HELOC's or similar products - how soon after buying a house and other questions

[doodlebugger]

I know I am putting the cart before the horse, but I am trying to get some ideas on how things might work if we do get the house we are trying to buy. The house was appraised last year at $137k, and we are getting the house for $105,000. We need to update the kitchen, and we want to consolidate some of our debt (too many small payments, plus we want to close some of the subprime products). I don't know anything about HELOCs or similar products. We would likely use Navy Fed because dh has an unsecured loan with them that he would like to consolidate, and because we have read they can do up to 95% LTV. How would they appraise the house or determine the value? How soon after closing could we do this? Would it be likely for them to do this if we have an unsecured loan that will be rolled into it? Are there fees/closing costs involved? Is this going to hurt our credit so soon after getting the mortgage? The updates on the kitchen will likely only cost $4,000. The rest of the money would go towards consolidating debt. When we get our tax refund, the bulk of that would be thrown at the HELOC/whatever too. This year is about getting our credit cleaned up, getting our finances under better control, and getting rid of some of the old accounts that we got when we first filed bankruptcy over 7 years ago. I'm just thinking about everything, and will have a bit more income next year likely, so I want to consider all the options.

[robjane58]

I don't know about Navy but it seems most banks use the lower of the purchase price or appraisal until after 12 months of the purchase. We closed in February on new construction and put 15% down on a conventional loan. We recently borrowed 40K from Compass Bank on a home improvement loan for a swimming pool. Compass did an appraisal which was 37k more than our purchase price in February and they still used the purchase price, since it was lower, for the claculations to see how much we could borrow.

[doodlebugger]

Thanks for the reply robjane58. That is interesting, but good to know too. If they use the purchase price, then there won't be any equity to borrow in our situation since our purchase price is a lot lower than the appraisal price. I'm thinking it wouldn't be a HELOC, but we would probably apply for an equity loan instead. I don't know......just thinking out loud here.

[robjane58]

Thanks for the reply robjane58. That is interesting, but good to know too. If they use the purchase price, then there won't be any equity to borrow in our situation since our purchase price is a lot lower than the appraisal price. I'm thinking it wouldn't be a HELOC, but we would probably apply for an equity loan instead. I don't know......just thinking out loud here.

 

 

We did find some credit unions in our area that used the assessed value from the tax appraisal district for their calculations but that didn't work out in our case. If the house you're buying is appraised by the tax district for more than the purchase price then it may work for you. As hard as you've worked on getting your house I bet you'll find something, even if it's not the full amount you want.

[cputrwz]

Navy federal told me I had to wait at least 6 months from the purchase but advised me that I should wait at least a year because of the purchase price vs. appraisal thing.

[doodlebugger]

cputrwz, thanks for letting me know that. Will probably have to approach this in a different way then. As soon as we are living in the new house, I will start working on everything else. Just have to get past this first. Was just brainstorming.