topic Re: 'Seasoning' for HELOC/HEL in Mortgage Loans

'Seasoning' for HELOC/HEL

Silver12 — Wed, 09 Aug 2023 18:36:36 GMT

Hi all!

I have just got the clear-to-close on a new build home, and will be closing at the end of this month. I'm looking at getting a HELOC or HEL afterwards for the purposes of consolidating some debt (credit cards) as well as to help fund some improvements in the house. Specifically looking at NFCU at this point....

Question - is there a 'seasoning' requirement for the first mortgage before taking out/applying for a HELOC/HEL? Will I need to wait 6 months or more, or can this be done more or less right away?

We will have about 69% equity in the house as soon as we purchase it, so the equity should be there.

Thanks!!

Re: 'Seasoning' for HELOC/HEL

ShanetheMortgageMan — Wed, 09 Aug 2023 18:58:49 GMT

You can get a HELOC/HEL the day after closing, but keep in mind most 2nd mortgages won't use a value higher than the purchase price until you've owned the home for 6-12 months. The timeframe will vary depending on the 2nd mortgage lenders guidelines.

Have you considered putting less money down and then using the money you'll have saved to pay off your credit card debt?

Re: 'Seasoning' for HELOC/HEL

Silver12 — Wed, 09 Aug 2023 20:32:36 GMT

Thanks for the reply Shane!

Unfortunately (for this purpose, very thankful for the gift!) the majority of the downpayment is coming from an outside source as a gift being paid directly to the builder, so I can't use it for my own debts. With the purchase price we should have about 65% equity, so that hopefully won't be an issue...

Re: 'Seasoning' for HELOC/HEL

ShanetheMortgageMan — Wed, 09 Aug 2023 20:50:25 GMT

You're welcome. Usually 2nd mortgages will cap out at 90% of the value being used, so with the ~65% of equity based on the purchase price you shouldn't have much issue finding a new 2nd mortgage assuming scores & DTI qualifies.

Re: 'Seasoning' for HELOC/HEL

Silver12 — Wed, 09 Aug 2023 20:59:11 GMT

That's great to hear - thanks again Shane!