HELOC is taking too long--what to do?

22 years ago

We're cutting it close; we applied for the HELOC in early December, and had lots of forms to send in, etc. (it's a co-op apartment, so there's a third business entity in the transaction). Then the lawyer collecting the material said "we don't have the UCC-1 form" when she did, and "the proprietary lease info is not complete" when it was.

The loan is at the underwriter's, first chance to close it is Tuesday, first chance to withdraw funds is (if I'm remembering right off the top of my head) Wed or Thurs due to the waiting period.

Construction starts Monday, though, and we need to be able to write a check for a huge chunk of the final payment then. Plus, we're paying for the remainder of the cabinets tomorrow (we already paid half down out of savings). We paid for appliances out of savings.

We'd hoped to do this whole thing off the HELOC, and leave the savings untouched. But at this point, there won't be much left to cover w/ the HELOC.

We *have* the money in savings, but we didn't want to deplete it, which this nearly will (my DH is working from home so he's not bringing in much, and his comfort level requires a sizable savings account). We paid off the mortgage a year or two ago, and were hoping to just use the mortgage-payment part of cash flow to pay off the HELOC at .75% above prime.

So, do we just deplete the savings account?

Do we pay our savings account back out of the HELOC?

Do we use the credit-card checks to cover the gap--use them to pay the contractor & cabinets, and then pay off the credit card bill in a week and a half w/ the HELOC checks?

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Comments (7)

joyfulguy
22 years ago
Will the bank or credit union be willing to make a short-term loan?

joyful
talley_sue_nyc
Original Author
22 years ago
the paperwork would take longer than the HELOC coming through will. We're talking days here, not weeks or months.

I have the credit-card checks available if I need a short-term loan. I'll be able to pay them off before they even come due.
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Steve, Are you maxing out on your HELOC, or is there more available on it? I assume that it's based on the value of your home. If the value of your home increases, perhaps you can arrange some increase in limit. Which might not be adviseable, as a number of knowledgeable analysts believe that current house prices in at least several areas of the U.S. are much too high - some are using the term, "bubble". Could a rather drastic revision in your area be in the cards? If it decreases, no doubt your lender will be reducing the maximum that you can draw. Which will quite likely include that, should your maximum reduce to below what you've drawn, the lender will want to see some immediate money. You haven't said anything about whether, in the ordinary course of things, you are planning to have the "credit" card balance paid off by the deadline on the 0% rate. Or whether, going into emergency saving mode, you could manage to do so - or about how willing you (and your family?) might be to alter your current lifestyle so drastically. I assume that the (currently non-existent) interest on the "credit" card debt isn't deductible. What are the chances that you could roll the credit card debt into another 0% program sometime between now and the deadline? I assume also that you have committed to adding not another cent to that balance owing between now and then. I feel rather uncomfortable with your suggestion that you are looking at " ... throwing around ... " what appears to many of us a substantial amount of money, namely $5,000. Do you frequently " ... throw (money) around ... "? Not that that is any of my business, whatsoevr. But for a number of years as a personal financial advisor I sought to convince my clients to use money wisely - making it work for them, rather than someone else. Just my $0.02. ole joyful
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Think of it this way... I complete a simple online credit app. It asks my income, I report $100, The credit report then shows my total loans as $50,000, with my monthly payments as $200. The lender or the computer says no good, they owe more than they make. I have no problem getting a loan with a full app that asks for my complete financial statement showing all assets and liabilities, but a simple credit app doesn't ask that. I just applied online for a new airline CC, it told me it needed to review me, but I did get it a week later. My point is, the credit report only tell so someone you pay your bills, it doesn't give much of a financial picture. Someone reviewing my report doesn't know what my $1mil loan attaches to, is the property worth $600k or $6mil? Do I receive $6k or $600k in gross income from that property?
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cmarlin20,why is it fortunate you closed your heloc's? I don't understand...If my bank reduced my heloc,it really wouldn't phase me at all, as i have never used it Really, the only reason I think it is fortunate that I closed it then is because now that many have been lowered, I'm glad I wasn't counting on it for any reason. My first one was low for several years. I got it to use as a down to buy another house, when I sold it and moved back to my original home, I paid it off. Now that I've sold another property I have cash so I doubt I'd need a HELOC anytime soon. As Dave said, I like having them... just in case. They never cost me anything to get, they are good insurance. My $200k HELOC was at the limit the whole time I had it, so they wouldn't reduce my "unused amount". It was great until the end, then the rate went up quite a bit. But it gave me cash to make a very good property investment. I agree with Dave, credit used wisely is a good thing.
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joyfulguy
22 years ago
If you can come up with the money within a month, so that you can pay the heavy balance on the card, in full ... you're laughing, aren't you?

Which of your suppliers accept the card?

If a builder doesn't, better pay your cash on hand to him, so you can write that person a cheque.

Pay retailers, suppliers, of product, etc. by card - for if you write cheques to them, and have to write one for the builder as well, you'll need to use the card to get a cash advance - on which you must pay interest from the day of the loan.

Good luck - hope all works out well for you,

joyful guy
talley_sue_nyc
Original Author
22 years ago
nobody who's left accepts a card--it's all checks or cash from here on out, and both of us prefer checks.

it just seems silly to replenish savings from the HELOC.
janetwilson
22 years ago
Consider the savings withdrawal as a loan that you will pay back w/the funds from the HELOC, rather than the view that you are taking out a HELOC just to put into savings. I think it's just how you view the transaction. Most credit cards charge a fee to use cash advance checks - using savings would avoid any fee you might be charged.
joyfulguy
22 years ago
Hi again, TS,

What rate of return are you making on your savings?

Probably peanuts.

What rate will you have to pay on the HELOC?

What difference is there?

If you draw down your savings, is it the type of instrument on which you'll be forced to suffer a penalty when you liquidate it? Including commission to seller, etc.

If the difference in rates is substantial, it may seem wise to liquidate.

What prospect do you have that you may need some emergency money in the next while? Could you find the money elsewhere, if necessary?

Should you choose to liquidate the savings and do without the HELOC, do you have the self-discipline to reinvest the money regularly into savings that you would have been paying on the HELOC?

If you can, your savings will be replaced sooner that had you been paying a higher interest rate on the HELOC - for you'll have that difference in pocket.

Further - the interest earned on the savings would likely have been taxable but you might not have been able to deduct the interest paid on the HELOC.

Good wishes as you proceed with your plans,

joyful
talley_sue_nyc
Original Author
22 years ago
The savings is easily tappable.

I'm thinking, the prospect that we may need the emergency money is sort of low, and if we needed it, we *could* tap the HELOC. They don't really care what you do w/ that money, right? So the HELOC can become our "safety net" until we build the savings ack up.

I've pretty much decided that we'll pull the first $9,000 (payable Monday) from savings, the remaining $9,000 from the HELOC (payable in two stages, a week from now, and a week after that, upon completion). Then we'll have two loans--one from savings, one from the HELOC, to pay back.

I think I can be organized enough to do that.

HELOC is taking too long--what to do?

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joyfulguy

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HELOC is taking too long--what to do?

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