HELOC Ending on Investment Property (fixed rate, interest, credit score, 30 year)

[toly4598]

I have a rental property in Boca Raton, FL and it is worth approximately 395K. I have a 30 year fixed rate P & I mortgage on it through Citi Mortgage at a rate of 4.25% and owe around 203K on the first mortgage (monthly payment $1,082). Then, I have an HELOC through B of A for 140K which is a variable rate and currently at 3.99%. The ten year period on the HELOC is coming to an end in December and while I know I need to eventually, cannot afford to start paying the full P & I on the HELOC. I currently pay around $457 monthly with just interest on the HELOC and this will go up to $1,200 or so once they add principal into the payment.

Any suggestions on how I can keep my payment at around the $500 mark for the HELOC? Then, once I am financially able, I will begin to pay down the principal on the HELOC.

Are there other banks that will give me a new HELOC and allow me to transfer the balance with a high LTV like this on a rental property?

Should I look at refinancing the entire amount including the first mortgage and HELOC in one loan? Not sure if can refinance a rental property with such a high LTV?

My credit score is around 740.

I very much appreciate any suggestions.

[LiveLoveLaugh]

If it were me I would sell it. Sounds like too much aggravation. Again...that's just me.

[Jkgourmet]

Originally Posted by LiveLoveLaugh

If it were me I would sell it. Sounds like too much aggravation. Again...that's just me.

My thought exactly. It doesn't even sound like a good investment. Heck the rental income isn't even covering the mortgages.

[bentlebee]

I don't think the OP can get a different HELOC to pay off the current one as it will only be given for a certain percentage of the value.

BoA has nowadays only HELOC's with a three year minimum length or if you sell prior to the three year, you have to pay for the closing fees.
Refi may or may not be a possibility and your interest rate will probably be higher.

To me it sounds you are not able to afford the property since you can t afford the payments on the HELOC when the time frame expires.

[toly4598]

Thank you all for taking the time to reply and providing feedback. I may end up taking your advice and selling it. I should have mentioned in the initial post that I was hoping to eventually retire and occupy this property in ten or so years.

Are you aware of any banks that will give me a new HELOC and allow me to transfer the balance with a high LTV like this on a rental property?

[chet everett]

Originally Posted by toly4598

Thank you all for taking the time to reply and providing feedback. I may end up taking your advice and selling it. I should have mentioned in the initial post that I was hoping to eventually retire and occupy this property in ten or so years.

Are you aware of any banks that will give me a new HELOC and allow me to transfer the balance with a high LTV like this on a rental property?

First I will directly answer your question: I do not believe any traditional lenders / banks would be comfortable extending your existing HELOC given the fact that you are losing money on the rent and the equity is too small especially for non-owner occupied property.

Given that your timeline to convert this to your retirement home is "ten years or so" I would recommend that you rethink your approach to this property. That might involve selling it and it might involve rethinking the whole idea of owning a home when you retire -- Retirees, Should You Buy or Rent When Downsizing?

Of course without knowing more about your whole financial situation, long term health prospects and other details it is very hard to say what really makes sense for "ten years or so" into the future... Did anybody thing the White House would have its current status even 10 months ago?!?

[Dmitriy Bleynis]

Unfortunately, a refinance will not work as your LTV is high. If you have enough equity in your primary residence, you can attempt to refinance and pay off your HELOC with your primary residence.