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  #1  
Old 05-27-2007, 12:55 PM
Matt Flynn Matt Flynn is offline
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Default 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.
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  #2  
Old 05-27-2007, 01:21 PM
ahnuld ahnuld is offline
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Default 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  
Old 05-27-2007, 01:50 PM
bav bav is offline
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Default 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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Old 05-27-2007, 02:22 PM
AvivaSimplex AvivaSimplex is offline
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Default 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?
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  #5  
Old 05-27-2007, 04:22 PM
VeryTnA VeryTnA is offline
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Default 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?
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  #6  
Old 05-27-2007, 06:37 PM
snowbank snowbank is offline
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Default 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.
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  #7  
Old 05-27-2007, 08:23 PM
Pete Pete is offline
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Default 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  
Old 05-27-2007, 09:10 PM
Matt Flynn Matt Flynn is offline
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Default 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.
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  #9  
Old 05-28-2007, 01:09 AM
Uglyowl Uglyowl is offline
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Default 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%)
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  #10  
Old 05-28-2007, 10:48 AM
Matt Flynn Matt Flynn is offline
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Default 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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