Did you know that home equity loans on investment properties are available from many lenders?  Some even offer an easy lending process when they hold the first mortgage on the property.  What can you do to secure a home equity loan on your investment property?

• Use property in which you have a larger amount of equity to market value.  Banks and other lenders typically will not increase the total debt against the property beyond a total of 75% of the market value.

• If your first-mortgage lender refuses to offer a home equity loan, line of credit or a second mortgage on investment property or second home, consider doing a cash-out refinance.

• If you do refinance to free up cash, choose a new lender for the refinance that will, in time, offer the chance to do a home equity line of credit or second mortgage, after you have again built equity in the property.

You will find that equity loans and lines of credit are some of the best financing sources for new projects.  The interest rates are usually more favorable than alternative funding sources, and using equity avoids the need to be dependent on partners for funds.

If you have built equity in your investment property, pulling cash out with a home equity loan, line of credit or a second mortgage can finance value-adding property improvements and new projects.  If your first mortgage lender is reluctant, consider a cash-out refinance.  Don’t ignore what may be your best and readiest source of funding for new profitable projects.

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