The Too-Good-to-Be-True Home Equity Loan

When is a home equity line of credit (“HELOC”) — offered at a 2.99%, six month teaser rate — too good to be true?

shot clockWhen, four months after the would-be Borrower first applied for the loan, the very big (and very overwhelmed) national lender still hasn’t approved it.

Ticking Clock

Usually, HELOC’s aren’t time-sensitive, because the borrower already owns the home.

However, in this case, the Borrower needed the funds for the downpayment on their upcoming home purchase.*

With the closing less than one week away and the HELOC still not approved, the Buyer called Edina Mortgage’s Steve Mohabir.

Steve immediately found another lender — Prime Security Bank in Shakopee — who approved an expedited HELOC, which the Buyer promptly tapped for their downpayment, and proceeded to close on time.

Elapsed time from loan application to release of funds:  5 business days.

Way to go, Steve!

*The Buyer chose to buy their new home first, then sell their current home — what Realtors call “buying non-contingent.”

Sellers overwhelmingly prefer that — some won’t even consider selling Contingent — but that can mean the Buyer needs to access the equity in their current home.

Bridge loans used to be one way to do that; now, apparently, HELOC’s are the only game in town.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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