Tulsa, OK · Member since 2017 · 11 posts · 0 votes
I have a question about getting a HELOC loan. Is there any restrictions as to what I can get a HELOC for? I want to get cash via a HELOC to buy stock. Before I go through the process, can this be done?
Investor · San Francisco, CA · Member since 2017 · 303 posts · 327 votes
8y
1. To get a HELOC, you have to own real estate. This is a must.
2. Your real estate has to be able to appraise for high enough over any currently outstanding debt(s) on/against it (that is called your “equity.”) That equity typically needs to be 20% (maybe 25% - this depends on whether this is your primary residence, condo, etc., and varies by lender) over the total debt - including the planned HELOC maximum.
3. Once approved, you should get a checkbook. You can also withdraw cash directly from a teller. You may be able to do a wire.
4. Assuming you have (1) and (2), why would you want to risk investing in the stock market when it is at its historic peak? This is your choice, of course.
5. If you have a “sure bet,” please PM, Gordon Gekko.
Tulsa, OK · Member since 2017 · 11 posts · 0 votes
8y
Can you get a HELOC loan for that though? I guess that is my question. Or can you only get a HELOC loan for your house, car, etc. Can i get a HELOC and have money put into my checking account?
A h.e.l.o.c stand for home equity line of credit. You can get a heloc using your house's equity ($$$) as a loan to yourself. You can use it for anything you want. Once you use it then you have to pay yourself back with interest.
Tulsa, OK · Member since 2017 · 11 posts · 0 votes
8y
Once you get approved for the amount, $15,000 for example, do they write you a check, or is it like a credit card, or do they give you checks to write attached to the HELOC account?
Whichever bank you decide to get HELOC, they recommend you get a checking account. Plus, if open checking account, will reduce rate by .25 or whatever your bank decides. With the checking account, you can transfer amount up to approved amount to this account. it happens in minutes and can use funds within a day.
Investor · San Francisco, CA · Member since 2017 · 303 posts · 327 votes
8y
1. To get a HELOC, you have to own real estate. This is a must.
2. Your real estate has to be able to appraise for high enough over any currently outstanding debt(s) on/against it (that is called your “equity.”) That equity typically needs to be 20% (maybe 25% - this depends on whether this is your primary residence, condo, etc., and varies by lender) over the total debt - including the planned HELOC maximum.
3. Once approved, you should get a checkbook. You can also withdraw cash directly from a teller. You may be able to do a wire.
4. Assuming you have (1) and (2), why would you want to risk investing in the stock market when it is at its historic peak? This is your choice, of course.
5. If you have a “sure bet,” please PM, Gordon Gekko.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
8y
@Adam Houser To answer your original question, individual banks can and do have their own rules about what HELOC funds can be used for. I've had banks tell me they don't allow HELOCs to be used for things like new businesses, educational purposes, etc. I've never had one tell me they don't allow them to be used for stock purchases, but I wouldn't be surprised if there's a bank out there that has a rule like that.
It may not make sense to most people, but it's the bank's money so they get to make the rules. But the good thing is that the rules are just specific to that particular bank. So if one bank won't allow a HELOC to be used for the purpose you want, simply try another bank.
Once you actually are approved for a HELOC and the line is open, there's very little/no control over how/what that money is used for. Typically you can withdraw the funds in a number of ways (i.e. online transfer, checkbook and/or Visa card attached to the account, etc).
Tulsa, OK · Member since 2017 · 11 posts · 0 votes
8y
Ok great, thanks. Any idea if the bank (I plan on using a “popular one”) having a withdraw limit, ie $15,000 limit, but can only use 3,500 at a time. If no limit, could I in theory use the 15,000 all at once?
HELOC, you have to pay bank back with interest. Rate usually tied to prime plus .50 to 1.5 depending on your qualifications. At least tax deductible.
You pay yourself back on loan from your 401k.
Terry
Using a 401k is another option but no experience with. When using a 401k you need to look at penalties and income tax I believe. This could cost you more. All my 401k is tied up to where I can't take a loan on it.
Akron, OH · Member since 2015 · 178 posts · 189 votes
8y
I am not trying to be mean with this comment (only helpful and funny), but with the type of questions you are asking, you shouldn't be undertaking this in any way, shape, or form.
HELOC, you have to pay bank back with interest. Rate usually tied to prime plus .50 to 1.5 depending on your qualifications. At least tax deductible.
You pay yourself back on loan from your 401k.
Terry
Using a 401k is another option but no experience with. When using a 401k you need to look at penalties and income tax I believe. This could cost you more. All my 401k is tied up to where I can't take a loan on it.
There is no penalty or tax assessment on a 401k loan (not in my experience with both residential and general 401k loans). Withdrawal, on the other hand... I agree with Terry, though, make sure you understand the consequences of whatever your action plan is.
I have a HELOC with BoK that I can draw against via online transfers to my checking if I need it right away. BoK had some pretty good deals on HELOCs, so I went with them. 80% LTV, but you can do 100% (obviously going to cost a lot more in interest).
Miramar, FL · Member since 2017 · 10 posts · 1 vote
8y
To add to your question, why are banks hesitant in approving a HELOC if they know you're going to use it to invest in stocks, use for a down payment for rental property, etc., but it's ok to use it to acquire bad debt or pay off other debts?