Denied HELOC

I am fuming right now. My husband and I recently applied for a $25K home equity line of credit so we could do some improvements without having to drain our savings account completely, as well as so we don't have to touch that money at all.

We went this route (line of credit) because we didn't want to take out a loan all at once because the interest rates are twice as high, and we wanted to pay the $$$$ back quicker as we completed one project at a time (not have a lump sum at once with interest multiplying).

In any event, my mortgage company called and said we are being denied. She said we both have excellent credit, and our combined income is around 6 figures (we also don't have debt except my student loans and our mortgage of course).

She said the reason we are being denied is SOLELY because of the housing market right now.......our house is appraised at well over $100K LESS than what we bought it for 2 years ago.

I guess I am sharing this to vent, and also to let this be a "lesson" for those of you who are dying to become homeowners. Many homes today are going to need work and upgrades, which is what we want to do (i.e. new kitchen, new living room, move around some windows, move the front door, new siding).

She did recommend that I meet with a local branch to discuss what our other options could be so we don't have to take all this money out of our savings account.

Anyone gone through something similar? What are your suggestions?

Re: Denied HELOC

Are you doing the work yourselves? Home depot has a loan program that you dont have to make a payment for the 1st six months - but obviously you have to buy everything from them.

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Yup. DH is self-employed IN construction so he plans to do everything himself or use his friends in the "business" if needed for something like plumbing or electric.

I will check it out. Thanks for the tip! He lives in that place.

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But that makes sense......if your home appriased for 100K LESS than what you paid for it, how would you take out an Equity line of credit if there is no equity in the home?

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Message edited 3/19/2010 4:07:56 PM.

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I GET that is what is going on. Does anyone have any suggestions or advice though who bought within the past couple of years and are now dealing with this?

My ILs home in Seaford has also been appraised at $200K less than what it is worth.

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this is why DH and I had to hold off over a year on buying a home, bc you need an extra 50-60 K to renovate, on top of dropping all the $ for a down payment

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This is just another reason Long Island living is not looking great to me. I so understand why so many people pack up and head North or South.

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Posted by mzsocialworker1

This is just another reason Long Island living is not looking great to me. I so understand why so many people pack up and head North or South.

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as long as you hvae good credit, get a home depot cc.

My husband and I both have very high limits, and you get 10% off when you sign up for the card and always get 10% off coupons in the mail. plus its usually 0% for a certain amount of time.

I would sign up for a card, buy some materials, and when you need more have your husband get one so you can get the 10% off again.

and Beth is right - its not just LI its everywhere. I have friends in south fl and their houses are worth 50% less

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Thanks ladies, I'm just venting. I guess I should consider ourselves fortunate because we probably will be some of the lucky few to eventually see an increase again.

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It is definitely frustrating, but what can you do? It's just the way things are now. We DO have equity in our house and great credit, etc., etc., and I'm sure we still wouldn't get a HELOC due to the market.
As much as I want to reside my house desperately, I can live with the shingles for a few more years. It's been a blessing in disguise for us because we've only done renovations we can pay for in cash, so we've accrued no debt working on the house. Sure it's a slower process, but in the end, it'll all get done.
When I think how long it took my parents to redo our house growing up, I feel we're pretty lucky because we've almost done our entire house from top to bottom in two years and we're definitely not swimming in extra cash, just did a lot ourselves and saved up for it.

Re: Denied HELOC

Posted by prncsslehcar

It is definitely frustrating, but what can you do? It's just the way things are now. We DO have equity in our house and great credit, etc., etc., and I'm sure we still wouldn't get a HELOC due to the market.
As much as I want to reside my house desperately, I can live with the shingles for a few more years. It's been a blessing in disguise for us because we've only done renovations we can pay for in cash, so we've accrued no debt working on the house. Sure it's a slower process, but in the end, it'll all get done.
When I think how long it took my parents to redo our house growing up, I feel we're pretty lucky because we've almost done our entire house from top to bottom in two years and we're definitely not swimming in extra cash, just did a lot ourselves and saved up for it.

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Quick question: Our house appraised $60,000 more then our purchase price and since then its value has gone up since we renovated a lot of the house. Would we be able to get a HELOC? I gotta look it up and see if its for us (not this year maybe next year when we clear up some debt incurred from remodeling)

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That stinks - maybe you can get a smaller personal loan from your bank and do smaller renovations over time??

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Posted by staceyums81

That stinks - maybe you can get a smaller personal loan from your bank and do smaller renovations over time??