Scarlett Posted January 9, 2017 Share Posted January 9, 2017 We have tossed around so many ideas about this house and moving to town and timing ect,,,,,I think we have decided a HELOC may be our best option. It will be for 50k or less. We will nail down the improvements we need in order to get the best price when we sell. If I am reading right the fees for getting the loan are very very low. Even if the interest rate is higher than conventional mortgage we would be better off because our plan is to sell with in the year. Dh starts his new job tomorrow so I don't want to overwhelm him with this kind of talk right now....but I am pretty excited..... I don't quite understand how the payments work though. Quote Link to comment Share on other sites More sharing options...
Carol in Cal. Posted January 9, 2017 Share Posted January 9, 2017 We have a HELOC, and we paid off the first ahead of it because there was a big interest rate difference. Our HELOC adjusts the payment based on interest rate and outstanding balance every month. When we got it, they guaranteed a low interest rate for a specific period of time--I think it was one full year, maybe 18 months. After that it floated based on a publicly published rate that was not in their direct control. We pay it faster than required. After 10 years, we will lose the ability to borrow on it, and the balance and interest rate will be frozen at prevailing rates at that time, and we will be required to pay it off in a specific number of years--10 I believe. Some of these have a balloon payment at the end of the borrowing period. CHECK YOUR TERMS CAREFULLY! Also, in addition to going to your credit union for a HELOC, you might want to talk to a mortgage broker about a 5 year ARM, since you're planning to pay it off so quickly. 1 Quote Link to comment Share on other sites More sharing options...
Crimson Wife Posted January 9, 2017 Share Posted January 9, 2017 We had to put a big chunk of our savings into the house when we re-fi'ed last year in order to qualify for a conforming rather than a jumbo mortgage. Because my DH's industry can be pretty unstable, we signed up for a HELOC just in case we needed to tap into the equity in an emergency. We're now working to build our savings back up so that we won't need to use the HELOC but it's good to have it available. I think it costs us around $50/year to maintain the HELOC. Definitely shop around and read the terms carefully before signing. 1 Quote Link to comment Share on other sites More sharing options...
maize Posted January 9, 2017 Share Posted January 9, 2017 Around here credit unions also offer "mini mortgages" if your home equity is high (I think you currently have no mortgage, so 100% equity?) These are 5, 10, or 15 year loans, variable or fixed rate, zero closing costs. Rates about 1% higher than a standard mortgage but for a smallish loan to be paid off quickly the zero closing costs can offset that. The advantage of the HELOC would be the ability to take out money over time and pay interest only on what has been taken out. Often HELOCS require only interest payments during the withdrawal period, which is commonly give or ten years. Variable interest rate can be a downside of the HELOC. 2 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted January 10, 2017 Author Share Posted January 10, 2017 We have dh's truck financed at a big credit union that I plan to call to see what they have to offer. I think a mini mortgage sounds perfect. I made the mistake of putting info in the lending tree page the other night. I mean I KNEW I was inviting calls but I really need some info so I decided to risk it. I got the biggest idiot on the phone yesterday. We don't need $60K but he said that was their minimum so I was like ok well give me the info on that....He looked at my credit score and asked a couple of questions about dh's credit history and said it looked good. Then he gave me a probably interest rate of 4-4.25%. So then we started talking about terms 15 or 30 years....anyway he told me on a 15 year loan the payment would range from 300 to $500. I was like, um why the huge range for a quarter point. I mean I don't need him to calculate the payment for me I can do that in 10 seconds on line. But I was doubtful of his knowledge if he was telling me a 200 range on a quarter point. So he starts educating me that it just depends on dh's income info...since he is contract and gets 1099 his income will probably show lower blah blah blah. As if that had anything to do with calculating a payment? Dh's income and credit will of course determine interest rate and how much they would loan us....but not how much a payment would be on X amount at Y % for Z years. After he repeated that same line about 'just depends on your dh's income' for the third time I was just done with him. It felt like that time I asked the business employee if they were on the north or south side of the street and he said, not so patiently, 'well it just depends on which direction you are coming from.' ARggggg. 1 Quote Link to comment Share on other sites More sharing options...
shawthorne44 Posted January 10, 2017 Share Posted January 10, 2017 ... It felt like that time I asked the business employee if they were on the north or south side of the street and he said, not so patiently, 'well it just depends on which direction you are coming from.' ... With those people I have 100% success rate with turning opposite of whatever they said. Because they always seem to think based on where THEY are. Quote Link to comment Share on other sites More sharing options...
maize Posted January 10, 2017 Share Posted January 10, 2017 With those people I have 100% success rate with turning opposite of whatever they said. Because they always seem to think based on where THEY are. But north or south side of the street never changes! Quote Link to comment Share on other sites More sharing options...
Scarlett Posted January 10, 2017 Author Share Posted January 10, 2017 But north or south side of the street never changes! I know right! I felt like I was in a candid camera episode or something. When he first said it I said, 'no, no it doesn't'. Then later in the conversation he said it again. I know later he was probably telling all his buddies about this dumb woman who kept asking if he was on north or south side of the street. Quote Link to comment Share on other sites More sharing options...
StephanieZ Posted January 10, 2017 Share Posted January 10, 2017 HELOC fees and costs should be extremely low. When we opened a HELOC on our house, there were 0 fees at all. The bank even paid for the appraisal . . . rates are very low. Similar experience with my mom's HELOC (who had no regular mortgage at all). The only downside is that the HELOC has a variable rate and generally floats frequently. If you plan to pay it off within 3-5 years, or if the total loan amount is small enough for you that you have the option to pay it off easily if the rates go crazy (like cash out an investment account if needed, etc) then I wouldn't sweat it and I'd go with the HELOC. BUT, if this debt is going to be around for decades . . . then I much prefer a fixed rate, specifically during these low rate times, and would do the higher cost ordinary mortgage instead. 1 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted January 10, 2017 Author Share Posted January 10, 2017 HELOC fees and costs should be extremely low. When we opened a HELOC on our house, there were 0 fees at all. The bank even paid for the appraisal . . . rates are very low. Similar experience with my mom's HELOC (who had no regular mortgage at all). The only downside is that the HELOC has a variable rate and generally floats frequently. If you plan to pay it off within 3-5 years, or if the total loan amount is small enough for you that you have the option to pay it off easily if the rates go crazy (like cash out an investment account if needed, etc) then I wouldn't sweat it and I'd go with the HELOC. BUT, if this debt is going to be around for decades . . . then I much prefer a fixed rate, specifically during these low rate times, and would do the higher cost ordinary mortgage instead. Yes, this is exactly my thinking. We really want to sell and move to town within 6 months to a year. The amount we want to borrow is 50K or less so I hate to pay a huge bunch of fees. Quote Link to comment Share on other sites More sharing options...
StephanieZ Posted January 10, 2017 Share Posted January 10, 2017 Yes, this is exactly my thinking. We really want to sell and move to town within 6 months to a year. The amount we want to borrow is 50K or less so I hate to pay a huge bunch of fees. For sure, if you're moving that soon, then use the HELOC. Literally, we had ZERO fees/costs for a 200k HELOC. Don't tell the bank you are going to sell that soon, though, or they might not want your HELOC business (as THEY generally cover all those OOP expenses like the appraisal, etc . . . in anticipation of making plenty of $$ Off the loan over the next many years . . .) 1 Quote Link to comment Share on other sites More sharing options...
shawthorne44 Posted January 10, 2017 Share Posted January 10, 2017 But north or south side of the street never changes! Oh, I know. But then you switch to left/right and reverse everything. Quote Link to comment Share on other sites More sharing options...
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