Is it possible to HELOC a down payment?

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buylowsellhigh_IHB

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Forgive me if the question sounds kind of dumb. But I'm wondering if its possible to draw the down payment $$ out of your home or at least use that equity as some sort of collateral for another loan? I've always been a renter so I missed out on the free money :D :D j/k.



Loan brokers and bankers have so far proved fruitless as I search around for business loans. Apparently a wad of cash sitting in the bank doesn't count as well as the same cash sitting as equity in the form of a down payment. Business equipment/inventory/AR's as collateral are discounted like crazy so that wouldn't work :(



Any ideas?
 
I'm not sure I understand the questions. Cash is cash. I don't know why a wad of cash would be frowned upon in this economy.



You can do whatever you want with your HELOC money. Think of it as withdrawing cash from your credit card only instead of going bankrupt when you can't pay it you'll just lose your house.



I have an aquaintance that took out 75K from his HELOC and put it right into the bank. They are paying a mortgage on a second house with it. Robbing Peter to pay Paul and of course it will end up badly.



If you're a renter currently and don't own a house the whole question (for you personally) is moot. If you could get a HELOC you'd already own the house!
 
[quote author="buylowsellhigh" date=1243759226]Say, if i put 100k on a 400k property as a down payment, can i HELOC all of it out or is it stuck in there?</blockquote>


It depends. You may have put $100,000 down on a $400,000 property and have no equity at all. To have equity, the house must be worth more than the mortgage. The amount you put down is not relevant. If the house has declined in value, that downpayment may be gone.



Assuming you have equity in the property, getting a home equity loan is not as easy as it used to be because the banks have lost so much money on HELOCs that they are not writing many of these loans, and they probably will not until prices stabilize.
 
[quote author="buylowsellhigh" date=1243759226]Say, if i put 100k on a 400k property as a down payment, can i HELOC all of it out or is it stuck in there?</blockquote>


So basically, you are saying that you want a 0 down loan, right?
 
[quote author="IrvineRenter" date=1243761315][quote author="buylowsellhigh" date=1243759226]Say, if i put 100k on a 400k property as a down payment, can i HELOC all of it out or is it stuck in there?</blockquote>


It depends. You may have put $100,000 down on a $400,000 property and have no equity at all. To have equity, the house must be worth more than the mortgage. The amount you put down is not relevant. If the house has declined in value, that downpayment may be gone.



Assuming you have equity in the property, getting a home equity loan is not as easy as it used to be because the banks have lost so much money on HELOCs that they are not writing many of these loans, and they probably will not until prices stabilize.</blockquote>


So basically, the $100k is considered equity, and I guess it will be up to the bank to see if they are willing to empty out that equity. Do banks/lenders publish information as to what they will and will not do? Seems like the lending world is not very straightforward...
 
[quote author="tmare" date=1243761571][quote author="buylowsellhigh" date=1243759226]Say, if i put 100k on a 400k property as a down payment, can i HELOC all of it out or is it stuck in there?</blockquote>


So basically, you are saying that you want a 0 down loan, right?</blockquote>


I guess it would end up being 0 down if i can pull the equity out. But garbage mortgage isn't exactly what I had in mind. ;)



Banks are so retarded these days... I tried borrowing $100k with a 740 fico and 0 personal and 0 business debt, secured towards business assets (AR/inventory) and they denied due to the fact that there are no real estate.



Since the $100k is for cash flow to fulfill open orders, I couldn't not have it... So I applied for (and was approved for) about $75k worth of credit cards. Balance transferred most of it out and fulfilled the orders. And now, with the principal + profit collected, I'm deciding whether I want to pay the cards back or not... (they are all at 0-5% APR). I've read of so many stories where CC companies are shutting down unused credit lines, and with this new CC law, I'm not so sure. I took a 50 point hit to the fico, but at least I didn't lose customers/orders thanks to the bank.



So, instead of these passive aggressive ways of dealing with the banks, i'd rather do something more "straightforward" and perhaps acceptable... i.e. property investment + line.... money out when needed, money in when its not, etc.
 
[quote author="buylowsellhigh" date=1243874220]



Banks are so retarded these days... I tried borrowing $100k with a 740 fico and 0 personal and 0 business debt, secured towards business assets (AR/inventory) and they denied due to the fact that there are no real estate.

</blockquote>


Banks are into lending money on businesses that are conventional and don't need the money. If you have an unconventional business that needs money, well, via con dios Senor. There is a checklist on the loan application for certain business loans that requires collateralization from property. The bank needs something to put a lein against, in this case, they want a piece of real estate. If you ran a trucking company, they might take a lein against your trucks. Maybe not.



I realize the situation is retarded, but does this answer the question why you couldn't do what you wanted?



[quote author="buylowsellhigh" date=1243874220] So I applied for (and was approved for) about $75k worth of credit cards. Balance transferred most of it out and fulfilled the orders. And now, with the principal + profit collected, I'm deciding whether I want to pay the cards back or not... (they are all at 0-5% APR)..</blockquote>


Sometimes you have to do what you have to do. In this case, I'd absolutely pay the credit cards back immediately - with great urgency. They likely won't close them, but there's no guarentee the bank won't call in your operating line for no reason and without warning either. I haven't seen that happen en masse since 1985 and the S&L crisis, but there has been more than a little reporting of this happening lately.
 
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