Local Bank HELOC at 3.99% 10y. Better offers?

3 Replies

I am interested to move forward with a HELOC offer from my local Bank here. They offer at 5.25% interest rate, up to 80% to 90% financed for 10 years, 120 months. During their introductory time to the end of October 2018 they offer to be able to borrow 3 times at a special rate of only 3.99% with their EQUITYLOCK product. No closing, origination or 3rd party fees.

So I see it as follows. Most other banks I contacted, they offer Prime plus, which is at least 5% plus some 0.5% or more, which is similar to what they offer at 5.25%, but with their special offer at 3.99%, it seems very low. Downside seems the 3 times borrowing only during the introductory time till October.

If you would want to borrow $5000 to redo your flooring and lock that in at the 3.99%, it is rather a waste and does not take advantage of the deal. I intend to borrow some $40,000 for multiple cash investments. That makes this very attractive as I can do that 3 times by October for a total of $120.000 each, which should total my possible equity borrowed. It is also a closed end repayment structure, therefore it does not go up with the interest rates. So it is like financing a $40.000 each for me for 10 years at 3.99%, seems like a solid deal for an investment property “mortgage”, which usually would run a lot higher besides that no bank finances a deal that low anyways.

Does that offer sound good to you and are there any known better deals out there?

Any info or input would be welcome.

Thanks.

If it is a HELOC it has a draw period and a repayment period. Make sure you read everything closely. From what you’re saying it sounds like you have a 10yr draw period. I would not automatically assume the equity lock option is for a 10 year period. Double check that. If it is indeed a 10yr lock at 3.99 that is absolutely a phenomenal deal.

I have a HELOC with an equity lock option but it is for various durations. There is a 5, 10, and 15yr lock option. And each term has a different rate (longer is higher). Just make sure you read all the fine print.

EquityLock Structure: Credit Approval, Closed end, fully amortizing, fixed 3.99% APR up to 10 years. Minimum loan amount $5000. Borrow request only during Promo period ends Oct 2018. Max of 3 EquityLock Structured repayment options are allowed at one time. A $120.000 borrowed in my case would be $1235 per month for 10 years, 120 months total at 3.99%. If prepaid, it goes back into the equity I can borrow against again.

Thanks for feedback.  

Just talked to the bank now. Updated info is excellent credit on primary residence is up to 85% LTV. First you qualify for their regular HELOC at 20 years and Prime plus 0.25%, so essentially 5.25%. Then you can borrow up to 3 times, now extended to November 30th 2018, with their EquityLock Structure at 3.99% for 10 years. Now that you did that, you changed your loan and that means you do not have the money available on a revolving line anymore when you paid back some of it. So in my case if all pans out, $120.000 borrowed, would cost me $1230 a month in P+I. So over 120 months at 3.99% I would pay $147.600, or $27.600 in interest.

I could pay it off earlier and save myself some interest in an amortized loan, meaning more interest paid upfront, but that does not mean that the say $20.000 I paid down is available to borrow against again. Would need to reapply for another loan at that time with whatever new equity I hope to have then by market going up and money paid down and new LTV applied again.

Either way, this product seems to work for my purposes, and I could not do anything with my home equity right now and just talk big and brag about it, or I can put this money to work for myself and invest it in a performing asset some 3 properties in the Midwest, and have them paid off with this loan in 10 years by the tenant and then own 3 properties free and clear. 3 x $420 Net Income = $1260, which is a wash towards the Equity loan. 

That is how I see it. Any input on that logic?