There are so many products, all of which have different benefits. The best thing I can see right now (as I'm trying to find financing) is that a HELOC has cheap closing costs...can be in the $300-700 range. Some have prepayments, some do not. You can get interest only loans of both sorts, you can get low rates on both loans. There are investor loans and owner occupied loans in both regular loans and HELOCs.
From my point of view the ad/disad of HELOC over fixed loan are:
Advantages:
-low (free sometimes) closing costs
-lower interest rates
-interest only payments
-if you pay it off it is still there for you to use if the need arises without any further refinancing
Disadvantages:
-variable interest rate
-higher LTV (maybe?)
That's just my perspective. Although I have found HELOC rates to be lower, I note there are some pretty good rates on loans also available, so it might pay to check it out.
HELOC- shop around for a bank which pays closing costs. Depends on how much your HELOC is for, but they usually throw out the pre-pay penalty. It pays to shop trust me.
The way I see it is the HELOC is ultra valuable depending on how long you plan on staying in or holding that property. There are some programs out there low rate HELOC's or variable rate 1st mortgages for up to seven years. The HELOC is cheaper closing cost wise and has better rates depending upon the loan to value. The longer you plan on holding that property, the more sense it makes to get a fixed rate instead.
Remember right now with the prime rate at 4% HELOC look really good but the only direction the prime will be moving in the next few years isn't down but up which means your HELOC rate is going to go up. If you are going to be holding the property for a while, if it is one of your cash flow "gems", a fixed rate is the better way to go.
I've never used a Heloc because most of them are at 80% of LTV. That lock-up more equity and loan a bunch less than a fixed 2nd mtg which , with decent credit, can exceed 100%. There's also COFI loans which have rates of 1.9%-that's close to find cash lying in the street.
Just got a heloc today. 90% LTV no closing costs. Washington mutual. 70k line of credit. Was approved over the phone while I held for 30 seconds. I am an actual case and could not be happier with the product. it is my 2nd one with them. hmmmmm what to buy?
[addsig]
But lemme tell you what I found today. I sat down with my personal banker at Wells Fargo. This was the rundown.
The HELOC:
- 3.75% Varible rate for 10 years after 10 years the Heloc is switched to a fixed mortgage.
Now 3.75% percent is based on credit worthyness. Rate could be as high as a fixed mortgage or refi.
-Min pmt was your choice from interest only to whatever you want.
-No closing costs at all.
-80% LTV
-OwnerOccupy ONLY
*And the suck part: It takes 15-20 days to wrap it up
The FIXED RATE was simple:
-700 in closing
-5.15% fixed for 30 yr
Also based on credit worthyness
Could draw equity out up to 80% LTV owner Occupy.
*This one also took 15-20 days to wrap up
HOWEVER:
Now there were also what seemed like 50 other ways to go but I didnt have time so I did a 30k unsecured LOC at 5.75% and left with my checks in about 30 mins. Min pmt interest only (automatic draft)
Lemme ad this: Without AWESOME CREDIT you are SUNK!
_________________
B.G. & Wheeler D. LLc Inc. and Trust
(A division of: Half Vast Enterprises)
"Most american millionairs today (about 80%) are first generation rich"[ Edited by WheelerDealer on Date 01/22/2004 ]
I just did one too. As stated before, credit worthiness is key. My credit union gave me a 90% HELOC with no costs unless I close it within 2 years. I got 72k at 3.25%. Sweeeetttt.
The funny thing is that I called up the first time and applied over the phone. At one point they asked what I wanted the money for. I told them I was investing in houses. They said they can't loan for that. Doh! I said "I mean for an addition to my house". They said that the call was being recorded. Grrrrrr.
So I called back 10 minutes later, got a different agent and told them I was adding the addition to my house. Hehe. I've bought too houses with it so far..........
Dang!!! Being a 'Subject To' kind of guy does put me at a disadvantage with those who are current on financing/refi market rates and variations. These deals are just too good not to grab www.some.t. Maybe a lot.
I'm glad JoelNelson tipped me off not to divulge my true reason for the loan (a mate for my pet Yak).
So they didn't come by to verify the addition to your house at all??
Quote:
On 2004-01-22 23:14, JoelNelson wrote:
I just did one too. As stated before, credit worthiness is key. My credit union gave me a 90% HELOC with no costs unless I close it within 2 years. I got 72k at 3.25%. Sweeeetttt.
The funny thing is that I called up the first time and applied over the phone. At one point they asked what I wanted the money for. I told them I was investing in houses. They said they can't loan for that. Doh! I said "I mean for an addition to my house". They said that the call was being recorded. Grrrrrr.
So I called back 10 minutes later, got a different agent and told them I was adding the addition to my house. Hehe. I've bought too houses with it so far.......... <IMG SRC="images/forum/smilies/icon_biggrin.gif">
[addsig]
There are so many products, all of which have different benefits. The best thing I can see right now (as I'm trying to find financing) is that a HELOC has cheap closing costs...can be in the $300-700 range. Some have prepayments, some do not. You can get interest only loans of both sorts, you can get low rates on both loans. There are investor loans and owner occupied loans in both regular loans and HELOCs.
From my point of view the ad/disad of HELOC over fixed loan are:
Advantages:
-low (free sometimes) closing costs
-lower interest rates
-interest only payments
-if you pay it off it is still there for you to use if the need arises without any further refinancing
Disadvantages:
-variable interest rate
-higher LTV (maybe?)
That's just my perspective. Although I have found HELOC rates to be lower, I note there are some pretty good rates on loans also available, so it might pay to check it out.
HELOC- shop around for a bank which pays closing costs. Depends on how much your HELOC is for, but they usually throw out the pre-pay penalty. It pays to shop trust me.
when you get a fixed mortgage the payment stays the same for X number of years X amount of payments
when you get a heloc
Your payment is determined by the prime rate
You can get anywhere fromPrime minus one to prime plus 3.
Also you can
The way I see it is the HELOC is ultra valuable depending on how long you plan on staying in or holding that property. There are some programs out there low rate HELOC's or variable rate 1st mortgages for up to seven years. The HELOC is cheaper closing cost wise and has better rates depending upon the loan to value. The longer you plan on holding that property, the more sense it makes to get a fixed rate instead.
Regards,
Jason Sardi
**Please See My Profile**
Remember right now with the prime rate at 4% HELOC look really good but the only direction the prime will be moving in the next few years isn't down but up which means your HELOC rate is going to go up. If you are going to be holding the property for a while, if it is one of your cash flow "gems", a fixed rate is the better way to go.
Q[ Edited by RunningQ on Date 01/22/2004 ]
I've never used a Heloc because most of them are at 80% of LTV. That lock-up more equity and loan a bunch less than a fixed 2nd mtg which , with decent credit, can exceed 100%. There's also COFI loans which have rates of 1.9%-that's close to find cash lying in the street.
Just got a heloc today. 90% LTV no closing costs. Washington mutual. 70k line of credit. Was approved over the phone while I held for 30 seconds. I am an actual case and could not be happier with the product. it is my 2nd one with them. hmmmmm what to buy?
[addsig]
Everybody is correct.
But lemme tell you what I found today. I sat down with my personal banker at Wells Fargo. This was the rundown.
The HELOC:
- 3.75% Varible rate for 10 years after 10 years the Heloc is switched to a fixed mortgage.
Now 3.75% percent is based on credit worthyness. Rate could be as high as a fixed mortgage or refi.
-Min pmt was your choice from interest only to whatever you want.
-No closing costs at all.
-80% LTV
-OwnerOccupy ONLY
*And the suck part: It takes 15-20 days to wrap it up
The FIXED RATE was simple:
-700 in closing
-5.15% fixed for 30 yr
Also based on credit worthyness
Could draw equity out up to 80% LTV owner Occupy.
*This one also took 15-20 days to wrap up
HOWEVER:
Now there were also what seemed like 50 other ways to go but I didnt have time so I did a 30k unsecured LOC at 5.75% and left with my checks in about 30 mins. Min pmt interest only (automatic draft)
Lemme ad this: Without AWESOME CREDIT you are SUNK!
_________________
B.G. & Wheeler D. LLc Inc. and Trust
(A division of: Half Vast Enterprises)
"Most american millionairs today (about 80%) are first generation rich"[ Edited by WheelerDealer on Date 01/22/2004 ]
I see people stating that HELOCs are variable interest.
I have seen a number of HELOCs with fixed rate as an option.
If you want a nice comparisson of the two you can go here:
http://www.bankofamerica.com/loansandhomes/index.cfm?template=lc_heloc_line_of_credit
About half way down it in blue it says Compare the features of home equity loans and home equity lines of credit.
I would have put a link to it but when you click on it there is a pop up window with no URL>[ Edited by MrMike on Date 01/22/2004 ]
I just did one too. As stated before, credit worthiness is key. My credit union gave me a 90% HELOC with no costs unless I close it within 2 years. I got 72k at 3.25%. Sweeeetttt.
The funny thing is that I called up the first time and applied over the phone. At one point they asked what I wanted the money for. I told them I was investing in houses. They said they can't loan for that. Doh! I said "I mean for an addition to my house". They said that the call was being recorded. Grrrrrr.
So I called back 10 minutes later, got a different agent and told them I was adding the addition to my house. Hehe. I've bought too houses with it so far..........
Dang!!! Being a 'Subject To' kind of guy does put me at a disadvantage with those who are current on financing/refi market rates and variations. These deals are just too good not to grab www.some.t. Maybe a lot.
I'm glad JoelNelson tipped me off not to divulge my true reason for the loan (a mate for my pet Yak).
I need to get a HELOC on my investment property. Any idea of who offers a heloc product on an ivestment property (2 unit home).
PLease get back
Thanks
So they didn't come by to verify the addition to your house at all??
Quote:
On 2004-01-22 23:14, JoelNelson wrote:
I just did one too. As stated before, credit worthiness is key. My credit union gave me a 90% HELOC with no costs unless I close it within 2 years. I got 72k at 3.25%. Sweeeetttt.
The funny thing is that I called up the first time and applied over the phone. At one point they asked what I wanted the money for. I told them I was investing in houses. They said they can't loan for that. Doh! I said "I mean for an addition to my house". They said that the call was being recorded. Grrrrrr.
So I called back 10 minutes later, got a different agent and told them I was adding the addition to my house. Hehe. I've bought too houses with it so far.......... <IMG SRC="images/forum/smilies/icon_biggrin.gif">
[addsig]