Answers
We have plenty of equity in our home and my sons college tuition will be approx. $30000/year. Should I take out a home equity for the estimated 4 year costs, or take out a home equity line of credit and hope interest rates stay low?
Loan....never line of credit.....The apr will change on a line of credit.
Some Ways to Lower Your Home Equity Line of Credit Rates Owning a home must be the most precious property that someone can possess in most peoples ...
Over 10K of credit Card debt, all with high interest rates, think it would be better to use Home Equity to consolidate or "payoff" cards to have one low rate and payment.
Yes !! Than figure the interest you paid on the credit cards and pay that amount back to your line of credit.Good Luck
The short answer to this is Yes. However, there are a lot of factors to consider. For one, how many years do you anticipate you will have the loan? If your payoff is within a year, I wouldn't bother.
Does your current financial institution charge an early payoff penalty? Consider that along with any other fees you will encounter when applying for a new loan.
Make sure you do not fall for a variable interest rate or a balloon type loan.
As you seek a new lender, make sure you compare the closing fees of your loan. You might find a good rate with low closing fees, and then you're way ahead of the game.
Good luck!!
I plan to get a home equity line to consolidate some monthly bills, and my mortgage company has offered this type of loan as the one wiith the lowest montlhy payment:
Home Equity Line of Credit 90
Rate: 84.500%
APR¹: 84.500%
Term: 120
Does ANYONE understand the terms and and interest on this type of loan?
The little superscript should have some explaination. I doubt you'd have 84.5% APR... maybe over the life of a loan, you'd pay that, but it'd be the total pecentage yield (like APY, but over life of the loan).
It looks like you're taking out a 10-year HELOC loan and it's possible that the 84.5% is over the life of the loan.
That's what I'm nervous about. My interest rate is right now at 6.5%, and because the economy is so bad that's most likely why.
However as the economy rebounds, which it eventually will, I'm sure my interest rate will jump. However that worries me because I'm not sure how much I'm then going to end up paying.
How high or low do they usually go?
I mean I just don't want to worry.
I can lock it in if i wanted to, but then my line of credit would turn into a loan, and I wouldn't have the option of taking more money out, which would honestly defeat the purpose of taking out this line of credit in the first place.
Anyways, any advice is greatly appreciated, thanks.
The adjustable rate aspect of a HELOC is a big disadvantage. And it gets worse. Unlike a typical ARM there are no adjustment or lifetime caps to limit the rate/payment fluctuation. Also your rate is calculated on a daily basis where a traditional ARM is based on a monthly calculation ( it's a small difference but something you should be aware of) take another look at your present 6.5% rate.
The tone of your question suggest that you view your HELOC as an insurance policy should you have a need for cash in the future. Which is an excellent strategy.
Now to address your real question as I see it.
You don't want to turn your HELOC into a fixed rate loan while you still have a considerable limit left to draw on.
May I offer a solution.
You can do a cash out refi on your 1st mortgage and use the additional funds to pay off your heloc balance. Of course Cap 1 would have to subordinate themselves to the new first
or
You could do a cash out refi on your 1st mortgage. Payoff and close your Cap 1 heloc and get a new one possibly with a higher limit but definitely with a better rate. 6.5% in todays market seems steep.
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Interest rate is fixed, the interest for a specified period and did not vary with changes in the base rate.
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