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Old 01-15-2009, 07:24 PM
 
77 posts, read 245,977 times
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We are in the process of selling our home and buying another. We are shopping around for mortgage rates currently. I was wondering if a home equity loan that we have on our current home that is on the market will effect our credit rate when the mortgage companies check them? We have plenty of equity in our home.
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Old 01-15-2009, 09:08 PM
 
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Your "debt to income" ratio will be based on the amount you owe OUTSIDE of your mortgage amount. Technically HELOC is a 2nd mortgage. If you truly do have "plenty of equity" and sell for more than you owe the existing mortgages will be settled and your equity will be yours to apply to a downpayment on your new house, or pocket if you are downsizing...

Your FICO can be excellent with a HELOC or lousy -- all depends on your total credit picture.
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Old 01-16-2009, 06:21 AM
 
77 posts, read 245,977 times
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So it sounds like the second mortgage does not effect the scoring. It is all of the other outside debt that is the problem. We should be in good shape then. I was just worried because we owe around 70,000 on our second mortgage. That would be a big hit if it was counted. Thanks!
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