HELOC | current rates and terms for home equity lines of credit
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client
I would like to do some major work in my house.  How hard is it to get a second mortgage to finance it? my current mortgage balance is around $ 450K,and I would say the house is conservatively appraised at over $ 1.3 (my next door neighboor bought his a year ago at $ 1.4 million and it is certainly worth less than mine).  Let me know what options I have, cost, etc.
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Choice
Your cheapest money will be with a Line of credit, or “heloc”.  We pay the closing costs for you and the rate is based on prime.  Your payments are only based on your outstanding balance and you can borrow only what you need.  With a rehab loan you have costs, you borrow a fixed amount, and your payments don’t change.

The rate is Prime minus .500%.  5.000% - .500= 4.500% currently. 
If you maintain a balance of at least $150,000 your rate will go to Prime minus 1.02%  5.000% - 1.02%= 3.980%

We pay all closing costs for you.  As long as you don’t close out the line (you can pay it down to $0, but not close it) in the first 3 years there is no fee.  If you do, you will be responsible for paying back all the costs… and it ain’t cheap!  We will also require you set up a checking account as part of this transaction to qualify for these rates…  A checking acct with direct deposit and an active debit card with the bank with one transaction per statement cycle.
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Client
I presume, however, that this is not tax deductible like a second mortgage, right? How much would a 2nd mortgage be (no closing cost, as I like….)?
Also, can they cancel it or deduce it early (as I’ve heard it is happening to some people with Lines of Credit?)

If I take this, and unless interest rates go through the roof and I have liquid funds, I will not repay this in less than a decade….
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Choice
 it is a 2^nd mortgage in the form of a line of credit… and therefore should be a tax write off.
Yes, if they see values in your neighborhood fall it’s possible they will lower the total available line.  You have so much equity that we can get a larger than needed line, and you only borrow what you need, and if they reduce it you will still have plenty of room for your needs.
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Client
given the use I will give to this, I’ll probably tap the line for whatever I need within a few months.  Say the line is for 200K and I tap 120K.  Can they eventually lower the line below 120K and force me to pay the difference?
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Choice
They only prevent you from using it further, but the difference is not due.
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Client
how do I calculate the monthly payments in the case of a LOC?
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Choice
The minimum payment is interest only.
If it were 5%, take .05 x your outstanding balance and divide by 12.
$150,000 x .05/12= $625 minimum monthly payment
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Client
Great, so I am only subject to interest rate fluctuations.
What if I go for a fixed 15 or 30-year paper?
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Choice
That fixed rate option is in the mid to high 7 range.  Even if the fed slowly raises prime over time, you would think it will take a while to get that high.  Plus, if you go with a fixed rate option, it’s not a line of credit.. instead it’s a one lump sum amount that you borrow at once, and your payments are based on that lump sum and never change.  The line is so good because you only take what you need, and as you pay it down it becomes available again to use, and your payments are only based on your outstanding current balance, AND you have the option to pay interest only (something you can’t do on the fixed rate).
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Alex Echeandia of Choice Finance®
Please contact me for options you qualify for.  I look forward to working with you!