Question: I am selling my home this year. We will buy a condo, and intend to use our current home equity line of credit to fund the condo’s deposit. Does the home equity line of credit need to be paid off before we sell?
Answer: Your home equity line of credit will be paid off from your sale proceeds. No need to dig into your pocket to pay it off early. Here is a tip, though:
Use the line of credit as you desire, but be careful as to timing. Your line of credit’s draw period will stay open until a payoff statement is requested. When the lender gets a payoff request, it will freeze your ability to draw money from the line of credit. Most times, a payoff request will be made 2-4 weeks prior to your sale closing.
If you are concerned with tight timing, draw from the line of credit early. This will avoid any freezing problems.