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Updated about 7 years ago on . Most recent reply
Disclosing the purpose of the HELOC
I am trying to obtain a $100k HELOC on a $200k out-of-state investment property that I own free and clear to use as a down payment for a new home that I will live in. WF recently rejected my application. Some of their assumptions and math were a little screwy (for instance, they subtracted my HOA, taxes and other expenses on the property TWICE, giving me a net loss on the property).
But their rejection also seems to be based in part on the fact that I told them I wanted to use the $100k as a down payment on a $350k home. So they assigned me additional debt based on that anticipated purchase. (Here again, they screwed up the calculation by assuming I wanted a $350k mortgage as opposed to a $250k).
In any event, I have applied with a new lender who wants to know the purpose of the HELOC. Do I need to answer? Can I be vague about the money's purpose? Or should I tell them I'm seeking a lower-costing home?
Any help is much appreciated!
Most Popular Reply

You're taking out the HELOC so that your real estate investing business has the liquidity to handle anything that might come up. Not a lie or fraud, and also not over-disclosing.