Applying for HELOC-What is banks preferred reason?

2 Replies

Hello BPers.

I'm applying for a HELOC so I can start investing. When applying, banks ask why you are taking out a HELOC. While I will also use the HELOC for things such as my son's educational expenses etc, that won't be my main reason. In your experience, do banks look more favorably upon your application if you specify a particular reason for the HELOC? Also, I'm finding that the advertised rates and the rates I'm quoted are considerable different--at least through one credit union that I'm applying to. This can't be because I have bad credit, I don't, and they haven't run it yet.

Jennifer in Brooklyn

I don't think it really matters to them what you use it for.  They will be looking mostly at credit.  I would shop around with different banks and credit unions and choose the one with the best rates and terms.

Great question and topic Jennifer. I would be interested to know how many BP folks use a HELOC for investments and if the going opinion is this is in fact a recommended way to use the HELOC. Does that make sense? Seems like it can be but it is also what got a lot of folks in "deep" back when the market went south.

Thoughts?

Thank you.