Answer:
Yes, a HELOC can be used to purchase a home. Per HELOC rules, repeated transactions (draws) must be contemplated to qualify for the special HELOC rules and disclosures. You will need a right of rescission for the potential future transaction; the initial transaction for purchase is exempt from ROR.
From the commentary:
15(f) Exempt transactions.
1. Residential mortgage transaction. Although residential mortgage transactions would seldom be made on bona fide open-end credit plans (under which repeated transactions must be reasonably contemplated), an advance on an open-end plan could be for a down payment for the purchase of a dwelling that would then secure the remainder of the line. In such a case, only the particular advance for the down payment would be exempt from the rescission right.
First published on BankersOnline.com 7/19/10
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