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Is Just Redoing Our HELOC the Best Way to Do This Thing?

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Is Just Redoing Our HELOC the Best Way to Do This Thing?

The primary goal here is to pull $5OK out of our primary residence.  That would mean paying off the current $45K HELOC, and borrowing another $50K.  That would put the total encumbrance at only 40% LTV, if my math is right.  DT appraisal came in at $250K.


We have started a VA cash out refi, but hit some snags—paperwork required from the VA.  *Not* just the COE; other more obscure docs are necessary, including multiple DD 214s.  No clue as to how long this would all take.


The interest rate quoted is 4.25%, 30 yr fixed.  Not set in stone yet. Appraisal has not been ordered, pending reciept of Docs from VA.


Payment would be $657 (includes T&I).


The credit union that holds our current HELOC has gotten credit approval for a new HELOC for $100K at the following terms:



****As long as we stay below 80% of the homes appraised value, the variable rate will be the same as your current HELOC, the US Prime Rate, which is currently 5.50%.


During the first 10 year draw period, the minimum payment is interest only on the outstanding balance…

Approximately $468.00 on 100k at the current Prime rate (approximately 47.00 per 10k used)


Anything you pay above the minimum will go to reducing the principal balance.


During the second 10 year repayment period, the payment switches to interest and principal and the line of credit access is removed……

Approximately $1086.00 on 100k at the current Prime rate (approximately 109.00 per 10k used)****


The payment jump after 10 years scares me.


We are in a growth area, it’s not unrealistic to anticipate being able to refi later.


The HELOC would be faster than the VA or starting all over with a conventional lender.


Our HELOC LO got tipped off about the VA loan when they called for a payoff.  I told them to go ahead and cancel.  I am guessing that restarting this soon would not be a huge problem.


Our priority at this point is a quick close.




Thank you!

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