Opening a HELOC (before or after initiating mortgage for 2nd property?)

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Prov227
Posts: 77
Joined: Thu Apr 03, 2014 11:13 pm
Location: Milwaukee, WI

Opening a HELOC (before or after initiating mortgage for 2nd property?)

Post by Prov227 »

Background information...
- Primary residence valued at $500K, paid off / no mortgage
- Cash on hand of $100K
- Purchasing land for $300K using most of $100K cash + mortgage for remaining $200K
- Not selling primary residence for ~1 year

Thought it might be nice to offset the depleted cash position by having a HELOC available. Any thoughts on trying to accomplish opening a HELOC before the land purchase vs waiting until after?

Thank you!
"...and the borrower is slave to the lender." -Proverbs 22:7
obgraham
Posts: 1618
Joined: Mon Jan 28, 2013 6:30 pm

Re: Opening a HELOC (before or after initiating mortgage for 2nd property?)

Post by obgraham »

I'd want the Heloc in place and ready before you needed it.
And you might get better terms for it listing your financial position before the new purchase. You only have to tell them your financial information as of the time of application, not what you "might do in the future".

I maintain a Heloc as my emergency fund. Used it a couple of times, and used it to buy vehicles, etc.
Topic Author
Prov227
Posts: 77
Joined: Thu Apr 03, 2014 11:13 pm
Location: Milwaukee, WI

Re: Opening a HELOC (before or after initiating mortgage for 2nd property?)

Post by Prov227 »

Thanks for the input. Somewhat unexpectedly, ended up under contract for property purchase the day after my initial post, with short closing period (28 days), so don't think I'll even try to do anything with a HELOC prior to the property deal going through. Guess I'll just have to reevaluate and see what's possible with opening a HELOC after that mortgage is in place.
"...and the borrower is slave to the lender." -Proverbs 22:7
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