Reapplying for a HELOC

[rynlee]

Hello,

One year ago I applied for a HELOC and was denied. The reason given was "income insufficient for amount of credit requested". Since then, I've earned a bit more income, though I also have more debt (in a mortgage). From a credit score perspective, I'm trying to sort how long I should wait before re-applying? I could also apply for less. Thoughts?

[lakpr]

If one full year has passed by (including the date), then you are free to reapply. Before applying though, it helps to know your credit score.

There are plenty of credit cards (Discover card and Chase cards) that will provide you the credit score free of charge. You don't really need to pay for it.

[ResearchMed]

Hello,

One year ago I applied for a HELOC and was denied. The reason given was "income insufficient for amount of credit requested". Since then, I've earned a bit more income, though I also have more debt (in a mortgage). From a credit score perspective, I'm trying to sort how long I should wait before re-applying? I could also apply for less. Thoughts?

Also do a quick calculation of your debt-to-income ratio, and compare it to what it was when you were denied, given that you now have more income, but more debt as well.

RM

[Limoncello402]

For what it's worth, I just got one from Alliant, no closing costs and all done online. They were very efficient and the whole thing took about 1.5 weeks.

[rynlee]

In reviewing the application, does the bank care how much equity I have in the property? In other words, all other factors being equal, do I have a better shot of being accepted for the HELOC if I take it out on the property (of the two) with more equity?

[Oddball]

You have a primary residence and what is the other property? Vacation home or rental will likely have a higher APR than a primary residence for a HELOC. What was your debt to income % last year? Banks are looking at lower than ~50% now, was a bit higher before covid.

If you are running up against a debt to income issue, than it likely doesn't matter what property you use as the overall amount you can borrow will be below an 80% LTV (or whatever % you are hoping for). So the % equity doesn't matter, it is the dollar value of the free equity.