Home: Message List - HELOC status when renting property

Re: HELOC status when renting property

Milleisen — Tue, 26 Aug 2008 17:32:26 GMT

In my experience, people who process insurance policies aren't looking for that sort of thing. Not to say it couln't happen, but I don't think insurance processing areas set up red flags to catch people who rent homes out. In most banks, one area has no clue what the other is doing. As long as they can check the little box that says your property is insured, I'd be surprised if anyone bothers you beyond that.

That said, I'm giving you my opinion from my experience. Technically if you use the line for a commercial use and the bank wanted to, they could doe sure freeze your line or call the loan. As long as you are paying the loan as agreed, the chances of the bank being that nasty are slim.

Re: HELOC status when renting property

merpha — Mon, 25 Aug 2008 15:07:23 GMT

Thanks for your response.

When I rent, I will change the homeowner's policy to a landlords policy since I will not be living there. The insurance company will send an updated copy to the HELOC company -- the updated copy will indicate that I am not living there anymore, correct ? Do you still think the bank won't bother me ??

Re: HELOC status when renting property

Milleisen — Mon, 25 Aug 2008 12:15:06 GMT

Very rarely will a lender close/freeze a line because you are renting the home out. Most banks don't monitor HELOCs to make sure you aren't renting the house. Once the HELOC is in place, there is really no way that the bank would know that you aren't living there. It may be written somewhere in the legal documents whether its a violation of the loan agreement, but the reality is that once the loan is closed, nobody is going to bother you as long as you continue to make payments per the agreement.

HELOC status when renting property

merpha — Mon, 25 Aug 2008 01:06:57 GMT

What happens if you open a HELOC and use the line when you live in the home but later had to rent the property out ? Will the lender close/freeze the line ?