criteria for cash out loan

3 Replies

I applied online for a refi loan against my rental house ( i do not owe anything),

 but the application asked for a closing date. 

Do i need to be in contract in order to  get a refi  loan? 

i just wanted the money so i can start looking....

would i be better off with a line of credit? 

thanks!

I'd check with a mortgage broker on this. It probably is seeking the closing date on your original purchase date, but I don't have the form in front of me.

Regardless, I think a HELOC is a great way to use equity in a home, if well managed. I don't know all the details, but definitely look at the HELOC as an option, particularly with rates being quite good right now, if the refi runs into any troubles.

HELOC gives you the buying power whenever you need it. I agree.

There may be some hiccups if you tell them you want a cash out refi to buy another house, but if you apply for a HELOC they're usually isn't any complications.

The application is used for both purchase money loans and a refi, just put in N/A or REFI or just leave it blank.

A HELOC can be a good loan arrangement to tap equity, however, be very careful using funds for long term financing needs, these are short term funds really, even if payments can be paid for years.

The issue with HELOCs are the terms. Read them carefully as loans can be called at any time really, if your credit score drops, if you have a change in your financial position, if you have any derogatory occurrence like a tax lien, that can trigger a change in rates or credit advances being limited or the loan being called on you. Many are simply call notes, if a lender decides not to loan anymore they can just say no, if the banks condition changes they can call the loan as well. So long as everything is hunky dory you have a line of credit.

Tying that money up long term can be a problem, never use short term financing for long term needs.

Used properly they can be a cheaper source of financing. Just be aware of the terms. :)