||Ask Dr. Don
Changing houses and keeping
Dear Dr. Don,
Can a person with a home equity line for overdraft protection move
that line when selling their current home and buying a new home?
I want to buy a different house because I have fallen
down the stairs here twice, the radon gas is just enough to bother
me (whereas it wouldn't bother anyone else), and my ex-boyfriend
keeps stalking me. So I want to switch the second mortgage to the
new house. Can I do that and how to I get the bank to work with
me on this?
When you sell your existing home all loans have to be paid off at
closing, including your home equity line of credit. That's because
it's your equity in the home that secures the credit line. If you
are just using the HELOC for overdraft protection, you shouldn't
have much, if any, balance on that line.
You'll then use some or all of the cash proceeds from
the sale as the down payment on your new home. The down payment
is your equity in the new property. You can take out a new HELOC
based on the equity created by your down payment. The lender's loan-underwriting
standards will limit the size of the available credit line.
Alternately, you could put some of the money into
savings and link the savings account to your checking account as
your line of protection against overdrafts. This approach lets you
avoid the closing costs associated with a new HELOC. Although closing
costs for HELOCs are often in the hundreds vs. the thousands paid
when closing on a new first mortgage, if the goal is overdraft protection,
then having the money sitting in a savings account beats spending
the money in closing costs.
Recognize that moving may not stop your ex-boyfriend
from stalking you. The National
Center for Victims of Crime's Stalking Resource Center can help
and provides information on stalking laws in your state.
Your state or local government may have laws that
require buyers or sellers to test for the presence of radon and
take steps to mitigate its presence in the home prior to sale. If
you know radon is a problem in your home, you're obligated to disclose
it when selling your home. Talk with a real estate agent in your area about
what's required in your community.
Since you're going to have to disclose and possibly
control your home's radon problem before you sell the house, you
should consider fixing the problem now. Learn more Myths
and Facts about radon on the EPA Indoor Air Quality site. Your
myth is that levels that bother you won't bother someone else. Radon
is colorless, odorless and tasteless. Long-term exposure is linked
to increased risk of lung cancer, especially in people who smoke.
-- Posted: Jan. 14, 2003