Ok, so I blogged that credit was stuck on stupid and how our bank is stuck in that mode. I think I was a bit hasty. Today our bank talked to us and they told us that our mortgage was pre-approved, but that it was not a mortgage. Not a mortgage, huh? What is that?
Simply put because of our situation the bank has approved a libor + 2 credit line for 80% of the house’s value. That is sold value, not appraised value. We asked credit line? Why not a mortgage?
Here is the catch and this is interesting. It seems that with a credit line the bank is making them the lender of first choice. The idea is that we have a credit line of 80% of the house and we can pay it off however we want. And more importantly if we pay it off due to sales of our properties or other holdings we can use it up to do whatever we want, a trip, house extension, buy a new car what have you. To top it all off we are pre-approved and just have to ask for the money. No hassles no muss no fuss…
So I guess the reason why the bank was stuck on stupid in our case was to make sure everything is on the up and up. Needless to say my wife and I are giddy with the credit terms we are getting. Then again we know we have to pay things off and will use this credit line carefully!