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Established Contributor
dog
Posts: 560
Registered: ‎05-03-2007
0

mortgage/heloc question...

lets say i am looking to borrow 10-15 grand against a home that i own outright (don't plan to do this until next year when i am hopefully in the 700s), to finish up some remodeling.
 
can a person get a short-term fixed-rate mortgage, like 5 years or less, or am i looking at a heloc?  do lenders even do mortgages that small and short term? 
 
also, am i looking at fees and closing costs that would probably outweigh any benefit of a mortgage to a heloc?
 
perhaps this is not appropriate for this forum, but thought i could trust someone here better than someone elsewhere. 
 
 
 
 
Super Contributor
MidnightVoice
Posts: 8,161
Registered: ‎03-25-2007
0

Re: mortgage/heloc question...

I got a fixed rate HELOC, and though it was for 15 years there is no prepayment penalty, so it will be gone in 5 years at my current payment rate (unless I move house!)
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Regular Contributor
OneMortgageGuy
Posts: 255
Registered: ‎06-08-2007
0

Re: mortgage/heloc question...

I think a lot of people get the Heloc mixed up with a fixed 2nd. They are both seconds but a Heloc is a 25 year I/O and a Fixed 2nd is P/I or I/O and can be 5,10,20,15,20, and 30 Years.
 
Im just making up rates and I have no idea what you will get in a year...
 
Lets say you get a Heloc for 20K at a 8.25% 25 Years I/O... Your payment will be $137.50 I/O. You can pull out and put back as much or as many times as you need to. Your min payment on the balance is Interest/Only. To pay it off in 5 years you need to pay 407.93 and that if the interest does not go up. Rate will only go up when prime rate goes up.
 
Lets say you do a fixed second for 20K at a 8.25% 30 Years P/I... Your payment will be $150.25 P/I. You will get 20K and if you make a 10K payment you payment will still be $150.25 P/I. To pay it off in 5 years you will need to pay $407.93 just like the Heloc but the rate will never change.
 
For a Heloc shop around because lots of banks are well below prime rate. Keep in mind Heloc's have little fee and even no closing cost option.
 
A Fixed Second will have a higher rate and start at zero points but you can buy down the rate. That's up to you on points and not the bank! The closing cost on a fixed is higher. As for the term... Price out a all terms and see what rate is better but most of the time they are just about the same. If a fixed 30 or  year term is the same... I would take the 30 and make the 5 year payment but that's because the way I'm paid.
 
You really need to think how long you need to money for.
Regular Contributor
OneMortgageGuy
Posts: 255
Registered: ‎06-08-2007
0

Re: mortgage/heloc question...

One more think.... You can find Heloc out there that have an option that you can lock in the rate but you can not pull any more cash out.
Established Contributor
dog
Posts: 560
Registered: ‎05-03-2007
0

Re: mortgage/heloc question...

thanks a lot, mortgage guy, you answered my question perfectly!
Regular Contributor
OneMortgageGuy
Posts: 255
Registered: ‎06-08-2007
0

Re: mortgage/heloc question...

Glad I could help!
Moderator Emeritus
Timothy
Posts: 9,252
Registered: ‎03-19-2007
0

Re: mortgage/heloc question...

Nice post.
TY


OneMortgageGuy wrote:
I think a lot of people get the Heloc mixed up with a fixed 2nd. They are both seconds but a Heloc is a 25 year I/O and a Fixed 2nd is P/I or I/O and can be 5,10,20,15,20, and 30 Years.
 
Im just making up rates and I have no idea what you will get in a year...
 
Lets say you get a Heloc for 20K at a 8.25% 25 Years I/O... Your payment will be $137.50 I/O. You can pull out and put back as much or as many times as you need to. Your min payment on the balance is Interest/Only. To pay it off in 5 years you need to pay 407.93 and that if the interest does not go up. Rate will only go up when prime rate goes up.
 
Lets say you do a fixed second for 20K at a 8.25% 30 Years P/I... Your payment will be $150.25 P/I. You will get 20K and if you make a 10K payment you payment will still be $150.25 P/I. To pay it off in 5 years you will need to pay $407.93 just like the Heloc but the rate will never change.
 
For a Heloc shop around because lots of banks are well below prime rate. Keep in mind Heloc's have little fee and even no closing cost option.
 
A Fixed Second will have a higher rate and start at zero points but you can buy down the rate. That's up to you on points and not the bank! The closing cost on a fixed is higher. As for the term... Price out a all terms and see what rate is better but most of the time they are just about the same. If a fixed 30 or  year term is the same... I would take the 30 and make the 5 year payment but that's because the way I'm paid.
 
You really need to think how long you need to money for.



Regular Contributor
OneMortgageGuy
Posts: 255
Registered: ‎06-08-2007
0

Re: mortgage/heloc question...

Thanks Timothy

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