Line of Credit against Investment Prop

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Line of Credit against Investment Property
Posted by: Joseph Mar 16 2004, 05:08 PM

I am about to begin the process of shopping for a line of credit against several investment properties that I own.

I would appreciate any guidance. Specifically, I was told that such a thing is impossible in New York, due to the mortgage taxes that would be invoked every time there was a drawdown or payback.

Thank you,

Posted by: loanuniverse Mar 16 2004, 08:15 PM

I am not going to be able to be of much help because your question is very specific to New York. My first guess is that the information that you got is not correct, since it would seem that the same would affect a “home equity line of credit” to the point of making it uncompetitive. As far as I know, the fees associated with a line of credit secured by real estate are handled similarly in all the states with little variation. Then again, I am in Florida so take that into account.

This means that essentially that when talking about setting up an LOC like that in Florida there would be a few fees involved in getting it setup {appraisal fees, environmental audits, whatever closing fee the bank charges, recording fees, documentary stamps, etc.}. After the line is set up there really aren’t any more fees just interest charges.

If I were you, I would double check with another commercial lender about this.
Posted by: Josh Mar 18 2004, 03:52 PM
Wow, this topic was timely. Joseph, I am looking to do the same thing in NY on some rental properties that I own free and clear. I had heard about the mortgage tax as well (I think it is 1% of the lien amount, in my particular locality). One would think that the mortgage tax would be assessed once upon opening the LOC, since the lien is for the full amount of the LOC, even if you pay down some of it (in other words, the lender doesnt re-record a lien everytime you make a principal payment). Please post back if you get any interest from lenders regarding this and what the issues were that came up. I am sure it would be a big help to not only me, but others as well. Best of luck!

Author: Commercial Loan Underwriter