HELOC-fixed rate good deal or not?

11 Replies

Never done heloc before. Do you guys think it's a good deal or not so?

HELOC Fixed Rate (3-year Draw Period, 10-year Amortization)

80% LTV - 3.99% APR

taking out 60K

@Lana Lee

Is it 10-year balloon interest only? And I assume for your primary residence? 

I think it's a good deal. However, you need to be careful with your budgeting and make sure that you pay it off at the end of 10year period. I think 3.99% is a good rate for a HELOC.

Originally posted by @Yuriy Skripnichenko :

@Lana Lee

Is it 10-year balloon interest only? And I assume for your primary residence? 

I think it's a good deal. However, you need to be careful with your budgeting and make sure that you pay it off at the end of 10year period. I think 3.99% is a good rate for a HELOC.

 Yes, primary residence. I don't think it's interest only. The interest only is variable at 4%. And as to the balloon payment ,II believe you can refinance into another product. But I am not planning to pay for so long anyway. 

And what 3 years draw period means? You can't re-use it after 3 years and have to open a new HELOC?

@Lana Lee

That means you have 3 years to use your line of credit. After you either need to refinance or just keep paying it off. 

My HELOC was 3% for 10 years interest only. Now 11th year into this loan taking out as ARM 4%+ amortized. Manage to pay off extra each month with 45% original loan left. I expect that to be an expensive loan later when they raise interest..... Yours sounds like a better deal.

Originally posted by @Sam Shueh :

My HELOC was 3% for 10 years interest only. Now 11th year into this loan taking out as ARM 4%+ amortized. Manage to pay off extra each month with 45% original loan left. I expect that to be an expensive loan later when they raise interest..... Yours sounds like a better deal.

 Thank you for sharing .

Originally posted by @Yuriy Skripnichenko :

@Lana Lee

That means you have 3 years to use your line of credit. After you either need to refinance or just keep paying it off. 

 Thanks Yura. And other question. I also have an opportunity to cash out refinance my property. What is better ?

@Lana Lee

It all depends on your plan. Refi may be better option if you are planing on using the money right away. The difference is that with HELOC you do not pay anything until you use money and you can use any amount you want. With the refinance you will get another mortgage that you will have to pay from the get go

We want to take out most of HELOC money towards down payment for rental property. Refinancing would give us lower monthly payment then HELOC. But on the other hand we have 3.6% mortgage rate on our primary and I don't believe anyone can offer us the same rate nowadays plus closing cost are like 4K.

3.99% sounds like a good deal.  I just got the following this summer:

*10 year draw period

*25 or 30 year amortization, can't remember

*Variable rate currently at 3.5% (moves with prime rate)

Given yours is a fixed deal the 3.99% sounds pretty good.  My rate will probably average out to your 3.99% as prime moves over the next 3 years.

Originally posted by @Michael M. :

3.99% sounds like a good deal.  I just got the following this summer:

*10 year draw period

*25 or 30 year amortization, can't remember

*Variable rate currently at 3.5% (moves with prime rate)

Given yours is a fixed deal the 3.99% sounds pretty good.  My rate will probably average out to your 3.99% as prime moves over the next 3 years.

 Thank you for sharing . At least now I have other people opinions and experiences to compare with. 

Originally posted by @Lana Lee :

We want to take out most of HELOC money towards down payment for rental property. Refinancing would give us lower monthly payment then HELOC. But on the other hand we have 3.6% mortgage rate on our primary and I don't believe anyone can offer us the same rate nowadays plus closing cost are like 4K.

 Hi Lana,

Make sure that you will be able to qualify for mortgage after you use your HELOC for the downpayment. That may affect your DTI ratio. If you want to refi, reach out to me I will give you contacts of a local CU that has better tares and will do refinance with no origination fee and I believe they do $0 closing cost as well.

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