We had two borrowers this week have to drain every penny of their substantial stashes of liquid funds in order to make their offers more competitive. Large down payments of course allow us to push files through underwriting faster, and they often make appraised value (and appraisals) a non-issue.
Maximizing Homebuying Power with a Large Down Payment
We reminded both borrowers they would easily qualify for Home Equity Lines of Credit (HELOCs) after close of escrow. These HELOCs are a great way to re-establish lost liquidity.
Using a HELOC to Restore Liquidity After Closing
Our lending sources will grant HELOCs up to 85% or 90% “combined loan to value.” One of our borrowers mentioned above, who could end up putting down over $350,000, could easily re-borrow over $150,000 with a HELOC shortly after close.
