Deleted

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[kbutton]

I know nothing about how a HELOC works, but I am wondering if you can get a credit card that has no interest for a certain amount of months, and if so, would that be a reasonable option as well? I didn't realize that it's fairly common to get cards that have no interest for a while until a friend mentioned this. Just trying to put more options on the table if it helps. 

[Spryte]

We used a HELOC for some very expensive medical bills. Some was not covered by insurance, some was under covered. It worked for our purposes.

[SoCal_Bear]

It is basically a line of credit that you can draw on against the equity you have in your house. The good thing is that the interest rate is much lower than credit cards but obviously higher than your mortgage interest rate. Usually it is offered for a max amount based on how much equity you have. It does affect your credit because even if you don't use it, it is considered credit that is available to you. So, if you are trying to do something else, it is factored in as part of the amound of overall debt you have. I usually tell people when I advise them that it is fine to have a HELOC as emergency credit available to you...just don't use it to upgrade lifestyle. Too many people will go and use a HELOC for things like vacations, new cars, etc. Use it if you need to...and pay it off as fast as possible. That's my bias because I'm a fan of no debt and paying off your house as soon as humanly possible because being financially free is priceless. Note: I am NOT talking about real estate investment...that's something entirely different and leverage debt in that situation is strategic.

You usually have to only make interest payments on your HELOC (unless the repayment terms specify something different). HELOC are for a set # of years. And it is possible for a HELOC to get frozen. Lots of them where frozen or revoked in the last real estate downturn because the risk was too high for banks when people lost equity.

 

Edited October 16, 2021 by calbear

[Spryte]

On 10/16/2021 at 4:33 PM, Spryte said:

We used a HELOC for some very expensive medical bills. Some was not covered by insurance, some was under covered. It worked for our purposes.

Quoting myself to add that we only used it for the medical issues. It did have a set number of years (needed to be paid off in x number), and we sold the property before it came due, so paid it off then. 

Edited October 18, 2021 by Spryte

[TexasProud]

4 minutes ago, Spryte said:

 

My co-pays at the time were running $1200 - $5000 per month (for our portion! It was insanity!), and without it — well, I probably would not be here. So ours was a big chunk of change, but worth it, I think. 😊

I think so.

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[gardenmom5]

Dh's background is banking, so I forwarded your question to him.

A HELOC is a great financial vehicle. There are usually no fees or costs to get one. They are basically a line of credit you can draw on and pay off when you want. Because it is secured by your home the interest rate is lower than a credit card or unsecured line of credit. Banks have been reluctant to make them due to COVID, but you should be able to find a bank that will make one. The ability to have funds readily available whenever needed is based on the money you have and the money you can borrow. A HELOC is a great solution to liquidity needs. Your bank can give you all the details. The rate depends on the loan to value ratio of the HELOC amount and the value of your home. Generally the best rates are obtained when you have a lot of equity. There is no obligation to use any of the available funds. It's a great solution for your situation.

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[Spryte]

19 minutes ago, BaseballandHockey said:

Definitely worth it.

The thing we might or might not be paying for requires a $55K check up front.  Also insanity.  

Yes, that is also a big chunk of change!

I hope whatever it is does exactly what you need and hope. 

[gardenmom5]

1 hour ago, BaseballandHockey said:

Thank you!

Can you ask him how income factors in vs. equity?  We have the equity, because prices have gone up dramatically in our area, but our income doesn't look great.  

It probably won't be posted until tomorrow - but I'll ask him.

 

eta: how is your credit score?  

Edited October 17, 2021 by gardenmom5

[Drama Llama]

. . . .

Edited October 26, 2021 by BaseballandHockey

[teachermom2834]

Just mentioning that they can take awhile to get processed so start the application ASAP if this is upcoming. There are more hoops to jump than on, say, an unsecured personal loan that can process quickly. Our Heloc just required a drive by appraisal but that still adds time to the process and could be longer while all the people involved with mortgages are pretty busy now.

We have used our Heloc and paid it down many times. In your situation that is likely what I would plan on. If you are disciplined then having that low interest credit line available when cash is needed quickly can be a peace of mind. 

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[Drama Llama]

. . . .

Edited October 26, 2021 by BaseballandHockey

[teachermom2834]

6 hours ago, BaseballandHockey said:

How long did it take?

I do not remember exactly but it is at least a couple weeks. They had to do an appraisal and income verifications, refit check, etc. It is not the nearly instantaneous process like a credit card or personal or auto loan. It is secured by your home so it like applying for a mortgage vs. getting an auto loan or credit card. It takes some time to get all the paperwork and verifications done. So I’m thinking at least a couple weeks. It’s been too long for me to remember- I just wanted to point out it isn’t the fastest option to get approved for. But once you have it, it is very convenient. 

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[ktgrok]

19 minutes ago, BaseballandHockey said:

Thanks everyone. Family member has pointed out a reason this almost certainly  won’t work, so we are going to look into other options.

Ugh, I'm sorry. Would a 401K loan work?

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[gardenmom5]

12 hours ago, BaseballandHockey said:

Credit score is good, and we've got a great track record for the mortgage payments.

But we've taken a major setback income wise, and i can't prove that things will get better. 

I've got his response:

Income is a big factor. The loan to value ratio protects banks from loss, but the income is the source of repayment. And banks are very risk averse. They require both.

 

Ask her why their insurance will not pay.

~~~

 bottom line, you will have to talk with the bank.

[ktgrok]

2 hours ago, BaseballandHockey said:

Maybe, we will sort out an option.  I am sure. 

We had to do that, 401K loan, when my ex had heart failure. It was fairly quick, no immediate tax implications since it is a loan rather than a withdrawal, and medical bills were one valid reason for taking a loan (check what applies in your situation - different companies are probably different). The only drawback is that if you leave the job you have to pay it back - and I realize that may be a problem in your situation. 

If you have any other investments, that's another avenue. 

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey

[Spryte]

5 hours ago, BaseballandHockey said:

If this treatment ends up making sense we will figure something out.

Kind of unusual suggestion, but DH’s CFO has made it clear to most employees that if they run into something like this, it is possible for them to make a loan. I think that could be sticky, and I’m not sure how it would work out, but would something like that be an option? Crazy out of network, uncovered medical is actually the topic for which they offered an employee assistance. That probably wouldn’t fly everywhere, but if that’s an option, you could consider it.

[Drama Llama]

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Edited October 26, 2021 by BaseballandHockey