Kent County, DE · Member since 2014 · 147 posts · 22 votes
I noticed most applications for home equity lines ask you for the purpose of the loan. I currently have a pending application for my primary home which I currently own free and clear. I was honest with the bank by letting them know I plan on using the funds for real estate investing. So far the banker is saying they may not want to do the equity line because I am using it for other real estate. They would however be ok with me using it for home improvements or vacations, etc. My question is, do you have to disclose the purpose of the line of credit? Should I have just told them it was for home improvement?
Kent County, DE · Member since 2014 · 147 posts · 22 votes
11y
What's interesting is that I initially went to prequalify for a conventional loan for a single family investment. To my surprise the loan officer told me I would need a commercial loan and the best I could get was a 5 year ARM. Then it was actually her suggestion for me to consider taking a loan out on my primary home. Now, they aren't sure if they can make the deal because of what I want to use it for. It's a local bank and the person I spoke to was the branch manager but she didn't seem too knowledgeable about the loan process. I'm wondering if I try using a different bank and just tell them I'm using it for home improvements, would the call the loan if the found out somehow that I used it to purchase another property?
Kent County, DE · Member since 2014 · 147 posts · 22 votes
11y
Just to follow-up, I found out today that the bank will not allow me to take out the loan solely because of my plan to use it to purchase real estate. So the application was denied. The loan officer couldn't give me a better explanation other than that it is their policy. I guess the best option is to not be so forthcoming with my plans to use it for RE purchases.