Has anyone used a line of credit?

[ChefGirl]

My folks found a house that they love an put in an offer.... well they have not sold their current house and their home equity loan fell through...I can get a line of credit against our investments with relatively low rate.....i was thinking we can co-sign the purchase and once they sell their house they can pay down the line of credit.

Has anyone ever done such a thing? OR, has anyone ever used a line of credit? thanks.

[AnnieW625]

I don't think I would be comfortable doing that even for my parents. DH would say it is a big fat no. I would not want anything to happen to them before this closes because then you'd be on the hook for the line of credit.

My co worker has a line of credit tied to his house (so it is really like a HELOC) and he uses it to pay for his kids' college. Other than that I know nothing about using a line of credit.

[HannaAddict]

I would never do that, borrow against your investments, to help someone else buy a house when their credit and interim financing has fallen through. I think it is less likely that a home mortgage will be approved, even with you co-signing since you will already have a LOC outstanding and they have a failed loan attempt, and it will show up that they have applied for a home equity loan. Also, not sure what you mean about borrowing against your investments, it can be extremely dangerous depending on the type of LOC you get. Many will offer a "LOC" against your investments but in reality it is basically a margin account, if your investments go down significantly (and they can in the market with its ups and downs), you can be on the hook to pay up suddenly and/or lose a lot of $$ if you can't easily pay. (This is a very, very overly simplified laymens's version I know). I would not do it, they should figure out why their home equity line failed, or apply for true bridge financing, or get their house sold and rent while they look. Sorry, keep your assets safe.

[niccig]

Way, way too risky for me. I would help my parents out by letting them live with me, but I wouldn't risk our financial future so they can buy a house. They have options, first one being, sell the house they own and then look for new house to buy.

You may also find that co-signing purchase makes things very difficult for getting a mortgage as lender will want to know if you alone can pay mortgage if parents can't.

[hillview]

I wouldn't do that. Too much risk in the RE market IMO. Sorry!