My wife and I have a HELOC that I will be using to pay for some of the down payment on a house. We got the HELOC about 3 years ago and since then the value of our home has gone up quite a bit. So my question is can I ask the current lender if I can have the house revaluated and get access to more money in the HELOC or will it have to be paid completely down before I attempt this? Thanks
@Sean Harris Hello Mr. Harris pending on the state and lending institution yes it can be done in my state of Connecticut I had to do a new application and a new process but it's worth it if you A balance on the old HELOC when you receive the new HELOC amount then they will pay off the balance from the new HELOC and then you'll receive the difference well worth it Hope this helps
@Sean Harris I'm no expert but I think a cash out refi is your best bet. I believe a HELOC is used towards your DTI when applying for a loan.
I owed about 50k on various things (cars/cc/loans) and I used a cash out refi to pay everything off and drop my interest rate. My monthly mortgage payment stayed the same and I got rid of all my debt.
@Sean Harris If it was 3 years ago, you'll need to reapply. They'll need to complete a fresh appraisal (possibly desktop) and also qualify you for the additional access to equity.
@Rambob Ramos Both Cash-Outs and Helocs count towards your DTI. Helocs typically hurt DTI less, as they're just interest only payments, so it's a lower monthly minimum payment. Along with that, you only show (and pay for) what's drawn on Helocs.
I'm a big proponent of a very specialized 1st position Heloc that's tied to a Zero Balance sweep checking account. With that ZBA, all regular banking deposits/idle funds are automatically swept to the balance of your line every night at midnight. So all my regular deposits work much harder than they would in any "high-yield" savings account, tax free. Along with that, there's a 30 year draw period for equity, lower interest rate caps, and more staying power with it sitting in 1st position.