Think of it this way... I complete a simple online credit app. It asks my income, I report $100, The credit report then shows my total loans as $50,000, with my monthly payments as $200. The lender or the computer says no good, they owe more than they make. I have no problem getting a loan with a full app that asks for my complete financial statement showing all assets and liabilities, but a simple credit app doesn't ask that. I just applied online for a new airline CC, it told me it needed to review me, but I did get it a week later. My point is, the credit report only tell so someone you pay your bills, it doesn't give much of a financial picture. Someone reviewing my report doesn't know what my $1mil loan attaches to, is the property worth $600k or $6mil? Do I receive $6k or $600k in gross income from that property?

Do you have an emergency fund? If you have a major auto repair, need to replace furnace, suffer substantial illness (possibly including being off work for a period), etc., do you have a cushion of funds that you can tap into in order to keep operational (without sweating blood)? It may be easier to initiate one when things are going smoothly than when your ship of state may be enduring choppy seas in future. Do you have family members who may have need of funds ... or adult kids who may come back home (boomerang kid), etc. How secure is your employment situation? If you should be laid off, especially if it appears to be pretty well permanently, no doubt a lender will be much less inclined to open such a Line of Credit than now when things are going smoothly. Should such happen even with a HELOC in place, when they learn of your loss of employment, they may be unwilling to let you use it, but there's a much slimmer possibility of that than if you didn't have it and went in to try to set one up at that time. As jkom51 says, a major deterrent would be if there's a fee to initiate such a Line of Credit, or an inactivity fee once it's established. Although as a personal financial advisor I've recommended to many that they have several months' worth of employment income available for short term use in case of emergency, I don't like earning interest, as usually the principal can't grow, the only "growth", interest that it will provide is now, the interest is taxed, and in Canada at top rate, while dividends on Canadian stocks used to carry a much lower tax liability level, which was reduced even further recently. So I often have only a small amount of near-cash readily available, and have a couple of credit cards (one with minimal credit limit that I use for online purchases, etc.) that I can use when an emergency crops up. Then I draw on my line of credit (that I've held for about ten years, with no initiation fee and no inactivity fee, that lies there most of the time unused) to pay off the credit card balance in full just prior to the due date, to avoid their high interest rates. Then I try to pay down the line of credit rather quickly, especially as most emergencies won't be related to a tax deductible issue. I will only use a credit card or other loan to purchase consumer goods in very unusual circumstance ... but I may choose to borrow to invest in a capital good, especially of a kind that I expect to grow or make money for me on an ongoing basis, especially if there's a prospect that the rate may grow, over time. If you have a mind to, you may use the L O C to purchase capital goods, such as stocks. I've said for a time that I could borrow for about 6% (three or four years ago) and just about break even, so it makes it more attractive now that interest rate is recently under 3%. As my purchase of investment with the intention of making profit makes the interest paid deductible, that reduces my 6% to about 4.5% after-tax cost, and if I use the loan to purchase shares of a fairly solid Canadian bank, or utility, e.g. pipeline, paying about 3% dividend, which, after tax, leaves about 2.5% in my hand, that reduces the net cost of the loan to about 2%. If you put $10,000. into the bank 15 years ago, they'd pay you rent on the money in the meantime, and if you went to collect it now, they'd give you exactly $10,000. ... that'll buy much fewer goods now than it would have 15 years ago - you got burned by inflation. If I'd borrowed that $10,000., and paid only rent on the money throughout, and went in to pay off the loan now, I'd pay the bank exactly the $10,000. that I'd borrowed ... that'd buy less now ... so I gained due to inflation. When I sold mutual funds for a brief period back in '84, some folks, especially seniors, told me gleefully how they'd earned 19% on Canada Savings Bonds back in '81. I said that the amount added to their bank book looked nice ... but that they had to pay tax at top rate on that interest income, which at 25% would take their after-tax return down to just under 15% ... ... and did they know what the rate of inflation was back in '81? Most didn't ... how about 12%? They found it hard to believe that they'd only really earned about 2 - 3% on their invested asset, earning interest, at that time. Good wishes for making a decision that you'll be pleased with, over 1, 2 and 3 years ... and up to 10 or so, if you have a mind to. ole joyful

Zanna 3, On my LOC, fully secured by stocks and mutual funds, the rate they quoted a while ago was 6.25%, but the Bank of Canada put their rate up 1/4 point the other day, so it's likely 6.5% now. I haven't used it for some time. Haven't shopped around for competitive offer, either, as I don't plan to use it soon. Do they charge you set-up and/or appraisal fees, or a fee if you let it sit unused for a period? They haven't me. I don't mind borrowing for purposes of investment that I feel has a good posibility of increasing my assets, when I think that conditions warrant. But I rarely borrow for consumer goods or activities, as it seems to me that suggests that I'm living beyond my means. I don't like contracting to pay next year for stuff that I wanted this year but couldn't afford to buy using current income. That makes a double whammy on next year's income, for I have to pay for stuff that I ate this year. Plus I have to pay the guy who owned the money for the privilege of using his, for a while. I claim that I can borrow to invest in quality stocks (or some other assets) for, frequently, almost no net cost. Good wishes as you find more effective ways to manage your money. ole joyful

The industry standard is that residential loan officers are salary paid. Commercial and large construction loan officers usually do get commissions based on production. If a loan officer has "inflated" an appraisal that is grounds for immediate dismissal for cause. Remember that the real estate is collateral for the loan. It is not in the lender's best interest to inflate value. Residential appraisals are often done by computer models today. But, they are up-to-date with current local comps and amazingly accurate. If somebody has a HELCO appraisal from six months ago and their property is not worth what the appraisal says...well, maybe the market's declined in those past six months? Anyway, the lender's appraisals are "reputable". If someone defaults on their loan & the lender has inflated the value during the appraisal process and, thereby, given a larger loan to value than they should have...it's to the lender's loss. What's the incentive for a lender to do that? Tricia Who speaks from 15 years lending experience & a hubby who currently manages a $2.5B+ residential real estate portfolio.