HELOC for Home Repairs
Author: usmsci
Posted: Tue Sep 27, 2005 10:54 am
Post subject: HELOC for Home Repairs
I bought my home in April for around $110,000. its a nice 3bed and 2 bath, brand new, never been lived in, roughly 1,450 sq.ft.
anyway April of 2006 i will have had it a year and want to take out a home equity loan on the house. the first question is, is this too soon or is a year ok? will the house need to be appraised again? how much would i expect on average to get?
if i was approved for 20,000 does that just get added on to the existing balance on the house/mortgage and they just write me a check for 20k?
my interest rate is 5.5% as a Fixed 30-yr mortgage. could i suffer a higher interest rate if i get a equity loan or not? i want to pay off my car(which i am paying 15.99%) and do some home improvements inside and outside the house. a 5.5% instead of 15.99% on a car is going to save me lots of interest money.
i figured it out and it would cost about 20,000 for everything that i wanted..of course i am flexible. This includes putting $1,000 or so in a ROTH IRA to get that ball moving and possibly putting money in a few other places.
my credit wasnt the greatest when i got my car loan and i am paying for it but now my credit is better.. FICO score is 656 and i was approved on the house with a score of 626-650 or so using all 3 reporting agencies. i calculate that i will be close to 700 by April rolls around as i have some negative information coming off my credit report at the end of the year.
i might think of some more to say but thanks in advance for all your advice..
Polonius
Posted: Tue Sep 27, 2005 3:41 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
The HEL or HELOC is completely separate from your mortgage--it will have its own terms and interest rate. There's no "too early" notion about applying for equity loans--everything depends on the equity of your home today and of course your own income and debt to income ratio. Each lender makes its own decisions on what you would qualify for. I'd suggest getting offers through LendingTree.com--they're free and will give you an idea of what you can get.
I live in what one magazine called the second most overpriced housing area in the country! Prices go up over 15% per year here. That's bound to come to an end, hopefully not soon.
Of course, leveraging your housing equity to the maximum can land you in trouble if prices fall. You know that.
Author: usmsci
Posted: Tue Sep 27, 2005 3:44 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
how do these terms and rates compare to regular mortgage rates? are they comparable??
Author: Polonius
Posted: Tue Sep 27, 2005 4:16 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
According to
www.bankrate.com/brm/static/rate-roundup.asp
Thirty-year fixed rate mortgages--Rate: 5.88 percent (30-year fixed) Average Points: 0.36
..............................................................
Home equity products
Rates: 6.76 percent (line of credit); 7.18 percent (loan)
But there are special deals all over the place--these are just averages; you could do better or worse. My own Citibank HELOC is at prime less .25%, so 6.5% now--and it had no closing fees of any kind (no points, no appraisal fees--nothing). And I only have to pay the interest for the first 10 years--no principal payment required until the 11th year.
Author: BestMortgageInfo
Posted: Tue Sep 27, 2005 8:09 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
Yes, an appraisal will have to be done for the new loan. In some cases lenders will pay for them, and have a 3 year prepayment penalty to recoup the costs if you pay off the loan early.
Be careful of HELOCs. Your initial lender may report it as a mortgage type loan, and the lender that buys the loan may report it as a credit line. A credit line, where you have over 50% Utilization, can really hurt your credit score.
HELOANS are fixed rate 2nds. The initial rate may be higher, but it won't go any higher. Or lower. Stability and no surprises are sometimes worth a few $ per month.
Lastly. I do mortgages, and I do my best to talk people out of paying for a car over 30 years. Some of them don't last that long. With your scores, try to refinance. One on line Auto refinance company is Patelco. You can probably cut your rate in half or better.
Author: usmsci
Posted: Wed Sep 28, 2005 8:46 am
Post subject: Home Equity Loan have
the Same Rate as My Mortage
ok thanks for all your help... somehow i was thinking that you could put whatever you borrowed on your house and that way you would still keep that same rate on your mortgage.
Again i am paying 5.5% right now on my house. it would be nice to put the $9k i have left on my car on the house and therefore my mortgage payments will be a little higher but i wouldnt be paying that outrageous APR. see what i mean? is this possible or was this something i just dreamed?
One more question..as i mentioned earlier ive only had the house since April so not much equity. someone said above that it really didnt matter that much, you could apply for a Home Equity Loan at any time. i was under the impression it was best to wait at least a year to make sure you have increased the value of your home somewhat. what are your thoughts?
oh yeah what does it mean by average points?? sorry i am new to all this lingo..
Author: BestMortgageInfo
Posted: Wed Sep 28, 2005 9:38 am
Post subject: Home Equity Loan have
the Same Rate as My Mortage
The reason for a year is that by that time there are normally enough other sales in your area to justify any increase in value. If you get a home equity loan, if you do it now, chances are the value of your home will not have gone up much since when you bought it.
The "rates and points" The average of all the loans that they grouped together had an interest rate of 5.88, Probably the average rate should have been 6%, but it was lowered by the borrower paying .36% to lower the rate to the 5.88.
Keep in mind that over time, the average home owner either buys another home, or sells theirs to retire, or refinances every 5-7 years, so you need to be carefull when you buy down a rate. If the net savings in the payments take longer than 5 years to break even, then it may not make sense.
Author: usmsci
Posted: Mon Oct 03, 2005 11:39 am
Post subject: Home Equity Loan have
the Same Rate as My Mortage
BestMortgageInfo wrote:
One on line Auto refinance company is Patelco. You can probably cut your rate in half or better.
i was approved by Patelco but in order to take advantage of the loan i have to be a member of Patelco. In order to be a member you have to be eligible to join. if you look at the requirements to join here: http://www.patelco.org/apply/eligibility.aspx which seems outrageous... i mean gimme a break i live in Mississippi so by default i am inelgible pretty much right there. Really amazes me how they would let someone apply for credit with them if they dont live in california.. really stupid if you ask me..
Posted: Tue Sep 27, 2005 10:54 am
Post subject: HELOC for Home Repairs
I bought my home in April for around $110,000. its a nice 3bed and 2 bath, brand new, never been lived in, roughly 1,450 sq.ft.
anyway April of 2006 i will have had it a year and want to take out a home equity loan on the house. the first question is, is this too soon or is a year ok? will the house need to be appraised again? how much would i expect on average to get?
if i was approved for 20,000 does that just get added on to the existing balance on the house/mortgage and they just write me a check for 20k?
my interest rate is 5.5% as a Fixed 30-yr mortgage. could i suffer a higher interest rate if i get a equity loan or not? i want to pay off my car(which i am paying 15.99%) and do some home improvements inside and outside the house. a 5.5% instead of 15.99% on a car is going to save me lots of interest money.
i figured it out and it would cost about 20,000 for everything that i wanted..of course i am flexible. This includes putting $1,000 or so in a ROTH IRA to get that ball moving and possibly putting money in a few other places.
my credit wasnt the greatest when i got my car loan and i am paying for it but now my credit is better.. FICO score is 656 and i was approved on the house with a score of 626-650 or so using all 3 reporting agencies. i calculate that i will be close to 700 by April rolls around as i have some negative information coming off my credit report at the end of the year.
i might think of some more to say but thanks in advance for all your advice..
Polonius
Posted: Tue Sep 27, 2005 3:41 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
The HEL or HELOC is completely separate from your mortgage--it will have its own terms and interest rate. There's no "too early" notion about applying for equity loans--everything depends on the equity of your home today and of course your own income and debt to income ratio. Each lender makes its own decisions on what you would qualify for. I'd suggest getting offers through LendingTree.com--they're free and will give you an idea of what you can get.
I live in what one magazine called the second most overpriced housing area in the country! Prices go up over 15% per year here. That's bound to come to an end, hopefully not soon.
Of course, leveraging your housing equity to the maximum can land you in trouble if prices fall. You know that.
Author: usmsci
Posted: Tue Sep 27, 2005 3:44 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
how do these terms and rates compare to regular mortgage rates? are they comparable??
Author: Polonius
Posted: Tue Sep 27, 2005 4:16 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
According to
www.bankrate.com/brm/static/rate-roundup.asp
Thirty-year fixed rate mortgages--Rate: 5.88 percent (30-year fixed) Average Points: 0.36
..............................................................
Home equity products
Rates: 6.76 percent (line of credit); 7.18 percent (loan)
But there are special deals all over the place--these are just averages; you could do better or worse. My own Citibank HELOC is at prime less .25%, so 6.5% now--and it had no closing fees of any kind (no points, no appraisal fees--nothing). And I only have to pay the interest for the first 10 years--no principal payment required until the 11th year.
Author: BestMortgageInfo
Posted: Tue Sep 27, 2005 8:09 pm
Post subject: Home Equity Loan have
the Same Rate as My Mortage
Yes, an appraisal will have to be done for the new loan. In some cases lenders will pay for them, and have a 3 year prepayment penalty to recoup the costs if you pay off the loan early.
Be careful of HELOCs. Your initial lender may report it as a mortgage type loan, and the lender that buys the loan may report it as a credit line. A credit line, where you have over 50% Utilization, can really hurt your credit score.
HELOANS are fixed rate 2nds. The initial rate may be higher, but it won't go any higher. Or lower. Stability and no surprises are sometimes worth a few $ per month.
Lastly. I do mortgages, and I do my best to talk people out of paying for a car over 30 years. Some of them don't last that long. With your scores, try to refinance. One on line Auto refinance company is Patelco. You can probably cut your rate in half or better.
Author: usmsci
Posted: Wed Sep 28, 2005 8:46 am
Post subject: Home Equity Loan have
the Same Rate as My Mortage
ok thanks for all your help... somehow i was thinking that you could put whatever you borrowed on your house and that way you would still keep that same rate on your mortgage.
Again i am paying 5.5% right now on my house. it would be nice to put the $9k i have left on my car on the house and therefore my mortgage payments will be a little higher but i wouldnt be paying that outrageous APR. see what i mean? is this possible or was this something i just dreamed?
One more question..as i mentioned earlier ive only had the house since April so not much equity. someone said above that it really didnt matter that much, you could apply for a Home Equity Loan at any time. i was under the impression it was best to wait at least a year to make sure you have increased the value of your home somewhat. what are your thoughts?
oh yeah what does it mean by average points?? sorry i am new to all this lingo..
Author: BestMortgageInfo
Posted: Wed Sep 28, 2005 9:38 am
Post subject: Home Equity Loan have
the Same Rate as My Mortage
The reason for a year is that by that time there are normally enough other sales in your area to justify any increase in value. If you get a home equity loan, if you do it now, chances are the value of your home will not have gone up much since when you bought it.
The "rates and points" The average of all the loans that they grouped together had an interest rate of 5.88, Probably the average rate should have been 6%, but it was lowered by the borrower paying .36% to lower the rate to the 5.88.
Keep in mind that over time, the average home owner either buys another home, or sells theirs to retire, or refinances every 5-7 years, so you need to be carefull when you buy down a rate. If the net savings in the payments take longer than 5 years to break even, then it may not make sense.
Author: usmsci
Posted: Mon Oct 03, 2005 11:39 am
Post subject: Home Equity Loan have
the Same Rate as My Mortage
BestMortgageInfo wrote:
One on line Auto refinance company is Patelco. You can probably cut your rate in half or better.
i was approved by Patelco but in order to take advantage of the loan i have to be a member of Patelco. In order to be a member you have to be eligible to join. if you look at the requirements to join here: http://www.patelco.org/apply/eligibility.aspx which seems outrageous... i mean gimme a break i live in Mississippi so by default i am inelgible pretty much right there. Really amazes me how they would let someone apply for credit with them if they dont live in california.. really stupid if you ask me..
posted by CardRatings.com at 11:51 AM
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