My question involves real estate located in the State of: Massachusetts
Good evening everyone,
Here is the situation: My wife and I jointly own a single-family house and wanted to buy another one in the same town. Since we had large down payment, it was suggested to us that we take home equity on the primary home, and purchase the second combining the equity with cash. So, we went into a bank, explained our plans to an assistant branch manager and a mortgage loan officer, and they suggested we apply for HELOAN. The application has been in processing for 4 weeks: the bank pulled credit reports, obtained appraisals, even hired closing law firm. A week ago I got a request from underwriters to explain the purpose of the loan. I went back to the branch and with the "help" of the loan officer and the manager drafted a note stating the purpose (which was purchasing another home). A few days later I received a phone call from underwriters saying that the application was denied because "the bank is not interested in giving us this loan to purchase another home." The underwriter said that we can apply fresh for another type of loan (i.e. mortgage or bridge) if we wanted. The proposed closing for another house is in 5 days. The seller (and agents) are aware of the loan outcome.
I feel that we were misguided by the bank officers. There was definitely no need to process the application for 4 weeks, all the way up to closing only to tell us at the very end that the bank does not like the purpose, which the bank knew from day 1. So, here are the questions. Suppose a seller grants an extension and allows us another shot at a loan.
1) Is it against the law to use home equity to purchase another property? Are we (unknowingly) trying to break any rules? The loan officer says that underwriters were unhappy because they realized the bank would make too little profit. Is that a good reason for loan denial? Or do they even need to provide a reason for denial? They were also concerned that we will move into another home, sell the 1-st one right away and pay off the loan. This is also very misleading, because our actions were largely motivated by attempt to invest large amount of cash in rapidly growing real estate, and there were no plans to move right away.
2) Is it wise in this situation to apply for a HELOAN with another lender? I think it is not, because any lender will see a record of denied HELOAN. Will a lender be able to tell me upfront if they will grant a HELOAN for our purpose (despite a denial)?
3) Is there any way to appeal the decision? (or consider the loan re-evaluated)
Thanks.
Good evening everyone,
Here is the situation: My wife and I jointly own a single-family house and wanted to buy another one in the same town. Since we had large down payment, it was suggested to us that we take home equity on the primary home, and purchase the second combining the equity with cash. So, we went into a bank, explained our plans to an assistant branch manager and a mortgage loan officer, and they suggested we apply for HELOAN. The application has been in processing for 4 weeks: the bank pulled credit reports, obtained appraisals, even hired closing law firm. A week ago I got a request from underwriters to explain the purpose of the loan. I went back to the branch and with the "help" of the loan officer and the manager drafted a note stating the purpose (which was purchasing another home). A few days later I received a phone call from underwriters saying that the application was denied because "the bank is not interested in giving us this loan to purchase another home." The underwriter said that we can apply fresh for another type of loan (i.e. mortgage or bridge) if we wanted. The proposed closing for another house is in 5 days. The seller (and agents) are aware of the loan outcome.
I feel that we were misguided by the bank officers. There was definitely no need to process the application for 4 weeks, all the way up to closing only to tell us at the very end that the bank does not like the purpose, which the bank knew from day 1. So, here are the questions. Suppose a seller grants an extension and allows us another shot at a loan.
1) Is it against the law to use home equity to purchase another property? Are we (unknowingly) trying to break any rules? The loan officer says that underwriters were unhappy because they realized the bank would make too little profit. Is that a good reason for loan denial? Or do they even need to provide a reason for denial? They were also concerned that we will move into another home, sell the 1-st one right away and pay off the loan. This is also very misleading, because our actions were largely motivated by attempt to invest large amount of cash in rapidly growing real estate, and there were no plans to move right away.
2) Is it wise in this situation to apply for a HELOAN with another lender? I think it is not, because any lender will see a record of denied HELOAN. Will a lender be able to tell me upfront if they will grant a HELOAN for our purpose (despite a denial)?
3) Is there any way to appeal the decision? (or consider the loan re-evaluated)
Thanks.
Buying Another Home by Using Home Equity on the Primary
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