Home Equity

[susandennis]

Way back when I first got serious about this redesign, I talked to the guy who has my investments and told him I was going to want a big wad of cash to pay for it. He was disappointed that I wasn't buying a new car but otherwise ok with it.

This morning I figured out what I think I will need to finish it plus replinish my 'out of work looking for a new gig' fund. And gave him a call. He said 'ohhhh I hate to pull you out of any of your stuff right now. I'm thinking home equity line of credit would be the smarter move.'

So I went to my credit union's web page to get the number of the loan people. In the past, I have asked them about home equity loans and basically they have said 'we don't do condos'. So today I called. I got Sharon who was very nice and enthusiastic and when I asked if they still had their no condo rule, she cracked up. Apparently, that rule got run over in the race with the competition.

We chatted and she explained stuff and it seems pretty straight forward.

Then I looked at the app and I realized the problem... I got no job! I work for myself and can show no proof of future income. Hmmm. On the upside, I do have more than a year of income and a 1099 to prove it. Should be interesting.

I guess I'll apply and we'll see what happens!

Comments

[danlmarmot.livejournal.com]

He was disappointed that I wasn't buying a new car...

Heh, does your investment guy think a car is an *investment*? Especially a new car?

Funny you mention the remodel vs. new car comparison. I've been doing a similar comparison over the last few weeks, and have concluded that a redesign of the yard will make me much more happy and satisfied than a new car. And that's where my comparison ended!

[susandennis]

Ha... He really can't quite understand splurging on a fun purchase that does not have a Jaquar or fancier insignia on it. It's always killed him that I have a Ford and I bought that new 7 years ago when I traded in my 10 year old Datsun. It's a running theme with him.

But, of course, I am so with you... I still am grinning every time I see the new paint.

[dizzdvl.livejournal.com]

If you have any questions that is what I do. Because you are self employed you will need to show past 2 tears of tax returns. And they don't look at future income, just what you get now.

[susandennis]

Oh I've got the past two years covered to bits. Cool. Crazy, but cool. But, I think, based on your comment, I'll just pull those past two years (if I can find 'em in this mess) and throw them in my backpack just in case they call tomorrow and say 'why don't you fax 'em to us!'

Their online form sure didn't ask a lot of questions. I'm guessing they can get the tax assessment on the house from the address and the mortgage info from my credit report, right?

Here's a question for you (and thanks so much for volunteering!)...

Their rates for an Equit loan (http://www.firsttechcu.com/Files/RateSheets/loan_rates.pdf) show 4.74%-12.24%. That's a hell of a diff. How does one (like moi) get the 4.74 instead of the 12.24?

[dizzdvl.livejournal.com]

That's usually based on credit, debt-to-income ratios, loan-to-value and stuff like that. Basically there are showing a range because then they can give different rates.

Yep, they can get the mortgage info from the credit bureau, but that isn't always right. Your remodel will increase the value of your property, so you may consider getting an appraisal because then your loan-to-value may be lower which could lower your rate as well. Like for example at my bank if you can keep below 80% of the appraised value of your house you can get a lower rate. Now if you don't owe much or anything on your condo then the tax assessed value makes sense because then you don't have to pay for the appraisal!

If you get a good banker they will try to save you in closing costs, but they have to disclose all costs to you at application and it's called a Good Faith Estimate.

As away if you have any other questions or if I explained something poorly!

[susandennis]

You explain things excellently! Thanks. The credit union lady already told me that there would be no application fee and if they needed to do an appraisal I would not pay for that, either. I pay an annual fee of $25 only. My mortgage is about half of the tax appraised value of the condo. So it sounds like maybe I'm in good shape for the lower end of the rate.

[dizzdvl.livejournal.com]

Looking at the rate sheet that 4.74 rate is attached to the fixed rate/term loan and those have approximate closing costs of $350-1300. I bet the loan she was talking about was the Equity Line of Credit which is a variable rate that is most likely attached to the Prime Rate. So if prime goes up your rate will go up.

Now those are nice loans because as you pay them back they are available to you again. Plus, if you get a line of $50K, for example, and you only use $25K you only pay interest on what you have used. But just like credit cards they have a minimum payment which is usually interest only. So you have to be pretty good at paying stuff to get it paid off.

To figure out the interest you will pay each month it's basically (Amount borrowed X Interest rate)/ 12. (50000 x 0.055)/12 =$230 per month approximately.

And to think I am on vacation from the bank this week :)

[susandennis]

You do good work on vacation!! And I think what I want is that Equity Line of Credit one. I'm pretty anal at paying stuff off. I like to keep my balances at 0. And thanks for the interesting payment info. Yikes. But, on the other hand, it sure will be incentive for me to get it to 0 fast! And nice to have it available if I need it.

Generally, I feel smart but when it comes to stuff like this, I amaze myself with how much I don't know!

[dizzdvl.livejournal.com]

Yeah, I didn't know it until I started working at the bank. I thought I was pretty smart too about this kind of stuff, but noooooo. I actually learned something at a workplace. Weird! :)

[katbyte.livejournal.com]

You won't have a problem getting an equity line of credit. Any secured loan is easy to get and because you have so much equity, they will be beating down your door to loan it to you.

We got one last year which we had for a few months. (We sold our house and it was repaid) Easiest loan I ever got.

[susandennis]

Interesting... I do have a lot of equity. This could be good.

[katbyte.livejournal.com]

The best interest rates too.