Home Equity Loans

[CrazyCaper]

My wife & I have recently come upon some difficult financial situations and have been researching home equity loans. I hear ads for them all over the radio these days and wanted to inquire on other people's experiences....whether they be good or bad.

Appreciate any feedback I can get.

CrazyCaper

[Tower]

Seriously, go to Homerun International. Tell them about your problems and they will guide you out of it. They have helped a lot of people.

http://www.homerun-international.com/

[Finner]

Originally Posted by CrazyCaper

My wife & I have recently come upon some difficult financial situations and have been researching home equity loans. I hear ads for them all over the radio these days and wanted to inquire on other people's experiences....whether they be good or bad.

Appreciate any feedback I can get.

CrazyCaper

I think you're talking about a "Home Equity Line of Credit" (HELOC). Basically if you have more then 20% equity in your home, anything above that 20% can be taken out as a line of credit secured against your house.

ie. House is worth 100k, you have 50k left on your mortgage. 20% of your house equity is 20k, so you can take 30k out as a LOC.

Rates are generally very good, right now probably prime + 1 (3.5%), and the minimum payments on HELOCs are interest only so the payments are usually very low.

I would probably go through a big bank, or wherever you have a mortgage. They are pretty common.

You can take out a HELOC on its own, or combine whats left of your mortgage into a HELOC. IE. House worth 100k (so maximum line of credit of 80k), 50k left on mortgage, so you take out a 80k HELOC, pay off your mortgage and are left with 30k available. Then your payments are way lower again as you only have to pay interest on them.

Clear as mud i guess...

[awildermode]

"Making your home equity work for you...Alpine Mortage"

sorry, had to do it.

[MoneyGuy]

HELOCs good or bad? It all depends on how you use them, my friend. Used well, they can be great. Used badly and they can be a disaster. Finner explained it well. They generally cost about $500 to set up (legal and appraisal fees). At least that's what is was for mine many years ago. If your financial problems are due to overspending, I'd also deal with that problem as it can kill you. Good luck.

[shane_c]

So what would be the difference between a HELOC and a regular LOC? Our mortgage is with Scotiabank but we do our day to day banking with RBC. Do we have to go with the mortgage holder for this?

We are considering getting a garage built and would need to finance it somehow. It seems like a reasonable investment. It would cost about $15K and for our area would likely add $25K in value to the house.

[red sky]

HELOCs are back by the equity in your house thus they have lower interest rates. The other difference is that you are required to only pay the interest on your HELOC but similar to an unsecured LOC you can pay as much principle as you want without penalty.

[Deegee]

Originally Posted by shane_c

So what would be the difference between a HELOC and a regular LOC? Our mortgage is with Scotiabank but we do our day to day banking with RBC. Do we have to go with the mortgage holder for this?

We are considering getting a garage built and would need to finance it somehow. It seems like a reasonable investment. It would cost about $15K and for our area would likely add $25K in value to the house.

I know our (a Credit Union) standard procedure is to charge a bonus over the standard Home Equity Credit rate if we are 2nd Charge to another Financial Institution.

Another option to consider is to do a smaller 2nd Mortgage for your garage right now with Scotia Bank. As they hold your 1st Mortgage right now, they should be able to offer you 1st Mortgage rates on the small loan.

[shane_c]

Originally Posted by red sky

HELOCs are back by the equity in your house thus they have lower interest rates. The other difference is that you are required to only pay the interest on your HELOC but similar to an unsecured LOC you can pay as much principle as you want without penalty.

Isn't that the same as a regular LOC, you only have to pay the interest? Is a HELOC the same as borrowing against your house that got so many in the US in trouble? Worse case scenario, if something happened and we couldn't make the payment (i.e. lost our jobs, etc) would they come after our house?