Heloc

[yankebabie]

Thinking of getting a HELOC to do some home improvements. Was hoping i could get some info on how they work. Such as about how long it takes to get the loan and are there closing costs like a refi? Also do you need and have to pay out of pocket for an appraisal? any help and info would be greatly appreciated.

 

[jrw118]

Thinking of getting a HELOC to do some home improvements. Was hoping i could get some info on how they work. Such as about how long it takes to get the loan and are there closing costs like a refi? Also do you need and have to pay out of pocket for an appraisal? any help and info would be greatly appreciated.

I am closing a heloc tomorrow with Td bank. We applied on 12/20. The bank paid for the appraisal. There are no closing costs, nothing out of pocket. My interest rate is 4.25%. The loan processor for our loan "is no longer with the company" which is great since she was awful. The new one is terrific. They were very attentive and it has been an almost painless process.

 

[mikehn]

Does not take long to get, 30 days, 60 days, depends how long it takes you to get them the documentation they need. Some lenders charge closing costs, some dont, some have appraisal fees, some dont, shop around. The best deals are through credit unions. If you plan to draw a big loan, such as for a major home renovation, it might be better to just get a second loan and lock in a low fixed rate. If a small draw with a fairly quick pay back, then a heloc works better.

 

[jgates]

I think we only charge Title Search (around $60) & bank pays for mortgage and flood determination, etc. Also make sure you compare if any annual fees. I used ours actually for our rental as current rate is prime + 0% (3.25%). And that way we can re-draw for needed expenses on the rental.

Every financial institution will be different so do you research! And if you are in a small community with community type banks, the CU may not be the best deal. It all depends!

 

[Muushka]

Don't forget that your house has to appraise for at least what you owe plus the amount you want to borrow:

Owe 80K
borrow 20K

House has to appraise for at least 100K plus (not sure what the amount is these days).

I have never paid closing costs. It was never a fixed rate. Always prime plus 1 (but that was several years ago.

Good luck!

 

[DawnM]

I was told it is still 20% over what you owe plus what you wish to borrow. When we refinance they asked if we wanted a HELOC added to our account and we could borrow up to the full 80% loan to value.

We opted NOT to do it.

OP, if your rate is 4 something I think that is a decent rate. Wells Fargo's website is listing over 6% for a HELOC.

Dawn

Don't forget that your house has to appraise for at least what you owe plus the amount you want to borrow:

Owe 80K
borrow 20K

House has to appraise for at least 100K plus (not sure what the amount is these days).

I have never paid closing costs. It was never a fixed rate. Always prime plus 1 (but that was several years ago.

Good luck!

 

[Muushka]

I was told it is still 20% over what you owe plus what you wish to borrow. When we refinance they asked if we wanted a HELOC added to our account and we could borrow up to the full 80% loan to value.

We opted NOT to do it.

OP, if your rate is 4 something I think that is a decent rate. Wells Fargo's website is listing over 6% for a HELOC.

Dawn

Thanks Dawn. It's all coming back to me now!

 

[jrw118]

I was told it is still 20% over what you owe plus what you wish to borrow. When we refinance they asked if we wanted a HELOC added to our account and we could borrow up to the full 80% loan to value.

We opted NOT to do it.

OP, if your rate is 4 something I think that is a decent rate. Wells Fargo's website is listing over 6% for a HELOC.

Dawn

Most banks now will only do a HELOC with up to 80% Loan to value. This includes mortgage. So if your house is worth $100,000, you would only be able to borrow up to $80,000 including your mortgage. You must have at least 20% equity. Most credit unions in my area will only lend up to 75% LTV(loan to value) which means you must have 25%equity.

 

[mrodgers]

My credit union does 100%, but 80-100% LTV would be a higher interest rate....

Oh, and just for semantics, a HELOC isn't a loan. It is a Home Equity Line Of Credit. A loan is just a HEL (Home Equity Loan.) Not important here, but may be important if you are asking the bank for one or the other.

 

[DawnM]

Right, 80%. You have to have 20% equity even after your mortgage and HELOC.

I don't know about credit unions locally as we haven't dealt with them.

Dawn

Most banks now will only do a HELOC with up to 80% Loan to value. This includes mortgage. So if your house is worth $100,000, you would only be able to borrow up to $80,000 including your mortgage. You must have at least 20% equity. Most credit unions in my area will only lend up to 75% LTV(loan to value) which means you must have 25%equity.

 

[yankebabie]

I don't understand the math in figuring out LTV ratio. Maybe someone can help. If we owe $132,000 on our house and we paid $159,000, what would my appraisal have to come in at in order to get a $25,000 home equity line of credit? Thanks for any help, It is greatly appreciated.

 

[jrw118]

I don't understand the math in figuring out LTV ratio. Maybe someone can help. If we owe $132,000 on our house and we paid $159,000, what would my appraisal have to come in at in order to get a $25,000 home equity line of credit? Thanks for any help, It is greatly appreciated.

It has nothing to do with what you paid. The only thing that matters is that your current mortgage plus the heloc should only be 80% of the homes current value is. Using your information. Mortgage + heloc $132,000 + $25,000= $157,000. This is the total amount you want to owe on your house. This means your home must appraise for $196,250. $157,000 is 80% of $196,250. Keep in mind that not all banks have a 80% LTV cap. I just closed with TD bank and they did have programs that were higher LTV and higher interest rates