Interesting heloc question
My girlfriend and I bought a home together in 2010. Got a great deal. Now we have about 100k equity in the house. My girlfriend is on the mortgage but we are on the deed to the house together. Iso it possible for me to be able to take out a heloc on this house? WE split all costs but I know a bank doesn't really care about that.
Yes. Are you looking to be the only guarantor on the home equity line? Either way she will have to sign come closing.
Might be both of us or just me. Not sure at this point. I was just wondering if I had the option to use the house, since she is on the current mortgage, but I'm on the deed with her.
I would have expected she would need to sign off, since she's on the deed.
Thank you.
How do they determine the amount of equity in my primary home if they don't do closing like on a refi?
Also, if I did a HELOC with my girlfriend how do they view credit scores? I have superb credit (810) and she is probably just under 700.
I don't think you will have any trouble getting a HELOC. I'm assuming your g/f would need to sign for it also, since you both own the home.
I recently got a HELOC for my home...purchased it before my marriage and it is only in my name...with a credit score probably a bit lower than your g/f's and it was approved.
They assess the property value by requiring an assessment...just like if you were purchasing or refi'ing the property. Some banks make you pay for that, some don't.
Although this won't apply to most people, I did have to add one oddity for my HELOC. I live in Louisiana, which is the only state that has Napoleonic Code Laws. As such, any time a married person is applying for any type of credit...their spouse has to sign a document that basically says "I am aware (spouse) is applying for credit." So my husband...who is not on the deed to my house, is not on my HELOC, and has no financial responsibilities whatsoever for either the house or the HELOC...had to come to my signing of the HELOC docs and sign some of the papers also. So Crazy!
Originally posted by @Jennifer T.:Although this won't apply to most people, I did have to add one oddity for my HELOC. I live in Louisiana, which is the only state that has Napoleonic Code Laws. As such, any time a married person is applying for any type of credit...their spouse has to sign a document that basically says "I am aware (spouse) is applying for credit." So my husband...who is not on the deed to my house, is not on my HELOC, and has no financial responsibilities whatsoever for either the house or the HELOC...had to come to my signing of the HELOC docs and sign some of the papers also. So Crazy!
Jennifer,
First, its an appraisal, not an assessment which the bank will order on the property.
What you describe above is not present solely under Napoleonic Code. It is pretty much universal in Canada - in some jurisdictions it is extended to common-law spouses as well - but was perhaps present in Québec first (which is also has the Napoleonic Code of Law). The purpose it to ensure one spouse does not put the marital home (or possibly any marital property) at risk unbeknownst to the other spouse.
It's about being a "community property" state more than it has to do with Napoleonic Code Laws. Unless you keep all of your money separate and you don't mix any of your income after marriage with the funds you use to pay for the mortgage, you both own the property. It's called comingling of funds. Once comingled funds are used to pay for an asset in a community property state, the assets are no longer separate. I'm not an attorney, but that's the way it works.
I think the term you are looking for in place of "assessment" is appraisal. Lenders require an appraisal when they loan money on a property. The parish (county other places) tax assessor assesses property values for property taxation purposes and it's similar to an appraisal, but not the same thing.
Thanks Roy for your correction. I did mean appraisal.
That is interesting about Canada. However, at least from my understanding, it is unusual in the United States and Louisiana is one of the only places that requires spousal consent to apply for a loan that they are not a party to or responsible for. I can see both sides of it.
While not a big deal, in the grand scheme of things. For my particular situation, I did find the requirement a little insulting. I bought the house, I pay for the house, I maintain upkeep on the house, I'm the one who applied for the HELOC. From a financial standpoint, my husband has nothing to do with the house. It is not marital property (per legal agreements), so I should not have to get his "permission" to do anything with my house and my credit. And that's the other side of the coin :).
Ok so, the cost for applying for the HELOC will be an appraisal cost? Is there any other cost?
I go through my credit union which has a separate dept for running all mortgages, and I believe the loan officer before told me I have to go to the branch and a loan agent/officer at the credit union will handle home equity loans and HELOCs. Does that sound right?
I am just now starting to discover the use of debt to leverage up but in a good way.
Until recently I was one of those debt haters. I was raised to save, to avoid credit cards like the plague, to pay down my home and be done with banks. While I still hate debt, I'm starting to realize more and more using the bank's money and conserving my cash is the smart thing, especially if I pay the bank 6% or less, and get 20+% returns.
But I won't lie, the whole idea of leveraging my primary home scares me.
@Robert...thanks! You were posting while I was replying.
Perhaps I am mistaken about other states having the same requirement. I was under the impression it was only ours...but many states have community property rules.
At any rate, your words are very wise. I did a lot of research before I got married to ensure the house does not become marital property under community property laws.
Now my next rental property...he and I will be buying together and hopefully be our first step in our combined financial future.
@David...That sounds right to me. I also worked with a loan officer inside one of my bank's branches.
From the little bit of shopping around I did, I was surprised at how different the banks were in what fees/costs they charged. Some charged a few hundred dollars just in bank fees to set up the HELOC. Some also/instead charged a yearly fee, though this was usually less than $100/year.
For me, my bank was pretty awesome. They paid for the appraisal themselves and did not charge me any fees...other than the filing fees charged by the city and parish (county). Which were shockingly high! I think those were like $250-$300...for the city to file a 12-page document (rolling eyes)? But then, I had expected to pay for an appraisal and didn't have to, so I still felt ahead of the game.
GL with your HELOC!
Helocs should not cost you anything besides a small annual fee of $50 or so. I do these every day and have been for the last 8 years with a couple different banks. Just take 80% of the value of your home then subtract your mortgage balance. That is what you can borrow as long as your income can support it.
Hi everyone, this discussion is a few years old, but may still be relevant so going back to some of the original
questions...
I am going through an investment HELOC and being told that my state is a "marital property" (community property) state. My wife isn't signed on the original purchase documents, but now is being asked to sign at closing for the HELOC. I can't find anywhere that my state is considered a community property state, but consulting with my attorney, I going through having my wife sign at closing (both of us via POA) rather than rub against the grain. This will add some cost and time to the process, but I value the ability to leverage the equity over fighting a battle that may result in not being able to close.
I did find the following article that may be slightly out of date, but probably also still relevant.
https://www.worldwidelandtrans...
Stay healthy everyone!
Joe:
Is the property securing the line of credit the marital home? Here (NB, Canada) that would automatically necessitate either the spouse co-signing or signing a declaration consenting to the LoC.