Trouble getting an equity loan with a paid off house?

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  1. #1
    VaderM5 is offline Junior Member
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    Default Trouble getting an equity loan with a paid off house?

    I'm having problems getting an equity loan because my house is paid off?

    I talked to a few lenders and they do not want to give me a home equity loan due to the fact that I have no mortgage. They want to instead give me a home equity line of credit, which I have no interest in.

    Anyone know of any other options for me?

    I'm looking to pull out about $80-$100K in equity. Are there any other lending options out there?

  2. #2
    DialM's Avatar
    DialM is offline Senior Member
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    Uhhh, what? Why don't you just get a mortgage loan? A home equity loan is just a mortgage in 2nd position. And why not get a HELOC? Once you draw on it, it is essentially the same as regular mortgage. You really own a home? Amazing.

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    VaderM5 is offline Junior Member
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    I'm not sure I can get a mortgage loan on a home that's owned? I'm not interested in a HELOC because the interest rate is not fixed.

    Yes I really do own a home. Extremely fortunate (and grateful) to be in this financial situation. Looking to do smart things with my equity and purchase an income property and make some minor home improvements.

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    Not sure what bank you use but if they're strictly a business bank such as the one that I am with, they don't want to go through all the RESPA requirements and therefor only do lines of credit.

    For a loan, they would refer you off to any home mortgage company. Although you owe nothing, it would be considered a cash out refinance and have a higher rate than what you hear on the radio.

    Why do you necessarily need a loan? If you know exactly what you'll be using the money for then I would agree but if you think you'll be able to pay off early, you might save on interest expense by having it in line of credit form.
    Don't argue with idiots...they will just bring you down to their level then beat you with experience!

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    DialM's Avatar
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    Bank of America will do an all-cash-out refi loan (it is considered a refinance even if there is no current debt). And many HELOC's can be fixed (albeit at a rate that is higher than a typical 1st mortgage rate).

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    VaderM5 is offline Junior Member
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    Just playing it safe. Don't want to go under the assumption that I will pay it off before the term is up (although I have every intention on doing so). Just want to be smart about borrowing a large amount of money when my home is on the line.

    I will look into the options that you have mentioned, thank you guys!

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    Along the lines of this, I was in a similar situation to this not too long ago. I own my home outright and wanted a home equity loan to fund another venture. I had a local bank tell me they wouldn't do it (mind you the finances were more than within their threshold, my credit score is over 820, and I had enough in reserves to cover at least 6 months of payments) because......"sir, your house was a foreclosure. I'm sorry but we do not lend on foreclosed homes. (I) Wait! My home is NOT a foreclosure, I have owned the home for almost 2 years. Yes it was foreclosed upon on the previous owner about 2 1/2-3 years prior to all this. But that has NOTHING to do with RIGHT now! (Banker) Yes but if a home was foreclosed on in the past, we cannot lend on it. (Me) So what you are telling me is that if a home at ANY point in its past, I'm talking since it was built in the 1960's, you will not lend on it. (Banker) Correct. (Me) Well in that case you can't/won't lend on about 80% of the homes in this area!

    Good luck my friend

  8. #8
    s2k's Avatar
    s2k
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    Very very strange, these banks after taking are money, gee
    Yes, money does grow on trees, you just need the right fertilizer

    “Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.” -Calvin Coolidge, 1872 – 1933, 30th U.S. President


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