Real Estate Home Mortgages/Home Equity Line


My son and his wife are pre-approved by US Bank for a first time home purchase.  The home will probably be in the $300,000 range with a 20% down payment. Their credit scores are 880 or higher. As they finished the pre-approval process, their banker suggested that they use the paperwork associated with the current application process to also be approved for a $35,000 home equity line of credit at a 5.25% interest rate which is prime of 3.25% and a margin of 2.0%. He says, if done later, it would require a separate underwriting process and 6 weeks to get approval plus additional cost.

What do you think of this?  Is it a good idea? Since they don't own yet own a home and have no equity, the line of credit must be bast on what ever equity the down payment is likely to generate in a first home.  Am I missing something?  The process can be daunting enough for first time homebuyers - is this just adding an additional layer of risk?

I would recommend not getting an additional loan unless you need it at this time; and you are right the process is daunting in today's compliance climate (thank you Dodd-Frand and the CSFB). I just don't believe in getting extra credi unless there is a need.
About Real Estate Home Mortgages
This topic answers questions related to purchasing a home, owning a home, home ownership, mortgage education, mortgage applications, and mortgage needs whether buying a first home or refinancing a current loan. Issues related to home ownership, home equity, mortgage education, refinacing options, home improvment finacing, first time home loans, home equity loans, vactation home loans, and mortgages for investment homes are dealt with here also. Though not the primary focus of this topic, Home Equity Lines of Credits (HELOCS), reverse mortgages, and calculating home equity may also be asked. If you do not see your home mortgae, home finacing, or home equity question answered in this area then please ask a question here

Real Estate Home Mortgages

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Al Rodenburg


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CMPS Institute; Houston Northwest Chamber of Commerce - Committee Chair; WCR - Womens Council of Realtors; HAR - Houston Association of Realtors; Houston Northwest Business Networking Group (founder); The Woodlands Area Chamber of Commerce

Certified Mortgage Planning Specialist (CMPS Institute) ; University of Illinois - at Chicago; Florida State University; Principia College; Lake Forest School of Management; Roosevelt University; Salt Lake CC

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