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HELOC: solo vs joint; disadvantages vs advantages
Old 04-29-2017, 01:33 PM   #1
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HELOC: solo vs joint; disadvantages vs advantages

We just became debt free with a paid off mortgage; home worth $425K, joint ownership. Upon having our taxes done in Feb, the accountant suggested getting a HELOC so we have accessible money for some home repairs/remodel desperately needed bathroom, etc. on current home, so when we downsize in 4-6 years (or possibly sooner, our home will be ready to sell without rushing to get Ďer done. DH plans to retire around in that same timeframe putting him at 64ish. We were approved for $250K no fees HELOC, but upon going in to sign the loan papers, we found that the bank rep put DH as sole responsible signer. FYI: The larger HELOC is just in case we find a home to buy before ours sells so we have cash to put down. Luckily, we now live in an extremely desirable neighborhood where the homes have always sold in 2-3 weeks.

We generally do most things jointly. Not sure why the rep made DH sole signer other than when I filled out the paperwork, I did not include my income since itís not much and goes back into my small biz (self-employed). DH brings home the dough and I handle all finances/bills (though heís in tune with things). Upon finding out about the sole signer, we postponed closing to decide whether to keep the HELOC docs as is or have me as listed as joint owner. Both of our credit scores are over 800, btw, and we are extremely responsible to use the loan only for its intended purpose (I've heard stories of others...). My question is: Does it really matter if DH is the only signer, or is it best to have both of us on the note as owners? We were dealing with a different banker yesterday as oppose to the one who originated the loan PW, so Iíll find out next week why she did it this way. Thoughts. Thanks.
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Old 04-30-2017, 07:11 AM   #2
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I am not an attorney or tax pro but I wonder if your name isn't on the HELOC & DH had an untimely passing, what would happen?
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Old 04-30-2017, 10:06 AM   #3
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I am not an attorney or tax pro but I wonder if your name isn't on the HELOC & DH had an untimely passing, what would happen?
The bank would be well within its rights to not honor any and all draws. Both people should be on this line.
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Old 04-30-2017, 10:11 AM   #4
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Strange. "Sole signer" on all documents? If you jointly own the house, the bank should be insisting on having you sign the encumbrance on the Deed, even if your income wasn't used on the loan calculations. (Last year, we refinanced our main mortgage and the loan was figured just on my income since DW's, even though higher, wasn't needed; she still had to sign the deed of trust; otherwise, the lender wouldn't have been able to grab the property if we didn't pay.)

Bottom line, if it is set up this way, it could be a problem for the lender; it shouldn't be a problem for you unless something quirky lurks in the law of your state.

In the situation postulated by Scuba, the term of art for what would happen to the bank is that it likely would be "S*** out of luck." (IF line had been drawn on)

(And, like Scuba, I don't have particular expertise in this area, as my practice is not in this area; so take fwiw....)

Edited after seeing Brewer's post
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