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What is the reasoning why I can't get a home equity loan on a home I have for sale?

10 months ago we put our home on the market,we signed a six month contract, they advertised and we had a couple of bites,then when that contract was up we signed another 6 month contract that was 4 months ago,we have not heard from them since and have noticed they are not advertising our home anywhere. We don't pay the realtor anything until the house is sold and then he gets a comisssion. We recently decided to go get a home equity line of credit loan on the home to pay off some bils and start our new home and thought we could rent it out. We do not have a mortgage on the home we own it free and clear I was told as long as a house is on the market we cannot get a home equity loan! After it is off the market we can apply and then put it back on the market! This is crazy that we own 2 homes with over 300 acres with no mortgage on any of it. And I can't even get a loan the way I would like? Please advise I don't know the reasoning behind the madness!
Thank you!
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August 05 2013 - Idabel
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Thank you both for your answers,they really helped. I just did not understand the reasoning behind it since when the house sold we would pay the loan completely off.
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August 05 2013
Lenders want to be sure that they are giving loans to a house that the borrower plans to have in the near future. They also need to be cautious when giving out loans because supplying a loan for a house on the market is not entirely a safe bet.

Also, it still may be hard to find a home equity loan even if you take the house off the market. This is because some lenders may refuse to refinance or give a home equity loan until a set period of time after the home has been up for sale.

I hope this helps but if you have any other questions about mortgages or lending, feel free to contact me through my profile page!

Good Luck!
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August 05 2013
Think of it this way, If your home is on the market to sell why would a bank give you a loan against a property that you may not be at any more? The loan doesn't follow you if you sell the property, it stays with the property.

Same goes with a conventional loan, I cannot lock in a rate for a refinance if a property is on the market to be sold either. Why would an investor give money to someone that won't be at the property anymore.

I think what you need to look into is a personal loan. Not a loan that is against your property.

Hope that helps.
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August 05 2013
 
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What is the reasoning why I can't get a home equity loan on a home I have for sale?
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August 05 2013 | 3 answers
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