Buying a house using HELOC? Timing?

4 Replies

I am looking at using a Home Equity Line Of Credit (HELOC) to buy a house in San Antonio but I am new and don't know how the timing will work. I know you can get pre-approved for a typical mortgage and use that pre-approval with your offer, but is there any way of showing funds available using a HELOC without actually borrowing the money. I don't want to borrow the money and have to make payments if the offer I make falls through. On the other hand, the bank I talked to said it will take 30 to 45 days for the HELOC to be processed.

I guess my question is: How do you work the timing when using a HELOC to buy a cash house?

Ask your lender for their requirements regarding use of HELOC funds as a down payment. At a minimum, you will need to have an approved HELOC all setup and ready for use before you make an offer. You will probably need it for prequalification as well.

30-60 Days doesn't seem unusual for approving a HELOC. Payments are usually available quickly once it is setup.

If you're using the HELOC to buy a house "all cash", you'll need to open the HELOC before you make the offer. Then you'd just show your HELOC statement (showing the amount of credit you have available is equal to or greater than the price of the house) as your proof of funds when making the offer. You won't actually need to draw on the HELOC until it's time to fund escrow, so no need to incur interest charges or make payments if the deal ends up falling through.

Wouldn't a HELOC only have payments if you drew from the line of credit? If you are approved for the credit, it can sit open with no payments.

Thanks for the quick responses, that is how I was hoping it would work. I will confirm with my bank and get it set up now so I have access to it if I need it. 

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