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HELOC

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Anonymous
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HELOC

How soon are you able to get a home equity loan or home equity line of credit? We're wanting to buy a house that's needs some serious updating. And does anyone know the basic qualifying score or what scoring model they use. Thanks for all of your help!
3 REPLIES 3
Revelate
Moderator Emeritus

Re: HELOC


@Anonymous wrote:
How soon are you able to get a home equity loan or home equity line of credit? We're wanting to buy a house that's needs some serious updating. And does anyone know the basic qualifying score or what scoring model they use. Thanks for all of your help!

You need to have equity in the house to get a HELOC as the majority underwrite at 80% CLTV though some do 90% CLTV.

 

HELOC's are all over the map, there's no standardization to them in terms of qualifying score or scoring model as every lender can be different on this one unlike a first or second mortgage where it's pretty much set in stone what the requirements are.  

 

Anyway if you're putting a big downpayment down then yes you can likely turn around and do a HELOC (well maybe, again some lenders may vary and have a time since mortgage clause) but I'd likely look at different financing arrangements like a 0% offer at Lowes or Home Depot or holding some cash in hand and financing on a secured at 2% instead of a HELOC's 3.5% or higher.

 

Or look at a different house altogether, if you're throwing all your assets at a seriously needs updating house be prepared to either extend the fixing in the time domain, or come up with other options.  Just my opinion.




        
Message 2 of 4
Anonymous
Not applicable

Re: HELOC

House is valued at 119,000. We put an offer in at 110,000 with a 30,000 down payment out of a 401k, which means we are paying 80,000 for the house that is appraised at 119,000. Which means we will start out with equity right away. We can't use the 30,000 from 401 for updates or remodel only down payment. So we were thinking if we put down a large down payment would be a good idea to start out with equity in hopes to qualify for a heloc for the updates. I am so sorry if I confused everyone with this post. I am just so confused and I honestly get more helpful advice and answers from this forum vs asking realtor/loan officers and lots of other people lol
Message 3 of 4
Revelate
Moderator Emeritus

Re: HELOC


@Anonymous wrote:
House is valued at 119,000. We put an offer in at 110,000 with a 30,000 down payment out of a 401k, which means we are paying 80,000 for the house that is appraised at 119,000. Which means we will start out with equity right away. We can't use the 30,000 from 401 for updates or remodel only down payment. So we were thinking if we put down a large down payment would be a good idea to start out with equity in hopes to qualify for a heloc for the updates. I am so sorry if I confused everyone with this post. I am just so confused and I honestly get more helpful advice and answers from this forum vs asking realtor/loan officers and lots of other people lol

I think, and I'm not 100% sure though I suspect the 401K loan is just part of the DTI equation at that point, that you're pretty much golden on that.

 

How much fixing up do you need?  As one example DCU does 80% CLTV and is pretty much the gold standard of all the ones I found (currently 3.5% at 675 EQ FICO 5) but if you need to get up to 90% you need a different lender, and every lender is different in terms of what they UW on.  There isn't a lot of data on HELOCs here, not quite sure why they aren't more popular other than people generally don't have a long tenure on this forum on average (get what information you need and move one) but the easiest thing is just go ask.  

 

Seems like more and more places are offering HELOC's with interest rates finally rising, I even heard Chase advertising the other day, and that was pretty new I think... but I'd see how big a line I needed (80% or 90% being the two targets) and then just go ask the lenders what they do.  Generally places like Credit Unions will underwrite literally everything that's not an explicit first or second mortgage on one particular score, so if you know you're golden on something like EX FICO 2, you can cherry pick a particular one for your HELOC and then just ask them what their tiers are which they will probably tell you.




        
Message 4 of 4
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