HELOC Reason for Funds?

[Ray D.]

My bank is processing my HELOC request and asked me what the money would be used for. I told them another investment property and they started asking for the information on the property I was going to purchase.

Since I would need to know how much I can get from the HELOC before choosing a property I cannot provide them with this info. Instead they want me to write a letter stating that I would NOT be using the HELOC money for the property and need it as emergency funds instead.

In your experience does it matter what the money is used for with a HELOC? I don't want to write a letter stating I will not use the money for a property and a few weeks later do the opposite. 

Thoughts?

Ray D.

[Daria B.]

@Ray D.

Hi-

I got a HELOC last Nov-2015 from a local bank - Regions Bank.

It was on my primary and at no time did they ask for any information on a "potential" investment property for which I was going to use it for.

In my case, I could have also gotten the HELOC on one of my investment properties and they would have processed it the same.

You should talk to other banks. They may have a policy that it only be used for non-investment use. 

I talked to a lot of my local banks and none of them asked for that kind of information or said they required a written letter that I would not use it for investment property.

What they should be doing is getting your assets and liabilities to determine debt ratio - not dictate what you will use the money for.

Good luck...