topic Re: Closeout a HE-LOC in Understanding FICO® Scoring

Closeout a HE-LOC

Anonymous — Fri, 21 Sep 2007 17:27:16 GMT

Before buying our retirement home in Florida we took a $223K IO He-loc on our (no mortgage) family home in NY. Other than the required $25K draw, which was paid back immediately, it was never used and the required 3 year prepayment wait is met. Our primary home in FL has a $300K mortgage (now $290K bal). We will be selling the NY house to our son probably sometime in December. It has to be sold by May for to satisfy the "2 of the last 5 years" tax rule. My husband and I are at odds about closing out the He-loc. I think we should close it now and save the $50 annual fee which is due in Oct (plus I hate the bank). He thinks we should wait until the closing to do that. He thinks our credit score which is now excellent will be affected. We might buy a 2nd home in NY next year. Any suggestions. Time is short so a prompt reply will be greatly appreciated.

Re: Closeout a HE-LOC

Anonymous — Sun, 23 Sep 2007 19:20:11 GMT

223K Line of credit $50 per year.

I say that is cheap access to a large chunk of $.

I vote KEEP IT.

Re: Closeout a HE-LOC

Anonymous — Sun, 23 Sep 2007 19:47:46 GMT

Won't such a large LOC hurt my score since we are going to have to close it out when we sell anyway.

Re: Closeout a HE-LOC

Anonymous — Sun, 23 Sep 2007 21:17:58 GMT

I have a large HELOC 150K (0 outstanding) and I think the real thing to think about is the amount of cash you have available and if you will beable to qualify again for the same HELOC. You have a ten year draw period that you should not have to prove your abbility to pay again...that to me is priceless.

I have only used it once and that was to float me for six months without having to use my cash on hand between jobs.

either way your score will be uneffected by the clouser unless you have a limited number of trade lines...sounds like your well establised tho. as far as the sale goes.....keep it or get rid of it same effect

Re: Closeout a HE-LOC

Anonymous — Tue, 25 Sep 2007 16:07:20 GMT

Having a large LOC - UNUSED - should actually dramatically HELP your FICO score. Having an excellent payment record on this HELOC account will also increase your score. Closing accounts often LOWERS your FICO score. If you were to refinance, your credit report will show the HELOC account as satisfied or paid in full without any action from you. I would suggest that you leave the account open with a zero balance, and keep your FICO scores at their max - qualifiying you for the best possible rates on a new HELOC, home equity loan or mortgage, should you decide you need one.