burkecoboy
Senior Member
I guess this would be for the money savy folks. Are the HELOCs or Home Equity Loans, good or bad. Would they help someone with average debt?
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A question
- Thread starter burkecoboy
- Start date
Snakeman
Senior Member
There are several things to consider before getting a HELOC.
How much equity do you have in your home?
How much will it cost you in fees to get the HELOC?
How long do you plan on staying in that home?
How financially secure are you, in other words, will you be able to make your mortgage payments and the HELOC payments until the HELOC is all paid up? (You don't want to lose your house because you mortgaged a $5,000 credit card debt)
HELOCs are good in that they usually have a lower interest rate, and lower payment, and the interest may be tax deductible. The trade off is that the payments (if you pay the minimum) last longer.
The Snakeman
How much equity do you have in your home?
How much will it cost you in fees to get the HELOC?
How long do you plan on staying in that home?
How financially secure are you, in other words, will you be able to make your mortgage payments and the HELOC payments until the HELOC is all paid up? (You don't want to lose your house because you mortgaged a $5,000 credit card debt)
HELOCs are good in that they usually have a lower interest rate, and lower payment, and the interest may be tax deductible. The trade off is that the payments (if you pay the minimum) last longer.
The Snakeman
southernclay
Senior Member
If it is not fixed rate it is not worth it. Rates are going up and it's not worth the gamble at this point IMO. If it is fixed and the numbers work then yes. Let the numbers do the talking.
Mrbowdeadly
Senior Member
Heya,
The rates are going up, but chances are they are not higher than your CC's. The HELOC will be adjustable. Snakemans advice is sound. I would echo the fact that you have to be diligent about your payments. Something I would consider is paying what you would have payed on your CC's anyways, that way you will get paid out much quicker. Only pay less if you are absolutely without a choice. Your starting rate will be affected by your loan to value. If you only owe 10K on a 200K house, the bank will hand you money with a big smile and a low rate as there is not much risk for them. If you are leveraging way up against the value (200k house, you owe 175K) you will be offered a higher rate. Use a mortgage broker, and let him know that you will be checking with three others, so please give you a good deal. Don't be too pushy though, as they do not make very much on these types of loans. Some lenders also are offering no closing cost HELOCS. Countrywide is one of, if not the biggest lender out there right now, and they are offering this option. Remember that when they say "no closing costs" to check the fine print. You may have other fees involved that are not considered closing costs. You can also approach your current mortgage holder first. Let them know your intentions and see what they offer. The most important pieces of paper for you will be the "good faith estimate" and the "Truth in lending." These will outline the costs involved with making your loan. Make sure you get these up front. They will tell you what they can do for you, then ask for these papers to review. If they are slow to get them to you, run, don't walk. If you have any other questions, PM me or call.
MBD
P.S. HELOCS require alot of self control as well, as they are alot like a really big credit card. If they give you a 40K limit and your CC's are 30K, don't buy everyone a really great Christmas present with the balance!
The rates are going up, but chances are they are not higher than your CC's. The HELOC will be adjustable. Snakemans advice is sound. I would echo the fact that you have to be diligent about your payments. Something I would consider is paying what you would have payed on your CC's anyways, that way you will get paid out much quicker. Only pay less if you are absolutely without a choice. Your starting rate will be affected by your loan to value. If you only owe 10K on a 200K house, the bank will hand you money with a big smile and a low rate as there is not much risk for them. If you are leveraging way up against the value (200k house, you owe 175K) you will be offered a higher rate. Use a mortgage broker, and let him know that you will be checking with three others, so please give you a good deal. Don't be too pushy though, as they do not make very much on these types of loans. Some lenders also are offering no closing cost HELOCS. Countrywide is one of, if not the biggest lender out there right now, and they are offering this option. Remember that when they say "no closing costs" to check the fine print. You may have other fees involved that are not considered closing costs. You can also approach your current mortgage holder first. Let them know your intentions and see what they offer. The most important pieces of paper for you will be the "good faith estimate" and the "Truth in lending." These will outline the costs involved with making your loan. Make sure you get these up front. They will tell you what they can do for you, then ask for these papers to review. If they are slow to get them to you, run, don't walk. If you have any other questions, PM me or call.
MBD
P.S. HELOCS require alot of self control as well, as they are alot like a really big credit card. If they give you a 40K limit and your CC's are 30K, don't buy everyone a really great Christmas present with the balance!
Ta-ton-ka chips
GONetwork Member
I don't like them. Generally the debt issue is one of discipline and it takes even more discipline to get debt free!
The worst case scenario is you could lose your home!
Have you looked at Clark Howards website - lots of good tips there
Good luck!
The worst case scenario is you could lose your home!
Have you looked at Clark Howards website - lots of good tips there
Good luck!
UGAalum13
Senior Member
I'm glad to see someone ask this question.
I don't have alot of debt, but I've only got the 20% I paid down on my house in equity. I went to the bank a while back because I was interested in purchasing a truck from a private seller. The branch manager suggested that I go with a Home Equity Line instead of a conventional car loan. She said that the only difference would be that I would have a 15 year loan vs. a 3-5 year car loan and I would have a lower intrest rate and that I would get tax benefits. She made it sound like a very reasonable solution but I was suspicious, none the less. The deal on the truck fell through so I never pursued the loan.
I'm relatively new to the "real world", so some of this stuff is a little foreign to me. If I happen to come across another deal like this, what would be my best option, a conventional car loan, or home equity?
Thanks in advance for any tips. Sorry for hijacking your thread.
I don't have alot of debt, but I've only got the 20% I paid down on my house in equity. I went to the bank a while back because I was interested in purchasing a truck from a private seller. The branch manager suggested that I go with a Home Equity Line instead of a conventional car loan. She said that the only difference would be that I would have a 15 year loan vs. a 3-5 year car loan and I would have a lower intrest rate and that I would get tax benefits. She made it sound like a very reasonable solution but I was suspicious, none the less. The deal on the truck fell through so I never pursued the loan.
I'm relatively new to the "real world", so some of this stuff is a little foreign to me. If I happen to come across another deal like this, what would be my best option, a conventional car loan, or home equity?
Thanks in advance for any tips. Sorry for hijacking your thread.
Deano
Senior Member
Don't do it !! I wouldn't ever take money out of my house to pay off debt ,what is what I assume your going to do with it . This is just my 2 cents worth , but what I would do is cut my credit cards up , get on a budget and pay the debt off instead of refinacing it on your house. And then what happens in 2 years when the cards are charged back up and you don't have any equity left in your house . 
Just like ta-ton-ka chips said I's a disapline issue . Check out this website www.daveramsey.com
or go get a copy of the "total money make over" ,and read it before you go get that loan.
Just my thoughts and excuse my spelling
Just like ta-ton-ka chips said I's a disapline issue . Check out this website www.daveramsey.com or go get a copy of the "total money make over" ,and read it before you go get that loan.
Just my thoughts and excuse my spelling
