Is there some sort of regulation that addresses what Home Equity Lines of Credit must and must not be used for (such as commercial purposes) or is the only criteria that it should be secured by residential real estate? Along the same lines is there any regulations against setting up a HELOC and using the funds to construct or purchase the residence securing the loan instead of using a construction to to perm loan? Could someone atleast point me in the right direction as far as this topic goes?
A bank may have priced its HELOC loans for consumer borrowers with consumer-purposes. For this reason, there could be some banks which have internal policies that don't allow HELOCs to be used business or other purposes.
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And where is Superman when I need him?
Quote: So if a HELOC were used for commercial purposes, no disclosures would be required, right?
If the primary purpose of the HELOC is for business purposes it is exempt from the provisions of Reg. Z. Even if the line may be occasionally used for consumer purposes.
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The opinions expressed are mine and they are not to be taken as legal advice.
How would you use a HELOC to construct a dwelling which secures the HELOC? I guess you could assign a limit based on the land value, but not necessarily on the finished dwelling value.
Thanks everyone. I agree, flood and an appraisal notice would be required regardless, but I was more unsure of Reg Z disclosures such as the HELOC disclosure and R of R. Thanks again.
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Me, Type A? Maybe - I'm not done analyzing it yet.