How soon after I buy a Home can I get a Home Equity Line of Credit?

How soon after I purchase my home can I get a home equity line of credit?
asked Dec 17, 2012 in Mortgages by answernest

1 Answer

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A home equity line of credit can provide you with enough cash to payoff debts, make home improvements, or pay college expenses. Of course, to qualify for a home equity line of credit, you need sufficient equity. After buying a new home, many people wait at least six months to one year before applying for a home equity line of credit.
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This gives the property time to appreciate, wherein the borrower can qualify for a higher dollar amount. Some home lenders adhere to guidelines that limit a property owner's ability to acquire a second mortgage or refinance for a specific timeframe. On the other hand, many lenders will approve a home equity line of credit one day after closing on a home loan.

It takes time for a property to gain equity. Thus, a home equity line of credit immediately following a home purchase will only benefit borrowers who put down a sizeable payment, and those who purchased their home "below costs." New construction homes appreciate quickly, and a homeowner can see their property value increase by $10,000 or more within a few months. In these instances, buyers receive instant equity, which qualifies them for a home equity line of credit.

answered Dec 17, 2012 by answernest