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Started By
Message
Home Equity Line of Credit - Find the flaw in my logic
Posted on 10/11/23 at 11:10 am
Posted on 10/11/23 at 11:10 am
Looking to open a line of credit based on home equity. I think I can easily get a 75% equity of about 80k. What I can get is a 6.99% rate for the first 12 months being charged interest only on what I take out. Here’s the plan:
Have to take out a minimum of 25k
-Park 10k plus some expense in OnPath credit union getting 7% on the 10k but have to use a debit card 15 times a statement (no minimum)
-Rest of the amount goes to a high yield at 4.5%
-Pay off the $25k draw the first year as rate now increases to national and leave it as a line of credit
Essentially I’m paying $500 ish the first year to have access to $80k for the next ten years. I don’t have any big expenses planned with the money other than some small house projects but I just like the thought of having access to it in case of emergencies .
Have to take out a minimum of 25k
-Park 10k plus some expense in OnPath credit union getting 7% on the 10k but have to use a debit card 15 times a statement (no minimum)
-Rest of the amount goes to a high yield at 4.5%
-Pay off the $25k draw the first year as rate now increases to national and leave it as a line of credit
Essentially I’m paying $500 ish the first year to have access to $80k for the next ten years. I don’t have any big expenses planned with the money other than some small house projects but I just like the thought of having access to it in case of emergencies .
6
Posted on 10/11/23 at 11:13 am to CE Tiger
What is the rate if you don't do an initial draw?
What is the HELOC rate tied to? Treasury? Prime? LIBOR?
What is the HELOC rate tied to? Treasury? Prime? LIBOR?
Posted on 10/11/23 at 11:23 am to meansonny
After intro rate it’s tied to Prime + 1/4 I think
Didn’t ask about not doing the initial draw . Figured after high yields that the interest paid would be small enough to not worry. I think the zero draw options are around 9% but this offer also comes with no money upfront and they pay for the home appraisal
Didn’t ask about not doing the initial draw . Figured after high yields that the interest paid would be small enough to not worry. I think the zero draw options are around 9% but this offer also comes with no money upfront and they pay for the home appraisal
Posted on 10/11/23 at 11:29 am to CE Tiger
Did the quote include set up costs/recording feee?
Posted on 10/11/23 at 11:36 am to CE Tiger
Sounds like a lot of trouble.
"Look, just give me a HELOC that I can use as needed over the next 10 years. What does that cost to setup?"
"Look, just give me a HELOC that I can use as needed over the next 10 years. What does that cost to setup?"
Posted on 10/11/23 at 11:37 am to CE Tiger
My last 3 HELOCs have all been zero cost.
Intro rates don't matter if you don't draw the funds (you don't appear to be doing better than the intro rate, so I haven't figured out the logic to pulling out the initial $25k yet).
Back around 2008, we bought a car on our HELOC. Rates were great then and i believe it had a tax deduction on interest at the time.
Outside of that, it is a layer of unemployment insurance or emergency fund.
Rates are currently too high for any purpose other than that for right now.
Intro rates don't matter if you don't draw the funds (you don't appear to be doing better than the intro rate, so I haven't figured out the logic to pulling out the initial $25k yet).
Back around 2008, we bought a car on our HELOC. Rates were great then and i believe it had a tax deduction on interest at the time.
Outside of that, it is a layer of unemployment insurance or emergency fund.
Rates are currently too high for any purpose other than that for right now.
Posted on 10/11/23 at 11:50 am to CE Tiger
Just open the line of credit and dont take anything out. you aren't required to use a LoC.
Posted on 10/11/23 at 11:57 am to notsince98
I mean realistically I’d probably want to use 8-10k the first year. I guess it comes down to if I get a shite rate on that vs the 7% on the 25k
Posted on 10/11/23 at 12:12 pm to CE Tiger
I mean realistically I’d probably want to use 8-10k the first year. I guess it comes down to if I get a shite rate on that vs the 7% on the 25k
--
A two percent difference on $10K is not much money. You're pinching pennies IMHO.
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A two percent difference on $10K is not much money. You're pinching pennies IMHO.
Posted on 10/11/23 at 12:55 pm to ItzMe1972
How is OnPath credit union paying 7% on deposits and for how long?
Posted on 10/11/23 at 1:11 pm to Texas Tea 123
quote:
How is OnPath credit union paying 7% on deposits and for how long?
you have to make a minimum number of debit transactions and if you don't hit those numbers then its probably 0%. A lot of people probably forget to get them in.
Posted on 10/11/23 at 1:14 pm to CE Tiger
5.26 is available thru Raisin w no strings.
Posted on 10/11/23 at 4:50 pm to CE Tiger
This a new level of crazy. You’re going to change up an entire banking relationship and pay money to borrow money you don’t need for the potential access to debt in the future which you could have then if you needed it?
And no one has said this is crazy yet? Crazy…
And no one has said this is crazy yet? Crazy…
This post was edited on 10/11/23 at 8:37 pm
Posted on 10/11/23 at 5:05 pm to CE Tiger
quote:
Find the flaw in my logic
All of it.
Posted on 10/11/23 at 7:13 pm to UpstairsComputer
Hmm when ya put it that way…
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