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Real Estate Home Mortgages/DTI calculation for a mortgage



First: Thanks for answering questions on all experts.

I'm obtaining a mortgage to buy a second house.  I'm well through the loan process.  The bank has now come and said I need to close my HELOC account -- an account that has no balance or history of use.  Their reasoning is that the HELOC would drive the DTI way up and so it should be closed.  Is this the usual process?  I don't see how a HELOC is different from the 10 credit cards I have that total a line of credit more than my HELOC.  Also, if closing a HELOC is not a usual thing to ask during a loan process, what should my response to the bank be?



Unfortunately, that is a common requirement. The bank wants to be sure you use your own funds for the down payment, rather than borrow the necessary funds from your HELOC.

Some banks show some leniency, and instead of requiring you to close the account they will ask you to surrender to them the HELOC checkbook and credit cards, which they return to you after the closing. Ask your lender if that option is available.

Best wishes,

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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

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Eric Forster


Did your last mortgage broker or lender trick you into a messy situation which could cost you your home? I've been close to 30 years in the mortgage industry, and I've seen it all. Believe me, it is not pretty. As the owner of a mortgage company I am called frequently to testify as an expert witness in mortgage fraud cases and other cases where lenders did not fully disclose the terms of the loans they were offering to the borrowers. I have seen fraud being committed by borrowers - and by lenders. It's a tough world out there. And by the way - you are invited to visit my website,


More than 25 years in loan production and underwriting in Southern California.

Mortgage Bankers of America (Southern California Chapter)

Former columnist for AOL Financial Center and the author of a mortgage primer.

MBA (Finance)

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