Home Buying in Los Angeles>Question Details

Clair Liu, Home Buyer in Los Angeles, CA

Does a statement showing credit available on a HELOC qualify as verfication of funds for a 100% cash offer?

Asked by Clair Liu, Los Angeles, CA Thu Jan 21, 2010

I'm using equity from one home to buy an investment property. Does the HELOC qualify for cash offer?

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Answers

6
Verification of funds for an all cash offer must show liquid cash, not a credit line.
1 vote Thank Flag Link Thu Jan 21, 2010
Sounds good. Who is the lender on the short sale?
Deborah Bremner
REALTOR, 00588885
Certified Short Sale Professional
Certified Home Retention Specialist
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes Thank Flag Link Sun Jan 24, 2010
Thanks for your answers! The property is a short sale offered at $240k. I'm offering at asking price. I am showing proof of funding from liquid funds of $232k, $8k from HELOC. Does that sound like a good offer?
0 votes Thank Flag Link Sun Jan 24, 2010
Jeffery is right. You need to show liquid funds. You will most likely get a counter-offer from the seller, stating that the seller wants to make sure that the funds are actual liquid funds, in order to get full acceptance on your offer. I do think that it is a good idea to make the offer with just showing the HELOC, so that if you do not get an acceptance, or at least a counter, you did not withdraw the money from your HELOC if you did not have to. Once you get the acceptance, or approval, you can liquidate your HELOC and show the seller your liquid funds.

You should write your offer by stating that you will put the liquid funds into escrow within 3 business days of acceptance of the offer, and that if the funds are not deposited with escrow by that time, then the seller has the right to back out of the agreement.

Diana Breazile
HouseTech, Inc.
0 votes Thank Flag Link Thu Jan 21, 2010
Hi Claire,
I don't know the terms of your HELOC, so I don't know if you are restricted in amount, timing, or use of funds. Please consult your loan documents.
The choice of verification of funds is, ultimately, the seller's, as to what is acceptable to them in an all cash transaction. In representing the seller, I would suggest a letter from the HELOC lender stating that the HELOC can be used to purchase the subject property, without qualifications. If the lender will accept, I am confident the seller would approve it. However, I would recommend to the seller to set a short date for you to put the funds into escrow, and perhaps an additional deposit.
Deborah Bremner
REALTOR, 00588885
Certified Short Sale Professional
Certified Home Retention Specialist
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes Thank Flag Link Thu Jan 21, 2010
Some sellers are asking for proof of funds to verify you have the ability to make the purchase. Showing a statement from an equity line with funds available might satisfy their request. Other sellers want to verify that the funds are liquid. There is no rule here. If you are making a 100% cash offer and your method for the down payment is funds that you will withdraw from an equity line it is more likely that the seller would accept this than not accept it. 100% cash offer is rare and also means that the escrow period can be shorter.
0 votes Thank Flag Link Thu Jan 21, 2010
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