HELOC Question

[Garet Jax]

Hello all,

I have a mortgage with Wells Fargo. I probably have ~30K in equity in my house. I do not want to refinance, but I would like to open a HELOC.

Does my HELOC have to be with my primary mortgage lender or can I open it with any lender?

PS - In case it is important, my credit was ~720 when I bought the house about 1.5 years ago and I have made all payments on time and have no reason to believe it has gone down.

 

[woowoo]

No
It can be with anyone

 

No, though usually the lending institutuion you are with will help you out better if you return for more business.

 

[Garet Jax]

Thanks. Now it begs the question how does one compare one HELOC to another:

0) Amount
1) Interest rate
2) Annual Fee
3) Variable Fees
4) Penalties for early termination

Anything else to consider?

 

[frankie38]

I would consider a HELOC if and only if the loan was for short time period such as 1-2 years. The reason being is that the FED is raising rates now. Rates are expected to rise another 25 basis points again after the FOMC meeting on 12/14. Many pundits believe that the FED will continue to raise rates another 50-75 basis points by mid 2005. The Prime rate today is 5.00% It will rise to 5.25% on Tuesday after the FED announcement. Then projected to rise to 5.75%- 6.00% by mid 2005. The HELOC are usually index based off of the Prime rate.

If you are borrowing for a longer term, then maybe a fixed rate HE loan maybe better. That is HE loan is fixed and will not increase if rates continue to rise. The HE loan amortizes while the HELOC does not. That is the HE payment includes principal while the HELOC does not.

My advice research HELOC and HE loans before any decision.

 

[Homerboy]

I just did a Equyity Loan (not Credit... blech) with Wells Fargo, my primary mortgage holder also.
One nice thing is they took of .5% if I did automatic deductions (paid electronically). Since I have my checking/savings there too it was a no brainer. Everyone pretty much gave me the same rate on a 15yr loan, but Wells Fargo knocked that extra .5% off so they won my business.

Just food for thought.

 

[Garet Jax]

Originally posted by: frankie38
I would consider a HELOC if and only if the loan was for short time period such as 1-2 years. The reason being is that the FED is raising rates now. Rates are expected to rise another 25 basis points again after the FOMC meeting on 12/14. Many pundits believe that the FED will continue to raise rates another 50-75 basis points by mid 2005. The Prime rate today is 5.00% It will rise to 5.25% on Tuesday after the FED announcement. Then projected to rise to 5.75%- 6.00% by mid 2005. The HELOC are usually index based off of the Prime rate.

If you are borrowing for a longer term, then maybe a fixed rate HE loan maybe better. That is HE loan is fixed and will not increase if rates continue to rise. The HE loan amortizes while the HELOC does not. That is the HE payment includes principal while the HELOC does not.

My advice research HELOC and HE loans before any decision.

Great advice! I don't actually need the money right now so an HE loan is not really useful.

I am going to be buying a secondary home to rent and I want access to large amounts of money quickly for contingency (furnaces, roofs, etc....). A HELOC allows me to withdraw money quickly and only pay interest if I have to for an extended period. A variable interest rate is par for the course. I haven't seen or heard of a HELOC with a fixed interest rate (at least not a reasonable fixed interest rate ).

An HE loan doesn't fit the need here.