HELOC vs Home Equity Loan

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by a searcher from University of Phoenix
in Tampa, FL, USA

2yrs ago

HELOC vs Home Equity Loan

Hey SF Family,

I can find tons of content on SearchFunder for using a HELOC to help with with raising capital for the down payment if using the SBA 7a. I have yet to see anyone bring up a Home Equity Loan as the rates tend to be lower. Are they the same thing? What am I missing?

*Note, I am not using it to avoid a PG, just strictly for a cash withdrawal as I am trying to minimize investor cash. Thanks as always!

- Israel

1 Like

239 Views

reply by an intermediary 2yrs ago
from Wake Forest University in Winston-Salem, NC, USA

Thanks ^redacted‌. Can you also comment on any seasoning and secondary source of repayment requirements of obtaining part of the down payment with a HELOC or HEL? Seems like those have changed in the last year or so.

reply by a lender 2yrs ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

If you are using the home equity loan as your down payment the funds do not need to be seasoned. We have gotten transactions approved where the home equity was not even approved yet and did not get approved and closed until shortly before closing.

The secondary source of repayment requirement went away with the updated SBA Standard Operating Procedure. They just need to prove you will have the cash flow from either other sources or the salary you will take from the business will support this debt along with your other debt obligations. Please let me know if you have any additional questions.