ForumsFinancing Tips

Up to All Forums

This Question is Possibly Answered

1 "correct" answer available (5 pts) 2 "helpful" answers available (4 pts)

3 Replies Last post: Aug 26, 2008 1:32 PM by Milleisen

HELOC status when renting property

Aug 24, 2008 9:06 PM

merpha 2 posts since
Aug 24, 2008

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 ?

Tags: Report as inappropriate

Milleisen 129 posts since
Aug 6, 2008

1. Re: HELOC status when renting property Aug 25, 2008 9:43 AM

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.

Report as inappropriate

merpha 2 posts since
Aug 24, 2008

2. Re: HELOC status when renting property Aug 25, 2008 11:07 AM

in response to: Milleisen

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 ??

Report as inappropriate

Milleisen 129 posts since
Aug 6, 2008

3. Re: HELOC status when renting property Aug 26, 2008 1:42 PM

in response to: merpha

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.

Report as inappropriate

Bank of America, N.A. Member FDIC. Equal Housing Lender

Bank of America is not responsible for user posts and other user content appearing on this website and does not endorse or guarantee the perspectives, the advice, the users, the businesses, or the products or services sold by any users or businesses that appear on this website.

ForumsFinancing Tips

This Question is Possibly Answered

HELOC status when renting property

Aug 24, 2008 9:06 PM

More Like This

Most Recent Forum Posts

Legend