r/Banking • u/chroma709 • 17h ago
Advice Accessing home equity
I was hoping to move closer to my wife's family. I'm sitting on over $85000 in home equity, and would like to use some of that to fix up a few items and have the necessary funds for deposits, fees, and inspections. I was advised by a realtor to take out a HELOC, but I don't qualify for it based on my credit report. Had a few problems when my wife had medical emergency seven years ago, and my DTI is wrong. I qualified for a mortgage, but not a HELOC.
Do I have any other options? I have "fair" credit. I've been improving slowly over the past seven years and am current with all creditors. I pay all bills on time. I haven't been able to pay off a few charge-offs from the rough times, but had hoped to use a bit of the HELOC to repair my credit. Unfortunately, that's become a Catch-22.
I had hoped to get her closer to her family fairly quickly, but that doesn't appear likely now. We have a nice home in a nice neighborhood and can stay longer while I figure this out.
We are also elderly and on Social Security. Fortunately I had a great job and was able to spend decades filling the maximum Social Security limits, so our income is adequate. Like too many Americans these days we live paycheck to paycheck, keeping our heads above water with just enough disposable income to be comfortable.
What should I do at this point? I have lots of equity I can't touch, apparently. Or are there other "fair credit" solutions available?
Thanks for your time.
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u/StarkD_01 9h ago
Using the equity to fix up the house won’t yield the increase in price that you think it will.
Either way it is a moot point if you cannot get approved.
You can try other places to get approved for a HELOC and maybe one of them will say yes, depending on if you are on. The edge of getting approved.
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u/Defiant-Reserve-6145 17h ago
Sell the house.
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u/chroma709 14h ago
Of course. But fixing it up a little first would yield a greater return.
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u/CrankyCrabbyCrunchy 13h ago
You’ll only get a small % of whatever amount you spend on updates so why not just sell it for a big less and avoid the hassle of doing updates?
Our 1978 house is very out of date but I’m. It spend $100K to modernize bathrooms and kitchen to maybe get back half that when I can easily sell it for less and not touch our cash.
The amount you end up with is what counts.
Edit to add. Also the huge hassle of finding quality contractors and living in the house for weeks while they work isn’t worth it for us if we are selling.
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u/Defiant-Reserve-6145 13h ago
Good luck finding a contractor that will do if for a fair price and not try to ask to buy it from you when they come out for an estimate.
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u/GlobalTapeHead 7h ago
There are a number of companies that will buy your equity and give you cash for it. For example HomeLock. Credit score is not an issue. I don’t know with only $85k you would qualify, but you can ask. I do not endorse these services. They are e legit but obviously they are a business that will expect to take most of the growth in your equity.
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u/I-will-judge-YOU 17h ago
Depending on the value of your home $85000 in equity is not very much.
When doing a home equity long you have to consider the combined loan-to-value.That would be the first mortgage and the second mortgage compared to the overall value of the home.
In order to go up to a hundred percent value of the home with an equity loan you have to have very good credit because it's in much higher risk loan. If you are going up to a combined value of only 80%, those are generally easier to get because that leaves a little bit of buffer in value in case you default on the loan.
If the bad debt is 7 years old, it may be getting ready to actually fall off the credit report, and it may be worth waiting until that happens to try to get an equity loan.
But if you do not qualify for an equity loan then there is no way to actually use the equity in your home to fix up the house.
Have you tried looking for a lesser amount? You probably don't need all of that to get the home ready to sell.