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I'm refinancing my FHA to conventional loan to avoid PMI. Do i need to wait for that to be done to apply for a line of credit?

by garret189 from Quinnesec, Michigan. Oct 29th 2015 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

Yes.. you should not apply for any new credit until your refinance is completed, funded and recorded.. If you were to apply for a HELOC before the first mortgage refinance is finalized, then the lender will be obligated to add the additional debt payment to your ratios.. the problem is that because it's an open ended line of credit, the guidelines say they have to assume that the HELOC would be maxed out.. so if you're approved for $100K, but you didn't take any funds out, then your new first mortgage lender will need to calculate a payment "As If" you actually owed the additional $100K, and add that phantom payment to your debt to income ratios to see if you still qualify.. My point being, that if you do this before the first is finalized, it complicates things substantially.. you're better off waiting until your refinance is completed before applying.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Oct 29th 2015
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,106 contributions

The answer is yes. Once you are finished with your refinance, wait until your new mortgage has been recorded with the county. You can start the process on your line of credit after closing, but you do need to wait to close on it until the first has been recorded.

Oct 30th 2015
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,446 contributions

OMG yes... WAIT! The last thing you want to do is apply for any credit of any kind while in the process of a mortgage loan. Once the mortgage closes, do whatever you want.

Oct 30th 2015
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Jesse Stroup (jessestroup)
#195 ranked lender in California - 589 contributions

Yes, you need to wait until the loan has funded. You never want to open a new line of credit or charge a lot to a credit card while in the process of a purchase or refinance loan.

Oct 30th 2015
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