Penny for your thoughts.... - Page 2

madzonie · ‎03-10-2010

On 8/27/2014 bluegrassbaby said:
madzonie: We have checked around and didn't find a bank that could beat the offer we currently have...also we don't want to take out of our savings either. It seems like once you start nibbling at a savings it never stops. I think our major concern is if DH was to pass away that I would have to repay the entire loan immediately. Thank you for your thoughts.

bluegrassbaby - I know this is probably a very delicate subject and I'm not asking for answers - just putting some thoughts out here.

Have you thought of taking out a life insurance policy that would pay off the loan should you be left alone?

Not sure of your ages, the amount you want to borrow, how much a policy would cost, or if you already have insurance, etc. But it's just a thought if you're particularly concerned about being left with a large debt to pay. Good luck with your project!

madcity411 · ‎03-09-2010

On 8/27/2014 esmeraldagooch said:
You are playing with fire. Rates can only go up, which could make payments go though the roof. Stop and get a interest rate and lock it in before going any farther. I had relatives who almost lost their home when their variable interest rate hit 21% in the 1980's. They had to sell their home as they couldn't manage the payments which went up hundreds of dollars in a short period of time. The FED can't keep rates low much longer, which is chatted about on many forums and easy to find.

Yeah and CD's for savers were in the double digits too! Not always a totally bad thing. Wink

LaterGator · ‎03-09-2010

In the 90's I was an underwriter. I believe there is a law that the interest rate, although variable, cannot climb more than 10% on the loan if I'm remembering correctly. So if you start out with 2.5% you'll never go above 12.5%. And, if that rates go that high that quickly, we're all in trouble. Please ask your banker. There are many laws they don't tell you about unless you ask because there are so many.

151949 · ‎03-09-2010

Last summer our saving investments made a profit that was enough for us to purchase a brand new large camper. When DH called our finance guy he suggested we do a HELOC instead as he felt he could make more with the money than we would have to pay in interest. We trusted him and when we got the LOC our interest rate is only 2.5% - so we are , in fact, making way more by leaving the money invested than it is costing us to carry the LOC.We have already paid off 1/3 of it. plus in the case we would have some need for fast money - an emergency- we could tap that line instantly. Say , for instance, if the furnace went out and needed replaced, something major like that.I don't think this is something I would do just to pay for things I want but for needs- it is a good way to go.

151949 · ‎03-09-2010

On 8/27/2014 LaterGator said:
In the 90's I was an underwriter. I believe there is a law that the interest rate, although variable, cannot climb more than 10% on the loan if I'm remembering correctly. So if you start out with 2.5% you'll never go above 12.5%. And, if that rates go that high that quickly, we're all in trouble. Please ask your banker. There are many laws they don't tell you about unless you ask because there are so many.

I do recall the banker explaining the variable rate to us and also explaining that how much it can be raised has a cap.

magicmoodz · ‎03-16-2010

This is a timely thread. We are contemplating doing some home improvements and rather than using savings, I have been looking for some low interest money. I contacted our city and they have a number of different loans. I think the only one we could utilize would be 5.99% if there are no income limitations and we aren't disqualified for not living in a neighborhood in desperate need of renovation/revitalization.

I checked with our credit union and home improvement loans come with a 8.25% interest price tag.

We do have a high line of credit that has had a zero balance for several years. I will look into what the current rate is. I guess if interest rates soared, we could pay it off and it would be the same as using savings.

Lynnj · ‎03-21-2010

I had one on my house that had a 15 year drawing period. I forget what the payback period was. My drawing period just ended recently, and the loan in now fully closed. I used the money in the beginning for home repair and did a kitchen remodel with it too. I had no problem making payments, and eventually paid off the balance within a few years. One of the benefits to a HELOC is that you will be able to write off your interest charged on your taxes, just as you would write off mortgage interest. This feature actually makes the HELOC as a loan approach a better deal than taking out a traditional loan or using credit cards. If you feel comfortable in the ability to making payments for what you borrow off of the HELOC, then I wouldn't worry about it at all.

esmerelda · ‎03-10-2010

On 8/27/2014 magicmoodz said:
This is a timely thread. We are contemplating doing some home improvements and rather than using savings, I have been looking for some low interest money. I contacted our city and they have a number of different loans. I think the only one we could utilize would be 5.99% if there are no income limitations and we aren't disqualified for not living in a neighborhood in desperate need of renovation/revitalization.

I checked with our credit union and home improvement loans come with a 8.25% interest price tag.

We do have a high line of credit that has had a zero balance for several years. I will look into what the current rate is. I guess if interest rates soared, we could pay it off and it would be the same as using savings.

Don't confuse a HELOC (home equity line of credit) with a home equity loan. As I understand it, with a home equity loan you make payments on the entire amount. With a HELOC you draw when you need it and only make payments on what you've drawn.

If the home equity loan (or home improvement loan) is for say $50K, you're paying interest on the whole $50K. With a HELOC of $50K, if you've only taken out $10K, that's all you're paying interest on.

*********************
Keepin' it real.

september · ‎03-09-2010

We're now on our third HELOC. I don't see a down side to having one. We've used ours to make home improvements, expand our business, and have had it available for unexpected expenses, like needing a new furnace. We don't have a balance at this time, but it gives me peace of mind knowing that we're ready for emergencies.