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Post by Deleted on Feb 13, 2011 13:32:21 GMT -5
We are going to need to remodel our bathroom within the next year or so. Have been saving for this and will continue to but still may need to borrow a bit. I am wondering if HELOC is the way to do this and if so should we get this line of credit now(rates rising) even though we will not be using it for a while. We have a lot of equity and are not irresponsible with our money. Any thoughts appreciated.
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Post by Savoir Faire-Demogague in NJ on Feb 13, 2011 13:34:29 GMT -5
It really depends on the lender, your credit score, etc., but a Heloc would usually have a variable rate. You'd have to look around at lenders in your area. I would suggest first inquiring with the local bank you do business with.
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Post by Deleted on Feb 13, 2011 14:11:23 GMT -5
Thanks. Credit scores are good. So if we took credit line out now or a year from now it would'nt really matter as HELOC rates are variable?
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schildi
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Post by schildi on Feb 13, 2011 14:16:24 GMT -5
Thanks. Credit scores are good. So if we took credit line out now or a year from now it would'nt really matter as HELOC rates are variable? That's true for all the HELOC's I have heard about. Never heard of a fixed rate HELOC. But I would probably just save the money and try to avoid taking a loan for a remodel.
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Post by Deleted on Feb 13, 2011 14:28:50 GMT -5
That is the plan , but you know I get a little greedy for my nice bathroom!
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TD2K
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Post by TD2K on Feb 13, 2011 14:57:11 GMT -5
All the HELOC's I've seen are variable rates though most will allow you to 'lock' in a rate (not the current variable rate, pity). That essentially converts it to a home equity loan.
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Post by Deleted on Feb 14, 2011 1:14:08 GMT -5
I would get a HELOC if you're not talking about very much money and if you're planning to pay it off quickly. To me bathroom and kitchen remodels are consumer items and only last around 10 years before they are considered "dated".
Alternatively you could get a small fixed rate second at a credit union.
Or if your existing home loan is more than 5.5% you should run the numbers and see if a cash-out refi of your entire debt makes sense.
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Wisconsin Beth
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Post by Wisconsin Beth on Feb 14, 2011 9:08:06 GMT -5
Our HELOC is variable rate. We're about 3 years into the 10 year term. We can refi and lock the rate at any time. I don't recall our interest rate offhand but I think it's still under 5% (it may even be under 4%, the last time I asked DH about it, I think it was 3.75%...) We were going to get a HELOC for $25K but after discussions between DH and me and the rep, we opted for the $50K limit instead.
Our HELOC is with Wells Fargo, who also holds our mortgage. Because they hold the mortgage, all we had to do was fill out the paperwork and then go over it with a Wells Fargo representative. This was in the middle of the market meltdown so things may have changed. I think we pay a $75 yearly fee. What's interesting is that we can freely pay the HELCO online but the actual mortgage has an online pay fee or something, the last time we checked on it.
I would encourage you to make sure you both are on the same page as what you're willing to use HELOC money for - DH and I are willing to use it to do improvements to the house and to buy cars. We're not willing to use it to pay off other debts. Views are different so make sure you both are on similar pages on the matter. You don't want to get the checks for a HELOC and discover that one of you is thinking it's now time to replace X, Y and/or Z too.
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cronewitch
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Post by cronewitch on Feb 14, 2011 10:33:53 GMT -5
Mine is with Charles Schwab Bank and Prime minus 1.01 but now they only offer prime minus .75 still a good deal compared to local banks.
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 14, 2011 12:29:16 GMT -5
Our HELOC is with Wells Fargo, who also holds our mortgage. Because they hold the mortgage, all we had to do was fill out the paperwork and then go over it with a Wells Fargo representative. This was in the middle of the market meltdown so things may have changed. I think we pay a $75 yearly fee. What's interesting is that we can freely pay the HELCO online but the actual mortgage has an online pay fee or something, the last time we checked on it. Do you have a WF checking account? I have a WF mortgage too and I make payments by going online and doing a transfer. No fee at all.
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jkapp
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Post by jkapp on Feb 14, 2011 13:32:40 GMT -5
I prefer HELOCs...their rates may be variable but I don't have to take out any money until I'm ready and I can decide how much to pay back each month (plus whatever interest accumulates obviously). Plus the interest is tax deductible (at least for now)
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dividend
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Post by dividend on Feb 14, 2011 13:45:05 GMT -5
We are going to need to remodel our bathroom within the next year or so. Have been saving for this and will continue to but still may need to borrow a bit. Since when is remodeling a bathroom a need? Why not just save until you can pay it in cash?
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Tiny
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Post by Tiny on Feb 14, 2011 14:07:38 GMT -5
HELOCs are variable rate... but the "agreements" differ from lender to lender. They usually have a minimum rate and a maximum rate. You could research the current offerings for HELOCs and see if you can find one that fits where you think future rates are going to go. Locking in on a rate structure now might be better than later if you think rates will skyrocket up later (meaning maybe you'd have a 8% maximum on a HELOC you take out now -- but if you wait a year the "new" maximums might be 12 or 14% - IF you think rates will go up that much. You also need to consider if your HELOC debt will be short term or long term. If you are gonna borrow 30K and "plan" to pay it off over 15 years - then maybe a HEL (Home Equity Loan) with a fixed rate may be better suited to your needs. If you are gonna borrow 30K and have a valid, workable plan to pay it off in 5 years - a HELOC might be the way to go - if the interest rates skyrocket you won't be paying them for very long... I've used a HELOC to fix up my fixer upper - I've never gone over a 20K balance - It seems to always have a balance between 5K and 15K... I'd pay it down and then move on to the next project... keeping the total due manageable within my budget, savings, and long term plans. It's been an inexpensive source of money
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Post by Deleted on Feb 14, 2011 19:07:02 GMT -5
We are going to need to remodel our bathroom within the next year or so. Have been saving for this and will continue to but still may need to borrow a bit. Since when is remodeling a bathroom a need? Why not just save until you can pay it in cash? It becomes a need for me when the bathtub starts peeling, the floor tile starts peeling, there is no ventilation, and it dosn't utilize space effectively. Like I said we have been saving for this and will continue to save but if we have to borrow a bit I have no problem with it , don't see why you should either. Thanks everyone else for the info I had asked for . I'm not being reckless. This bathroom had been remodeled probably in the 70's and has held up amazingly well. It would not be a trendy remodel as I won't redo a bathroom every 10 yrs. Why do I feel I need to apologize for wanting a nice bathroom? Jeeez!
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Post by Deleted on Feb 15, 2011 2:38:09 GMT -5
I think you understand the difference between a "need" and a "want". But I remain surprised at how many people still believe they will make money by remodeling. Frankly it's rare to recover most of what you spent. And like I wrote, if you go to sell in 10 years the new buyer will want to redo the outdated kitchen, bath, whatever, lol. So the point is pay attention to how you finance e.g. don't put dinner on a cc and taking a year to pay it off.
We remodel too because we like living in a nice place. We can afford it, will be paying cash and hope to live in the house for 5 years. I see nothing wrong with borrowing a small sum and paying it back over 5 years. It's just the perpetual HELOC that can be a problem for folks. Be careful not to fall into that debt trap.
Good luck!
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Wisconsin Beth
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Post by Wisconsin Beth on Feb 15, 2011 14:03:13 GMT -5
Our HELOC is with Wells Fargo, who also holds our mortgage. Because they hold the mortgage, all we had to do was fill out the paperwork and then go over it with a Wells Fargo representative. This was in the middle of the market meltdown so things may have changed. I think we pay a $75 yearly fee. What's interesting is that we can freely pay the HELCO online but the actual mortgage has an online pay fee or something, the last time we checked on it. Do you have a WF checking account? I have a WF mortgage too and I make payments by going online and doing a transfer. No fee at all. Nope. Checking is a different bank.
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Post by Deleted on Feb 15, 2011 17:52:12 GMT -5
I think you understand the difference between a "need" and a "want". But I remain surprised at how many people still believe they will make money by remodeling. Frankly it's rare to recover most of what you spent. And like I wrote, if you go to sell in 10 years the new buyer will want to redo the outdated kitchen, bath, whatever, lol. So the point is pay attention to how you finance e.g. don't put dinner on a cc and taking a year to pay it off. We remodel too because we like living in a nice place. We can afford it, will be paying cash and hope to live in the house for 5 years. I see nothing wrong with borrowing a small sum and paying it back over 5 years. It's just the perpetual HELOC that can be a problem for folks. Be careful not to fall into that debt trap. Good luck! Thank you Bonnap! I guess the word HELOC has some real bad connotations these days.We plan on staying in this house a long time and have no illusions about getting this money back out when we do sell someday. We probably could pay for it all in cash and maybe we will. We have some options. I just like to explore them all. We have never, will never, fall into the debt trap. Thanks for the vote of confidence. I'm scared to ask any more questions over here.
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cronewitch
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Post by cronewitch on Feb 16, 2011 1:32:55 GMT -5
I think every person with any self control should have as large a HELOC as they can get at all times. You never need to use it but if you need to borrow it is already approved. Banks won't give you a loan if you need a loan so set up a HELOC and just don't use it.
Then if you get injured and can't work or have a long unemployment you have credit in place. I use mine because the rate is 2.24 right now so it was very handy for buying my car and doing some home repair. I pay it down so if rate shoot up I could sell some stock and pay it off.
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2kids10horses
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Post by 2kids10horses on Feb 17, 2011 10:44:28 GMT -5
I completely agree with Cronewitch! There is absolutely nothing wrong with using a HELOC for home improvement, provided you can repay the loan.
I don't have a mortgage on my residence. I do, however, have a HUGE HELOC. I use it to buy foreclosures, fix them, and sell them.
There is no cheaper source of money.
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