are you looking for with this HELOC?