“Using Your HELOC as a Down Payment”
Hi Joe, I know I should know this answer, but not sure. I have a colleague at the bank that is purchasing a second home which will be her primary residence. Can she access her existing HELOC on her current home and use the funds as the down payment on her new home?
Of course you can use a home equity line of credit as a down payment on a second home, as long as you understand that the monthly payments for the use of these funds are included into the debt ratio.
One more caveat, some lenders may require that the monthly payment for the HELOC be fully indexed. What does that mean? If the current rate is 3.5% and based on an adjustable rate but can go up to let’s say 10% then that is the rate that will be used for qualifying purposes.
Fortunately many of the lenders that I use will allow me to use the 3.5%.
Subscribe to my blog via Email:
Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.
Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.