finance question

It depends on what your doing with it. Is is a first or a second? Are you using it for home improvement or to buy toys?
 
Rockin Ronnie said:
It depends on what your doing with it. Is is a first or a second? Are you using it for home improvement or to buy toys?
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first and i would be using it to pay off my mortgage faster, lets say in like 5 years or so....pay way less in interest...or so im told....
 
I have heard of them before but I have never had a client use one. It seems to me that in todays market with the interest rates hovering right around 4 7/8 I wouldnt recommend a heloc.
 
just remember the old rule ,,if it sounds too good to be true ,it most likely is ,,,keep us informed:rock:
 
Home Equity Line of Credit....basically a line of credit using your house equity as colateral.

Example: You have a mortage on your house and the balance owed is $100,000. Your house appraises for $175,000. You can generally borrow up to $75,000 against the equity in your home. Banks will uaually loan between 80% to 100% of the equity....in rare cases you can get more than 100%...would be hard to do today though. Your credit rating plays in how much you can borrow also.

Interest rates are usually low...some even below prime rate. The rate can be fixed or variable meaning that it goes up as some other rate increases such as the prime rate. The interest rate is usually based on your credit score.

The advantage to the HELOC is you can borrow any amount up to the limit and pay back principle when you want to. You can borrow $75K today and pay the $75K back next week. Then turn around and borrow up to $75K again when needed. You only pay interest on the amount borrowed. You do not pay anything while nothing is borrowed and only pay interest each month when there is a balanced borrowed.

Most HELOCs have a 5-15yr life. At the end some convert to a convential mortgage...with some the balance drawn against the line is due in full.

I could go on about pros and cons but I am running out of time. More will chime in............one warning...remember that this is not an unsecured loan like a credit card...if you dont pay the bank can take your home..:(
 
Not an appropriate use of a Heloc in my opinion.

If you want to pay off your mortgage early (great idea, saves a lot of interest!) Pay extra on each mortgage payment and have the extra applied to your principal.

Run a amatorization schedule to see how fast you can complete your loan...

http://www.bankrate.com/brm/amortization-calculator.asp

One of the things I think you should always consider is that if you have a 15 or 30 year mortgage...one of the values of these longer term loans is that you end up paying off your loan in later years with inflated dollars (worth less in terms of purchasing power)...

Currently we are in a period that it might be wise to be sure you have a year or so of cash reserves. The mortgage is a good thing to payoff, but with very unsure employment issues and very hard times...a significant cash reserve now would be a strong asset.

I admire your interest in getting your assets into action...but a loan to absolve a loan is really just substituting debt for debt in my opinion...but I am a very weak financial advice source...we have a few CPA's here and their opinions would be much more reliable than mine!
 
Prof said:
Not an appropriate use of a Heloc in my opinion.

If you want to pay off your mortgage early (great idea, saves a lot of interest!) Pay extra on each mortgage payment and have the extra applied to your principal.

Run a amatorization schedule to see how fast you can complete your loan...

http://www.bankrate.com/brm/amortization-calculator.asp

One of the things I think you should always consider is that if you have a 15 or 30 year mortgage...one of the values of these longer term loans is that you end up paying off your loan in later years with inflated dollars (worth less in terms of purchasing power)...

Currently we are in a period that it might be wise to be sure you have a year or so of cash reserves. The mortgage is a good thing to payoff, but with very unsure employment issues and very hard times...a significant cash reserve now would be a strong asset.

I admire your interest in getting your assets into action...but a loan to absolve a loan is really just substituting debt for debt in my opinion...but I am a very weak financial advice source...we have a few CPA's here and their opinions would be much more reliable than mine!
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As always, I value your opinion. The good news is that I found out that my contract in Iraq is good for at least another two years. Also we are getting ready to head to Afghanistan in the near future. I am in the airborne recon business, so business is goooooooooooooooooooood. Looks like Mexico may even be an option....sad, but true....heck, we are all over the damn world with what I do!
 
wheredwhogo? said:
first and i would be using it to pay off my mortgage faster, lets say in like 5 years or so....pay way less in interest...or so im told....
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Just saw your reason....as prof said not a good choice...just pay extra on the mortage you have...if the rate is over 6% you might try renegotiating the rate..

But the best thing you need to see is a reputable financial advisor that can look over your finances and give informed advice...you will not get that in a truck forum..

And Prof I am a CPA....but I am prohibited by law from giving financial advice (if I charge for it) unless I have been separately certified as a financial advisor...consists of a test & $$$.....most of the test covers what a CPA has already been tested on..:dontknow:
 
TNVIPER said:
Just saw your reason....as prof said not a good choice...just pay extra on the mortage you have...if the rate is over 6% you might try renegotiating the rate..

But the best thing you need to see is a reputable financial advisor that can look over your finances and give informed advice...you will not get that in a truck forum..

And Prof I am a CPA....but I am prohibited by law from giving financial advice (if I charge for it) unless I have been separately certified as a financial advisor...consists of a test & $$$.....most of the test covers what a CPA has already been tested on..:dontknow:
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naw, im sitting pretty good fellas..i got about 35k in equity in my home and i currently have a 30 yr fixed at 5.0%. just seeing whats out there....
 
I have a HELOC and it is the best thing I have done. The flexability is great, but you have to be cautious because you can end up staying in the same place for a long time or even going backwards.

Some other people here have taken out HELOC's and took all the equity they had available and invested it. Then pay interested only payments, no principle towards the HELOC. Then the money that would have been used monthly for principle is also added to the investments monthly.

Basically the idea is that you never pay down the amount of your house, but have a very large initial investment that can grow quickly. Then when the time is right pull from your investment and pay off your house. It is a risk, but it seems that some people have had good luck doing it.
 
wheredwhogo? said:
first and i would be using it to pay off my mortgage faster, lets say in like 5 years or so....pay way less in interest...or so im told....
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The last couple years I have paid about 4-5%, but right now its 2.5%. Also you would probably be penalized to get out of your current mortgage. So sometimes with the penalties its not worth it, or consider when it comes time to renew.
 
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