Can I apply for home equity loan while house is listed for sale?

No....lenders will not make loans on property listed for sale.

If you need to get a loan remove your home from the market and then apply for the loan. In the past I've seen lenders refuse to make a loan on a property just a couple of days before the 2nd trust deed closing, when the lender discovered that the property in up for sale.

You would be hard pressed to find a lender who will refinance your mortgage or give you a home equity loan on a home that is currently for sale. While lenders have different policies on the subject, a lender is going to be cautious about lending money on a property that you don't plan on owning in the near future because that property is how they guarantee that they're money will be returned to them. Some lenders go beyond even this and refuse to refinance or give a home equity loan for a set period of time after a home has been up for sale. That means that even if you take your home off of the market, you may not be able to get a loan until that period of time is up.

Some borrowers may be worried about having to pay high monthly payments with a new loan, but that doesn't have to be the case when refinancing or securing a home equity loan before you sell your house. Since in theory you will be making back all of the money you borrowed from the increased value of your home, many borrowers take out an interest only loan before selling. That way they only pay the interest on the loan for a couple of months before the house sells, and they can pay the entire loan back at time of sale. This saves the owners from having to pay several high monthly payments before the sale of their house.

No lender will issue a home equity loan if your home was even listed for for sale in the last twelve months (typically that is the time frame), let alone if it's currently for sale. No way, no how.

The terms of the home equity loan are that you have placed a lien on the house. You can not sell your house to another person untill all the liens are payed. The best method is to convert the debt to a personal loan.

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RE :Can I apply for home equity loan while house is listed for sale?

In MD area, is it possible to apply for home equity loan while house is listed for sale? I am trying to purchase a land/lot, but need home equity loan for downpayment. I know loan guidelines have been pretty tight recently. If my house is sold, home equity would obviously be paid off from the proceeds. Thanks

Update: Thanks for all replies. Since loan is secured by the property.. won't they get their money once property is sold !! what am I missing here ??

Follow 8 answers

no chance at all. What you need is a bridge loan from your bank. They will want to see the sales agreement on your home to obtain it

I doubt it. I have seen sellers take it off market until loan is obtained. Then re list it.

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