Investor's Loan Guide by Graham W. Parham

asis. Many people will establish their HELOC’s to extract money from the
equity of their property and re-invest into more real estate. "Still not a bad play."
This is not using borrowed funds. This is utilizing your equity. Cash advances from
credit cards or non-secured loan cannot be used for sources of a down
payment. HELOC’s you can.
If you are planning on utilizing your
HELOC for the upcoming real estate
transaction, please take note of the things
that the lender will be asking for. A copy of
the mortgage statement showing the
beginning balance before the withdrawal, a
copy of the check written from the HELOC
to your personal bank account, and a
deposit slip showing those monies
transferred into your personal account.
Once this takes place, we want a copy of
the new statement showing the new
balance and a copy of the HELOC’s
promissory note showing the terms of the loan. The underwriter will review all of
the information to determine that these funds are acceptable. Most HELOC’s
are pretty straightforward, but some may have some crazy terms where a few
years into the note it could potentially come back to haunt the borrower.
HELOC FUNDS CANNOT BE USED FOR RESERVES!!!
New Fannie Mae Reserve Requirements for Investors with Multiple
Properties Owned
There are many investors that still do not know that Fannie Mae requires
additional reserves from borrower’s that have more than one financed
property.
The Old requirements were six months Principle, Interest, Taxes, and
Insurance (PITI) on the subject property and two on all other properties up to 4
leveraged 1 – 4 family properties excluding the primary residence. Properties 5
– 10 would require six month PITI on all properties.
The New requirements are based on a percentage of the unpaid principal
balance on each loan excluding the primary residence.
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