Things really are crazy now for sure- I am the one who posted before out my HELOC getting frozen right in the middle of my major house renovation. I decided to contact another bank for a new HELOC, and at the same time went down the path with my existing bank providing a new appraisel. Before we did our renovation, we had two realtors come to our home to advise us on what houses were selling for in like size, condition to ours, and what they thought the renovation might add. They both replied with a number that was very close to each other, assuming that things do not change too much (we live in a very desirable part of town, that did not get the huge run up on prices and no big drops lately). Then, the appraisor gave us another number, about 20% lower than the realtors but high enough to continue our HELOC if our original bank actually wants to do so. Then, the new bank denied us a HELOC, stating that their compturized valuation came in too low- It was so low it was laughable- it was almost half lower than our actual appraisel. Now, I understand being conservative, but that is ridiculous. I almost wonder it they had the wrong house. As by chance, on the same day the county sent us our new assessment, which went up by 10% of course. At this point, our contractor has to be paid and the original bank is taking forever to review our new appraisel and I am about done with the whole thing. We are very fortunate in that I am going to be able to sell enough stock to cover what we owe, but it was not what I planned when I started this whole thing, and I hate putting so much more cash into the house. Even with the HELOC, we would have been at 80% LTV, and now we will be more like 60%. We don't plan to sell for at least 10 years, so at least I can enjoy my investment :)

Roxyl, we are doing this now (closing next month) - we will not draw the money out until closing. Our house is not going on the market until we close - but our mortgage broker said that was not an issue (we are not on the market now). There is a prepayment penalty with ours if we pay off in less than 3 yrs of $500. What our broker recommended is that if we pay it off (we plan to when we sell our house) then he advised us not "close out" the line of credit (leave it open) - that way it is free for the first year, second year charge is $75, third year is $75 - total $150 vs the $500 charge if we call them to officially close the loan off their books. After that the HELOC closes automatically after 3 yrs unless we extend the term. Good question about how the open HELOC would affect credit (even if the balance is $0) - thank you - I will ask our broker that in the morning!!

I'm confused. Why would you triple debt yourself as in a HELOC, loan and mortgage AND not have enough to pay off your existing mortgage when you will have approx 120K equity in the new home? To me, the logical thing to do is to put less down on the new home, pay off the HELOC and have enough to take to the closing table. Then you won't have to take out the third loan or have to pay extra when your current home sells. The lender will look at your debt to income ratio and the fact you will be unemployed will play into their decision. Since you will be unemployed, you're taking a huge risk. I really don't understand your logic in this situation. Perhaps I'm missing something?

Yes. You can do a mortgage. Other questions for you to consider... Do you fill out a FAFSA for your college children's financial aid? How does a mortgage help (it will help, or be zero, will not be a negative) on the FAFSA? Are you or your children taking out loans to pay for some of college? What are the loan rates? Higher than the mortgage rate? (probably) Would it be better to finance college with a mortgage than with student and/or parent loans? (maybe--look at interest rates) Do you have money available to you at a lower rate than a mortgage? (probably not). You can refinance your house to any value up to 80% of your home's bank-appraised value. You can choose to pay back most of that loan immediately, if you wanted. Or, you could wait to pay it all off after your children are through with college. I think you have many options, since you are so relatively debt-free.