Home Equity Loan vs Line of Credit

I am a financial moron. I need pictures, videos, kindergarten-level explanations. We applied for a home equity loan to consolidate 2 smaller home equity loans and our credit card debt. We wanted to take out $110K. We have over 300K of equity in the home. We applied through the company we have our mortgage with, just to make it easy. We were told today that they can't approve the loan, b/c the interest rate would be too high for NYS. Something about a subprime test?

She said the problem isn't our credit. I asked about lowering the amount we want to take out and she then transferred me to the underwriter. The underwriter was trying to push me into a home equity line of credit, which I don't want. I asked her what the "magic number" was for the rate to be ok'd for the fixed rate home equity loan and she said she would run numbers and get back to me, which was a few hours ago.

I want to be ready with info when she calls back.
DH and I talked and figured out a way that we be ok with taking out $65K out instead of the $110k. Would that make a difference for that rate she was talking about?

A friend from work gave me the # of a mortgage broker who is a family friend of hers and whom she trusts. Should I call him too or just wait to see what the underwriter says?

Head=spinning.

Re: Home Equity Loan vs Line of Credit

Contact the other guy. The rates are low right now so I don't know what the heck they are telling you.

Re: Home Equity Loan vs Line of Credit

Yeah. You're right. I just spoke to Wells Fargo and this girl was just reading off her screen and clearly doesn't have a clue what she's talking about. She basically said that NYS regulations aren't allowing them to give home equity loans to anyone, which makes no sense. She said we have excellent credit and it was just the rate that NYS wasn't approving. So lower the rate! Still makes no sense.

I'm calling the other guy later.

Re: Home Equity Loan vs Line of Credit

The difference between a Home Equity Loan and a Home Equity Line of Credit (HELOC) is that the HELOC is more like a line of credit you might have on a checking account.

Let's say you get a $50k HELOC, you don't have to use it right away but some banks may require you do use it to some extent.
You generally don't have to use the entire amount and as you pay it back you can keep dipping into it.
A HELOC is nice when you're doing renovations because as the bills come due you dip into the HELOC.

A Home Equity Loan is used right away and as you pay it back you can't dip back into it.

I recently closed on a refi and tried to take out a HELOC but didn't have enough equity in the home.
We don't need the money but here was my thinking.
HELOC's generally have interest rates that are comparable to traditional morgages - this time around they're actually a little lower.
I wanted to have the money sitting there for use when we needed it , thereby locking in a low rate.
If the bank was going to require that I use it I would have used it to their minimum requirements just to keep the HELOC in place.

I would defintily recommend the HELOC because IMO it's much more flexible - if you or your husband has the financial discipline to use it well.
In your case, since you are talking about using it to pay off high interest cards - it sounds like the better option.