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HELOC vs Home Equity is one better?

Discussion in 'Credit Talk' started by hockeymom, Mar 12, 2003.

  1. Mar 12, 2003 #1
    hockeymom

    hockeymom Well-Known Member

    Looking for some opinions on getting a Equity Line vs lump sum equity.

    I did do a search but the info is a bit scattered about.

    Here's what I'm wondering:

    1. What kind of scores are they looking for? In other words is one easier to get than the other?

    2. How do these typically report to the CRA's and is tone more likely to affect your score more negatively?

    3. I am interested in getting some equity out to do some updates and repairs to my home as I would like to put it on the market this summer. How will this affect my pre-approval for my new home, if at all?

    My current scores are listed as the bottom and I have a couple of things in dispute on both TU and EXP. I won't be doing anything until I get the outcomes of those disputes. I am hoping they will boost my scores the high 600's like my EQ.

    I do have a BK7 discharged in 4/96 showing on all 3 reports. One paid chargeoff from 10/99 and my current mortgage. No other open TL's. Othe negatives are some 90 day lates on a mortgage from 7/01.

    Any input would be appreciated.
     
  3. Mar 12, 2003 #2
    Nestea

    Nestea Well-Known Member

    if you get a H.E.L.O.C. , make sure its reported as a "real estate loan" or "installment"

    if it will report as "revolving", then when you max it out it looks bad...
     
  4. Mar 12, 2003 #3
    hockeymom

    hockeymom Well-Known Member

    Nestea

    How do you just ask the lender how they report it to the CRA's?
     
  5. Mar 12, 2003 #4
    Nestea

    Nestea Well-Known Member

  6. Mar 12, 2003 #5
    hockeymom

    hockeymom Well-Known Member

    Thanks Nestea. I did read this one yesterday when I did my search.

    Like you said, it didn't really answer the question though.
     
  7. Mar 12, 2003 #6
    Why Chat

    Why Chat Well-Known Member

    If you have a specific sum budgeted for your repairs, you are probably better off with a fixed equity loan,rather than a HELOC which is considered (and is) a revolving account and is repoted the same as a cc, although some people have been able to get it reported as a revolving account secured by real estate.

    In addition,if you keep the funds in a special account in the bank, you would be able to make sure that any repairs you did were properly done, with subs signing off etc.This would give you the documentation you would need when you go to sell the house.
     
  8. Mar 14, 2003 #7
    hockeymom

    hockeymom Well-Known Member

    Thanks Why Chat.

    I was thinking this was the way to go, just to be on the safe side. It sounds like a HELOC could potentially be more negative if I were to utilize the full loan amount as it would appear that I had maxed it out, thus screwing up my utilization.

    I think I got that right. But feel free to correct me if I'm wrong! ;)
     
  9. Mar 15, 2003 #8
    IncomeHelp

    IncomeHelp Well-Known Member

    If you get a HELOC, that is reported as revolving, but only use 25% does that look good?
     

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