Quick HELOC Feedback for a New Guy
Hey, folks,
New to the forums here, and I've been inhaling everything BP over the past couple of months.
Short Story on Us: A couple looking to get into our first deal(s). Our town has a lot of single-families and duplexes that sell for under $50k. We're looking to purchase with a HELOC and most likely refi once we're able to.
Our local bank (which we love in so many ways) is offering a 100% LTV on our primary residence at $85,000
We received the terms back for the line. Here it is:
| Details on requested credit line option: |
| LOAN PROGRAM: HOME EQUITY LINE OF CREDIT (1ST LIEN) |
| LINE AMOUNT: $85,000 |
| VARIABLE RATE: 7.31% VARIABLE APR: 7.31% LOAN-TO-VALUE RATIO: 100% |
| ESTIMATED MONTHLY PAYMENT DURING DRAW PERIOD (FIRST 10 YEARS): $517.79 (INTEREST ONLY AND BASED ON UTILIZING TOTAL LINE AMOUNT) |
| ● The interest rate, Annual Percentage Rate (APR) and payments above may increase. The interest rate is a variable rate that can change monthly. The APR is based on the “Bank Prime Loan” rate index, Prime +2.06. APR will never be higher than 18.00% and can never go below 2.96%. The current Prime rate is 5.25%, as of 12/05/2018, and APRs are available from 2.96% to 8.84%. |
| ● APR displayed above is based on a 809 credit score. |
Also: $60 per year fee.
So, here are my questions:
That variable rate is high, right?
If so, what do people recommend moving forward? Honestly, we feel more comfortable using a local bank since we are just getting started since we can interact face-to-face if necessary. Is this unwarranted?
What is a reasonable APR?
What would you do? .
Thanks in advance,
Keith
PS: I did some searching around on the topic.