OK to use Home Equity credit line for down payment?
I've got about $3k in equity in my current house. Instead of a mortgage, I have a Home Equity Line of Credit, with roughly $160k available for withdrawal. I'd like to move to a new place. My plan would be to find a new home (in the $400k range), withdraw roughly $100k from the HELOC as the down payment, and get a traditional mortgage. After finding the new place, I'd put my current place on the market, and pay down a substantial part of the new mortgage when the old house is sold. Is there anything fundamentally flawed with this plan?Is there a better way to do this, without going through major hoops? by pegren_861_463 from Wilburton, Oklahoma. Sep 6th 2011
Nick Utesch (nick@valoansok.com)
#2 ranked lender in Oklahoma - 22 contributions
I think this is a fine idea. As a matter of fact, we may have an option that is of great interest to you and that is called a "Recast Option". This allows you to make a principal reduction after closing (as long as it is at least 10% of your loan amount--for example if you owe $150k, you'd have to make a reduction of at least $15k) and then we can re-cast or re-ammortize your payments based on the new balance. So if you paid your balance down from $150k to $100k 1 year after closing on a 30 year note, we could re-calculate your new payment based off of $100k on a 29 year term which will give you a lower minimum payment amount.If you're interested in exploring this further, please feel free to contact me at405.308.4208.Thank you!Nick UteschProgressive Financialwww.loanwave.com
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