Valued Contributor
Posts: 3,302
Registered: ‎06-09-2010
Re: Home Equity Line of Credit question....


My husband and I currently have a home and there is NO mortgage on it.  The deed was transferred into our name from my inlaws. We want to build a new home on acreage in the next year.  We are looking at possibly taking out a HELOC on our current home to use towards any down payment on the land or new home/land (found a lender who finances both together and they want 10% down) just in case we haven't saved up enough money by the time it's built/closed. We also plan to sell the current home to pay off any LOC we used and keep the difference.  My questions are:


1.  Is it wise to do a HELOC for down payment towards another home, especially a new one? This is not always a wise thing to do, but is a choice you would make.


2.  Do they use an appraiser for our current home for the HELOC or go by what the homes are selling for in our area or the appraisal district? It would have to be appraised. Your appraisal should not differentiate too much from other similar homes to yours that were recently sold albeit depending on condition of home etc etc...


3.  If we do get a HELOC (not using it until closing on the new property), do we get this before or after we are pre-approved for our construction loan? Our CC UTI is excellent btw. This depends on different factors, how it impacts your credit scores, how it impacts your DTI, what  type of loan you are seeking, just to name a few...


My husbands FICO's are in the 760's and mine are in my sig below.


Thank you in advance!




In my opinion if you plan on selling your home anyway I would make every attempt to sell the home and use the proceeds needed to pay for DP and closing and whatever other money needed for your new construction loan. I see no benefit in paying interest on a HELOC to purchase another home. 

Good Luck
May all your dreams and wishes become a reality!