I own a duplex free and clear that i bought back in november (paid cash)… did the rehab out of pocket (15k signature loan. I’m in the process of getting a heloc through wells fargo. everything is fine. Here’s my question, when i applied for the loan I stated that it was to be used for debt consolidation because i heard if you tell them that you just want to cash out and buy another property with their loan, that most times they’ll deny you. Anyways, my question is this… they are going to send me a check for ~14k to pay off my discover loan. Do i have to pay it off or can i just rip up the check and use that money to get into another property? Could they close my line of credit if I don’t use it the way they want?
If that was one of the conditions to obtaining the loan, then you must pay it off