Home Equity Loan

ELCHawk

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Sep 3, 2019
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My wife an I own a 15 year old house. We have owned it for around 10 years now. It is starting to nickel and dime us. Both decks are rotting. Our water heater is close to the end. We have to get a new roof and although insurance is paying some it is not paying it all. We would like to get a real fence or dog fence for our two big dogs. We are currently taking much more out of savings than putting in. We are both teachers and although we make a nice income we definitely are middle class. Has anyone ever got a home equity loan? Would you recommend it? We purchased house for 220,000. It is now worth 245,000. We have 85,000 left. We both have excellent credit. What say you?
 

Tenacious E

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Dec 4, 2001
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My wife an I own a 15 year old house. We have owned it for around 10 years now. It is starting to nickel and dime us. Both decks are rotting. Our water heater is close to the end. We have to get a new roof and although insurance is paying some it is not paying it all. We would like to get a real fence or dog fence for our two big dogs. We are currently taking much more out of savings than putting in. We are both teachers and although we make a nice income we definitely are middle class. Has anyone ever got a home equity loan? Would you recommend it? We purchased house for 220,000. It is now worth 245,000. We have 85,000 left. We both have excellent credit. What say you?
We have a HELOC that we have used a couple of times but have not retired. I pay it off as rapidly as possible as bonuses and such come in, but it is nice to have the flexibility.
 

theiacowtipper

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Feb 17, 2004
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My wife an I own a 15 year old house. We have owned it for around 10 years now. It is starting to nickel and dime us. Both decks are rotting. Our water heater is close to the end. We have to get a new roof and although insurance is paying some it is not paying it all. We would like to get a real fence or dog fence for our two big dogs. We are currently taking much more out of savings than putting in. We are both teachers and although we make a nice income we definitely are middle class. Has anyone ever got a home equity loan? Would you recommend it? We purchased house for 220,000. It is now worth 245,000. We have 85,000 left. We both have excellent credit. What say you?
We got a home equity line of credit. When we were done with the application we had a Mastercard with a 75k limit that we could use for home improvements balance transfers or whatever we wanted. It could have been more if we needed it. Zero fees. No closing costs. No appraisal. Took about 2 days to get done start to finish. No tax returns. No submission of payroll info. They verified income through our bank. Our credit scores are 775 or so. Interest rate was 4.5%ish. We beat the rate our bank was going to charge.

Using it to do a new HVAC. New driveway. Windows and siding. New shed. Probably have the cost will end up on the card.
 

hydro2.0

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Jun 25, 2018
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Yep got a HELOC 2-3 years ago. Used it for down payment on a rental- paid it off then used it for bathroom remodel. Very low monthly payments but can pay off whenever
 

thewop

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Jun 27, 2002
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We got a home equity line of credit. When we were done with the application we had a Mastercard with a 75k limit that we could use for home improvements balance transfers or whatever we wanted. It could have been more if we needed it. Zero fees. No closing costs. No appraisal. Took about 2 days to get done start to finish. No tax returns. No submission of payroll info. They verified income through our bank. Our credit scores are 775 or so. Interest rate was 4.5%ish. We beat the rate our bank was going to charge.

Using it to do a new HVAC. New driveway. Windows and siding. New shed. Probably have the cost will end up on the card.
Any particular reason you carry a 75k limit on a credit card? Have you just let them raise it whenever they like, or is there a strategy at play I need to know?
 
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theiacowtipper

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Any particular reason you carry a 75k limit on a credit card? Have you just let them raise it whenever they like, or is there a strategy at play I need to know?
I’m going to be honest I don’t know. When I applied, they asked the total cost of the project. Application was online. I put 75k down because that’s what I thought it was going to cost. They didn’t ask how much I was going to use, which will be about 30k. I guess I should get it lowered but since it’s actually a Mastercard I assume it is fraud protected.
 
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theiacowtipper

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Feb 17, 2004
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Any particular reason you carry a 75k limit on a credit card? Have you just let them raise it whenever they like, or is there a strategy at play I need to know?
Adding, it’s brand new. Like I just got it this last week. When I was approved it was for 75k. I assume because that’s what I said total cost of the project would be. For reference sake, we have about 100k in equity on the house. Maybe 125k.
 

cubforlife18

Gold Member
Oct 20, 2015
8
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Rate hikes have killed variable credit like credit cards, equity accounts, or anything tied to those treasury indexes.. this is assuming you need possibly more than 25k but I would seriously consider a cash out refinance. While mortgage rates have been impacted due to rate hikes, it’s still a better option rate wise for financing.. my guess is you could do a 15 year, get the cash out you need, and your payment will look similar to what you’re paying now.. 15 year fixed refi rates are in low 4’s depending.. you can do that and guarantee you can do a HELOC at the same time at no cost so you have funds available in the future if expenses like this come up.. I manage a mortgage team and a lot of clients are going this route still assuming it fits their situation.
 

theiacowtipper

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Feb 17, 2004
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Rate hikes have killed variable credit like credit cards, equity accounts, or anything tied to those treasury indexes.. this is assuming you need possibly more than 25k but I would seriously consider a cash out refinance. While mortgage rates have been impacted due to rate hikes, it’s still a better option rate wise for financing.. my guess is you could do a 15 year, get the cash out you need, and your payment will look similar to what you’re paying now.. 15 year fixed refi rates are in low 4’s depending.. you can do that and guarantee you can do a HELOC at the same time at no cost so you have funds available in the future if expenses like this come up.. I manage a mortgage team and a lot of clients are going this route still assuming it fits their situation.
What about fees for a cash out?
 
Mar 11, 2020
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Personally I wouldn't touch my first mortgage for a cash out. You have to look at your numbers but as an example.i would rather pay 6%(example) on 25k (heloc) and leave my first mortgage balance 225k (example) at "3.25"(example) than pay 250 at 5%
 

cubforlife18

Gold Member
Oct 20, 2015
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What about fees for a cash out?
Depends on state..Iowa is one of the lower costing states so you'd be looking at about 1800 all in max but over the last 2 years a lot of lenders have started using alternative valuation products for the appraisal so I'd say on 80% of refinances we do there's an appraisal waiver which wipes out 5-600 of that total cost. not saying it's a guarantee but it's very likely. the other thing to consider here is weighted average rate and what that means is I would still entertain a home equity loan option even if the rate is higher on that and if you have say a 3% on your outstanding balance of the primary mortgage then depending on weighted average, it may make more sense to do the home equity loan even if it's higher. feel free to PM me if you want further details. I don't originate, just manage so happy to help educate a fellow HROT'er so you can make a more informed decision.
 
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cubforlife18

Gold Member
Oct 20, 2015
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Personally I wouldn't touch my first mortgage for a cash out. You have to look at your numbers but as an example.i would rather pay 6%(example) on 25k (heloc) and leave my first mortgage balance 225k (example) at "3.25"(example) than pay 250 at 5%
all depends on weighted average. You definitely may be 100% right but every scenario is different and it's definitely worth entertaining if it means saving money over long term.
 

Tenacious E

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Personally I wouldn't touch my first mortgage for a cash out. You have to look at your numbers but as an example.i would rather pay 6%(example) on 25k (heloc) and leave my first mortgage balance 225k (example) at "3.25"(example) than pay 250 at 5%
It really just comes down to how much interest you have left to pay on your loan and how much interest you will have to pay on the new loan.
 
May 27, 2010
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OP prioritize your needs. I've had an open HELOC for a long time on my primary residence, just be aware they are usually adjustable rate instruments. I would think the roof is your first thing to tackle because a failed roof will definitely cost you the most in your worst case scenario. Think about getting rid of the decks perhaps? Most decks are short-term and money pits and they don't add much to the value of your home. Water heater will be a necessity obviously, but just wait for it to fail, unless it already has failed. Fencing for your dogs sounds more like a want as opposed to a need, I don't know for sure but maybe an electronic fence would be a cheaper option, but for big dogs they don't always work effectively.
 
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Tenacious E

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OP prioritize your needs. I've had an open HELOC for a long time on my primary residence, just be aware they are usually adjustable rate instruments. I would think the roof is your first thing to tackle because a failed roof will definitely cost you the most in your worst case scenario. Think about getting rid of the decks perhaps? Most decks are short-term and money pits and they don't add much to the value of your home. Water heater will be a necessity obviously, but just wait for it to fail, unless it already has failed. Fencing for your dogs sounds more like a want as opposed to a need, I don't know for sure but maybe an electronic fence would be a cheaper option, but for big dogs they don't always work effectively.
Perhaps this belongs in the first-world problem thread, but if you have kids or dogs, I do not consider a fence to be a want. And while in an unamerican sense a deck is a want, most houses would look ridiculous without them or at least a stone/concrete patio.
 

Speedway1

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Dec 23, 2012
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Currently doing this. A major remodel to our old house. Budget of $60k. Separate loan that we have up to a year to use the funds and then add to my current mortgage. Easy peasy. Contractor is tearing out walls currently and doing rewire and new plumbing . New bathroom kitchen and laundry. Much needed. I have a great Local bank no unnecessary BS.
 

theiacowtipper

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Feb 17, 2004
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I think our primary loan is 3.25%. I don’t think I can touch that now. I’m only going to need this HELOC for 18 months or so, the no fees makes this route pretty attractive.
 

NoleATL

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Jul 11, 2007
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We purchased house for 220,000. It is now worth 245,000. We have 85,000 left. We both have excellent credit. What say you?
I would have thought the value would have increased more but congrats on how little you owe on it compared to most people.
 

thewop

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Adding, it’s brand new. Like I just got it this last week. When I was approved it was for 75k. I assume because that’s what I said total cost of the project would be. For reference sake, we have about 100k in equity on the house. Maybe 125k.
Makes sense. Yeah if it's a card you may want to lower it, but for the most part it won't come into play I don't think. I've just always kept my limits lower in the event it would potentially impact another loan. Your right though, it'll be fraud protected regardless.
 

theiacowtipper

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Feb 17, 2004
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Makes sense. Yeah if it's a card you may want to lower it, but for the most part it won't come into play I don't think. I've just always kept my limits lower in the event it would potentially impact another loan. Your right though, it'll be fraud protected regardless.
I do worry about the effect that much potential debt has on the credit score but we will see
 

bhawk24bob

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Jul 8, 2001
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My answer would depend on how expensive this work would cost. Try splitting it up between the must haves (the roof, the water heater) and the nice to haves
 

Hawkman34

HR MVP
Mar 17, 2002
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ELC.....That is the best option I would say. It does depend on how much the work will cost that you need done and if you have the ability to pay it off a little sooner. Still good deals to be had out there. Good luck!!!
 

cubforlife18

Gold Member
Oct 20, 2015
8
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I do worry about the effect that much potential debt has on the credit score but we will see
A HELOC usage/balance doesn’t impact the credit score at all because it’s collateralized debt tied to the equity in the home. If they have a 75k limit and use it all, there’s no impact to the credit score. Revolving credit like a credit card is completely different.. you get a credit limit of 10k and you have a running balance that runs high or close to the limit.. that will not help your credit score because it’s high revolving debt.. add a couple more credit cards like that and the score is in the tank.. HELOC wouldn’t have any impact compared to high balance credit cards.
 

noleclone2

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May 4, 2015
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HELOC is a good way to go, as long as you are responsible with it and mainly use on house upgrades or big repairs or big life events. Problem is when people get access to that money and spend it on stupid stuff and have no cushion for when the roof needs replacing because it is maxed out due to skiing in Vail and jewelry and golfcarts and jet skis and....
 
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millah_22

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Jun 15, 2004
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Omaha
Perhaps this belongs in the first-world problem thread, but if you have kids or dogs, I do not consider a fence to be a want. And while in an unamerican sense a deck is a want, most houses would look ridiculous without them or at least a stone/concrete patio.
Even without pets or children, a fence in a denser neighborhood is very nice for privacy.
 
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CoachH

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Jun 26, 2001
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A HELOC usage/balance doesn’t impact the credit score at all because it’s collateralized debt tied to the equity in the home. If they have a 75k limit and use it all, there’s no impact to the credit score. Revolving credit like a credit card is completely different.. you get a credit limit of 10k and you have a running balance that runs high or close to the limit.. that will not help your credit score because it’s high revolving debt.. add a couple more credit cards like that and the score is in the tank.. HELOC wouldn’t have any impact compared to high balance credit cards.
The credit report will probably show it as revolving debt (depending on how the bank codes their credit reporting data) in my experience. So it will be lumped in with other revolving debt as far as balance/credit line, possibly affecting credit score.

Now if it's not a line but fixed loan amount with regular payments, that is completely different.
 

DianaPowell

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Feb 19, 2021
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My parents had a similar problem. They have lived in the same house for twenty years, and it needed some reconditioning. Unfortunately, they are retired, and they don't have the possibility to recondition the house, and I don't have such a great job to help them with this problem. It is why I got a personalized loan from Monifai Costa Rica, so I could get some money to renovate their house. We are paying the loan together, so it is not so hard, and we think it will be paid off even earlier than it needs to be.
 

cfbfan23

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Mar 29, 2002
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My parents had a similar problem. They have lived in the same house for twenty years, and it needed some reconditioning. Unfortunately, they are retired, and they don't have the possibility to recondition the house, and I don't have such a great job to help them with this problem. It is why I got a personalized loan from Monifai Costa Rica, so I could get some money to renovate their house. We are paying the loan together, so it is not so hard, and we think it will be paid off even earlier than it needs to be.
interested-keep-talking.gif
 
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Tenacious E

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Dec 4, 2001
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My parents had a similar problem. They have lived in the same house for twenty years, and it needed some reconditioning. Unfortunately, they are retired, and they don't have the possibility to recondition the house, and I don't have such a great job to help them with this problem. It is why I got a personalized loan from Monifai Costa Rica, so I could get some money to renovate their house. We are paying the loan together, so it is not so hard, and we think it will be paid off even earlier than it needs to be.
Are there any other financial products in the Monifai Costa Rico portfolio that you would recommend I consider?
 

Colonoscopy

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Feb 20, 2022
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My parents had a similar problem. They have lived in the same house for twenty years, and it needed some reconditioning. Unfortunately, they are retired, and they don't have the possibility to recondition the house, and I don't have such a great job to help them with this problem. It is why I got a personalized loan from Monifai Costa Rica, so I could get some money to renovate their house. We are paying the loan together, so it is not so hard, and we think it will be paid off even earlier than it needs to be.

Pics? Ass pics?