Any recommendations for bank for home equity line at a modestly valued home?

[joshuagraham]

After 4 years of ramen noodles & Milwaukee's Beast beer (OK, not really, but metaphorically ), I'm ready to spend again! I have a home valued at about $50K, free & clear, and would like to get a home equity line of credit for about $20K. I have no other debt, as I've been paying off any CC debt as soon as I can. My income is about $13K, so I figure that I could get a loan that would max out at about $300/mo, which would be fine for me. (I also have Roth IRA conversion basis that I could tap if I were ever to get into any bind from my "prolificate" spending, to not have my house confiscated.)

However, it seems that banks only want to loan at large minimums, such as $100K, etc.

[justbroke]

There are few that will do typical mortgages under $60K, but you may be able to get a home equity line of credit (HELOC) or a home equity loan. Please realize that a HELOC is typically going to carry a higher APR than a regular equity loan. You may also be able to get a line of credit using the home as your collateral (from a Credit Union). You will need to shop around. I know that Navy Federal offers these types of loans including interest-only HELOCs with 20-year draw periods.

If you're not able to join Navy Federal, shop your local Credit Unions. You may need a mid-FICO score of 700 for HELOCs.

[LadyInTheRed]

Why do you want a loan? Instead of getting a loan that will obligate you to spend $300 a month, why not start putting $300 a month in savings and earn interest instead of paying interest? It sounds like you want to use a HELOC to raise your standard of living. That is a really bad idea!

[joshuagraham]

It sounds like you want to use a HELOC to raise your standard of living. That is a really bad idea!

A bad idea? I've been living on quite a low level since I ran out of apostles to continue juggling debt via CC balance transfers (i.e., robbing Peter to pay Paul, who got robbed to pay Andrew, who himself got robbed to pay Matthew, etc.) before my Chapter 7, and I just would like to increase my standard of living a bit for the next few years, when hopefully my IRA will be much larger, and I'll have a lot of Roth conversion basis to avoid the 10% penalty.

[justbroke]

I think that was my colleague is saying that, using a HELOC specifically to raise your standard of living, is always a bad idea. You should use your home equity for major purchases like a new roof, windows, air conditioning... things that improve the value of the home. We are speaking from our combined experiences. I used HELOCs and cash-out refinancing to amass a lot of debt before I filed. I even used it to payoff a bunch of credit cards (that had combined credit limits exceeding $100K), paid off cars only to buy new ones. It was a spiral.

The question you have to ask yourself is would you trade the roof over your head (and your single largest asset), for a nice new Xbox? Car? Sofa?

If you can answer that with yes, then you should spend your equity on those things. Otherwise, please do not base your desire to use the HELOC in the hopes that the stock market improves (to lift your IRA/Roth/Investment vehicles). I'm still waiting for interest rates on checking accounts and savings accounts to get out of the 1%-2% gutter they have been in for 8 years.

I am one who would have obtained the HELOC, but I would not and have never spent it on "luxuries" like jet skies, boats, swimming pool (although it would add some equity back), expensive trips, drugs and alchohol, gambling, private jet charters, etc. To tell you the truth, I don't know where $100K went, and what's worse, I have nothing to show for it.

[joshuagraham]

The question you have to ask yourself is would you trade the roof over your head (and your single largest asset), for a nice new Xbox? Car? Sofa?

If you can answer that with yes, then you should spend your equity on those things. Otherwise, please do not base your desire to use the HELOC in the hopes that the stock market improves (to lift your IRA/Roth/Investment vehicles). I'm still waiting for interest rates on checking accounts and savings accounts to get out of the 1%-2% gutter they have been in for 8 years.

I am one who would have obtained the HELOC, but I would not and have never spent it on "luxuries" like jet skies, boats, swimming pool (although it would add some equity back), expensive trips, drugs and alchohol, gambling, private jet charters, etc. To tell you the truth, I don't know where $100K went, and what's worse, I have nothing to show for it.

I already have the old Xbox 360, and am quite satisfied with it.

My home is so small I don't have room for a sofa.

I am keeping my car with its 155K miles until the advent of driverless cars comes about, which would, in my estimation, obviate the need for folks to own a car as taking a taxi would become as cheap as owning one and using it (if not cheaper!)

I will not be blowing it on a jet ski or boat, or gambling or private jet charters (did you really throw away your cash on THAT? Oh my! ), but the extra cash will go into the general pot of the $140 a month of microbrew quality beer I consume , and ski resort season passes and travel expenses for that.

I just want to be able to spend a few hundred bucks more a month than I do now so I don't feel poor. If I can get a $30K HELOC, that would pay for about 6-8 years of comfort that I have been denying myself.

[justbroke]

I understand completely. No, I did not spend it on private jets and jet skies, but maybe I should have and at least I'd remember where it went.

P.S. I have the old XBOX 360 as well. I bought it during my Chapter 13 as a Christmas present. I felt so guilty. I think I posted about it here on the forum.

[joshuagraham]

I understand completely. No, I did not spend it on private jets and jet skies, but maybe I should have and at least I'd remember where it went.

P.S. I have the old XBOX 360 as well. I bought it during my Chapter 13 as a Christmas present. I felt so guilty. I think I posted about it here on the forum.

I was given mine as a post-BK gift. I only play one game on it - Rock Band!

[LadyInTheRed]

Your standard of living should be based on your income, not how much you would like to spend. You should continue to live within your means. Borrowing money to increase your standard of living is always a bad idea. It's often what leads to bankruptcy. It's what led to mine! If I didn' t have the monthly debt payments (including a HELOC that paid off a large amount of credit card debt), I would have been able to save each month and quickly have enough to pay for my expensive taste in wine, a ski pass and other ski-related expenses.

Using that home equity seemed like such a great idea until the housing market crashed and I suddenly had none!

The unfortunately reallity is that buying a ski pass and going skiing enough to make the pass worth the cost is a luxury that somebody making $13,000 a year probably can't afford. $140 a month for beer is a splurge. But, if you can pay $300 a month to a HELOC, you can spend $140 a month on decent beer.

What you are proposing to do puts you at risk of running out of apostles again in the future.

[Drazil65]

After reading your post I am not so sure you would qualify for a loan of any type truthfully. Your income does not allow for much if any and with the chp 7 on your credit report that may further reduce the chance of a loan. You say your house is worth $50,000 but the bank may not find it worth that much once an appraisal is completed.

My point is although your seem to really want to do this it is not a given that you can. So maybe a backup plan would be worth a thought like bringing more income into the house so you can increase your standard of living. Good Luck!!!