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Lending rate question
I am buying a house 70/25/5 with a 25% HELOC that is >100K. Credit is excellent, income easily supports the purchase, full doc, first is a 15-year fixed. They offered 7.25% fixed "5-year" or prime minus one-half on the HELOC. Is that a decent rate? If so, which one is better?
Thanks. |
#2
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Re: Lending rate question
matt im a bit of a newb when it comes to mortgages. Would you mind explaining what all those terms (70/25/5, HELOC) are?
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#3
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Re: Lending rate question
70% on the principle mortgage, 25% on the 2nd (HELOC in this case, Home Equity Line Of Credit), and 5% down payment.
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#4
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Re: Lending rate question
[ QUOTE ]
I am buying a house 70/25/5 with a 25% HELOC that is >100K. Credit is excellent, income easily supports the purchase, full doc, first is a 15-year fixed. They offered 7.25% fixed "5-year" or prime minus one-half on the HELOC. Is that a decent rate? If so, which one is better? Thanks. [/ QUOTE ] They're offering prime minus one-half? You must have very good credit. That's a good deal, as long as there are no big hidden fees. Also, that might be an introductory or teaser rate, that goes up after 6 months or a year. Be sure to check, but if there's no catch, it's a great rate. The 7.25% may be even better. Prime is currently 8.25%. What does it go to after the 5 years are up? Do you expect to borrow the full 25% immediately, and how long until you pay it off? |
#5
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Re: Lending rate question
[ QUOTE ]
I am buying a house 70/25/5 with a 25% HELOC that is >100K. Credit is excellent, income easily supports the purchase, full doc, first is a 15-year fixed. They offered 7.25% fixed "5-year" or prime minus one-half on the HELOC. Is that a decent rate? If so, which one is better? Thanks. [/ QUOTE ] Lots of question to be answered. How long do you plan on keeping the house? Will you be paying off the 2nd early? Do you need a line of credit for other reasons? How would a jump in rate affect your ability to pay? What would the rate be on an 80/15/5? How much cash are you left with after closing? What are the cost to close these loans? Just a few questions like that.... Who is giving you advise? If you have excellent credit you should have plenty of choices? What rate are you getting on the first lien? |
#6
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Re: Lending rate question
Matt, 7.25% seems like a good deal on your HELOC, yes.
As to which one to take, depends if you think the rates are going up or down. |
#7
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Re: Lending rate question
take the 7.25% rate.....prime would have to go down by over half percent for the other to be a better deal....if this does happen down the road it would mean that mortgage rates are lower and therefore you would refinance everything
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#8
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Re: Lending rate question
[ QUOTE ]
take the 7.25% rate.....prime would have to go down by over half percent for the other to be a better deal....if this does happen down the road it would mean that mortgage rates are lower and therefore you would refinance everything [/ QUOTE ] good point. |
#9
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Re: Lending rate question
[ QUOTE ]
I am buying a house 70/25/5 with a 25% HELOC that is >100K. Credit is excellent, income easily supports the purchase, full doc, first is a 15-year fixed. They offered 7.25% fixed "5-year" or prime minus one-half on the HELOC. Is that a decent rate? If so, which one is better? Thanks. [/ QUOTE ] Both are good rates since you don't have much equity. (LTV>90%) |
#10
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Re: Lending rate question
[ QUOTE ]
[ QUOTE ] I am buying a house 70/25/5 with a 25% HELOC that is >100K. Credit is excellent, income easily supports the purchase, full doc, first is a 15-year fixed. They offered 7.25% fixed "5-year" or prime minus one-half on the HELOC. Is that a decent rate? If so, which one is better? Thanks. [/ QUOTE ] Both are good rates since you don't have much equity. (LTV>90%) [/ QUOTE ] Once I sell my current house, I'll have about 35% equity in the new home. What rate drop comes with <90% LTV? Is there another threshold below that at <80% or similar? |
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