HELOC HELOC where do I get the Right HELOC?

Question

So, I was about to do a HELOC and Refi with my Companies Credit Union, but there are stipulations on what the HELOC can be used for, I was told, "you cant use the HELOC to buy a business or another home." Can anyone suggest where I should look for a HELOC that will allow me to use the funds to purchase another home? Not sure if it matters, but I live in Washington State. Any suggestions would be much appreciated!

Zach Bosson · Answer

Most HELOCs don't have restrictions on the use of the funds. I personally have a number of HELOCs on my properties, and as a lender with access to dozen of investor's HELOCs I can say none of them restrict the use of the HELOC, or even require a cash out letter of explanation.

Credit Unions write their own rules! They're lending their own assets and the majority of the time holding the note rather than securitizing it in the market. That can lead to odd quirks, sometimes good deals, and sometimes long and arduous processes, it just all depends.

I will share a story - one Credit Union was offering such attractive HELOC terms that Auto Dealerships caught on to it. Ended up funnelling a bunch of traffic to this particular Credit Union who accidentally ended up financing automobiles via home equity, not exactly the risk profile they had sought out!

Feel free to reach out - with access to a wide array of lenders we have the best products available.

Wesley W. · Answer

Wow.  I've never actually seen a HELOC where the bank restricts what you can use the money for.  It's collateralized with the equity in your home; it's not really their place to say, in my opinion.  I would do business with another lender that appreciates your business.

Jaysen Medhurst · Answer

Yeah, keep shopping, @Devin Cutler.

Kyle J. · Answer

@Devin Cutler I've had lenders tell me the funds cannot be used for things like "business purposes", "educational uses", and "new property purchases". Since each lender can make up their own rules with HELOCs, there's no way to know what a particular lender will or won’t allow unless you ask them. But it’s better to ask them up front (like you did) before you waste your time applying if it’s not going to be for an approved use.

Also, if you’re just not sure what you’ll do with the funds, you can always say the purposes is “for cash reserves”. That usually seems to work.

Rose Jones · Answer

Thanks @Kerry Baird - Vacaville is within drivable distance, I am going to see if they will take me since my brother is retired military.

Kerry Baird · Answer

@Rose Jones, if you haven’t already, take a look at Navy FCU.  They have high loan amounts and a very long draw period and long pay back period.

Rose Jones · Answer

@Kerry Baird - I am going to try to get a Heloc through PenFed - wish me luck.

Kerry Baird · Answer

I've used PenFed, which was really a great product for an owner occupant.

Jaysen Medhurst · Answer

I would clarify with the CU, @Devin Cutler. You're looking to buy an investment property, not a "home." "Home" suggests it will be for personal use. You still may get stuck by the "business" clause, though. Just look around at other local banks and CUs.

HELOC HELOC where do I get the Right HELOC?

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