topic Re: What do I need to know about a HELOC? in Mortgage Loans

What do I need to know about a HELOC?

jamie123 — Mon, 17 Feb 2020 19:01:37 GMT

I am planning some major renovations to the house that I have lived in for 3 years. I currently have a mortgage of $255K and it was bought 3 years ago for $409K. Similar houses in the neighborhood are selling for $475K today.

Renovations that are planned this year with ballpark costs:

New roof $25K
Pool relining $11K
Birdcage screens replaced $10K
Solar panel installation with some battery backup: $40K

Total: ~$86K

How tough are HELOCs to be approved?

Should I ask for more than I need? $100K?

How will this affect my scores? My wife and I are both in the lower 800s now.

What do I need to know about HELOCs?

Where is the best place to get a HELOC?

Thanks in advance for all your help!

Re: What do I need to know about a HELOC?

NC_Mtg_Loaner — Tue, 18 Feb 2020 02:53:42 GMT

HELOCs are great if you can pay them off before interest rates rise.......

HELOC's are typically anchored to the Prime Rate or LIBOR.

The type of repair/renovations you are doing have you not considered just doing a cash out refi to one of today's low fixed rates?

Re: What do I need to know about a HELOC?

Revelate — Tue, 18 Feb 2020 07:13:27 GMT

HELOCs are fairly easy to get underwritten, there's no regulation on them like a second mortgage.

Cash out refi, problem is that costs a few thousand in closing quite often. HELOC generally is going to be cheaper... I highly recommend DCU's HELOC personally, not only is it possibly the best rate, you can also do a fixed advance at Prime basically to prevent creep if interest rates do rise. I'd check both and do the math for however long you intend to carry the debt.

As far as scoring goes won't be any impact on FICO 8, it'll be excluded. EX FICO 2 will take a hit, didn't see anything on the other two mortgage scores. Shouldn't be a big deal unless you're planning to get another mortgage anytime soon.

You can go up to 80% LTV typically, more than you need might defray that EX FICO 2 penalty some but I doubt it; some might go up to 90% but I don't know specific lenders for that and doesn't sound like you need that.

Also might want to look at the Tesla Solar Roof specifically, you have slated like 65K and it might actually come in under that from the pricing I saw previously.

Re: What do I need to know about a HELOC?

Shooting-For-800 — Tue, 18 Feb 2020 13:03:55 GMT

Some of your repairs have their own finance options, perhaps fixed rates.

I would investigate those also.