I plan to get a home equity line to consolidate some monthly bills, and my mortgage company has offered this type of loan as the one wiith the lowest montlhy payment:
Home Equity Line of Credit 90
Rate: 84.500%
APR¹: 84.500%
Term: 120
Does ANYONE understand the terms and and interest on this type of loan?
2007-03-09 03:46:14 · 8 answers · asked by Destiny D 1 in Business & Finance ➔ Credit
The little superscript should have some explaination. I doubt you'd have 84.5% APR... maybe over the life of a loan, you'd pay that, but it'd be the total pecentage yield (like APY, but over life of the loan).
It looks like you're taking out a 10-year HELOC loan and it's possible that the 84.5% is over the life of the loan.
2007-03-09 03:51:25 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It looks like ... 90% of equity (value of house minus mortgage)
I think you misplaced the decimal in 84.5% ? It is probably 8.5% ...if not RUN THE OTHER WAY.
term is probably 120 months or 10 years.
Be very careful using a home equity loan to consolidate other bills...you could end up losing your home if you begin making more bills and start missing payments. If you get this loan...swear to your self you will not make more debt just because your new payments are less per month!!!! you will have this loan for 10 YEARS.
2007-03-09 04:45:04 · answer #2 · answered by sw-in-gardener 3 · 0⤊ 0⤋
There are legitimate reasons to have a home equity line of credit. Consolidating debt is NOT one of them. Lines are normally offered at variable rates. Because of the way revolving interest is credited, the rate is deceptive. You will pay more interest over an identical period than a fixed rate home equity loan offering a rate 2-3 percent higher. Your lender can illustrate this for you. Also, with rates as they are today, yours will likely increase.
As you know how much you need, get the loan. Often, lenders will allow you to do both, so you can have the line available for future use as necessary.
2007-03-09 04:14:35 · answer #3 · answered by Rob D 5 · 1⤊ 1⤋
It doesn't sound like you have your interest rate right - Usually HELOC loans are variable rate loans based on prime rate which is 8.25% right now. Your term means its a 10 yr loan but you need to find out more info before signing any papers. If it is variable you need to know how often and how much the rate can change - which will make your payments change as well. Personally I think people are better off going a fixed term and fixed rate.
2007-03-09 03:58:44 · answer #4 · answered by Anonymous · 0⤊ 0⤋
HELOC's are adjustable rate notes that are typically tied to prime rate. You could have prime or prime +1 or 2 or 3.
It is a revolving loan just like a credit card. Your monthly payment will be figured on what ever prime is as posted in the Wall Street Journal on the first day of the published month in most cases on your outstanding balance. In most states there is a cap as to just how high they can go with the rate. In TN where I live it can go to 18%. I personally would opt for a closed end fixed rated note that has a start and and end.
I personally think you have in these quotes you placed before us have the decimal point in the wrong place.
I have never seen rates quoted that way.
I am a mortgage banker in TN & KY
2007-03-09 04:02:49 · answer #5 · answered by golferwhoworks 7 · 0⤊ 1⤋
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2016-09-30 10:44:09 · answer #6 · answered by vyky 4 · 0⤊ 0⤋
Some if not all home equity loans can be called due at any time. IF the lender thinks you are getting to deep in debt they can make it due now.
be careful and check it out.
2007-03-09 05:31:06 · answer #7 · answered by heybulldog 5 · 0⤊ 0⤋
8.45% would seem more logical for the rate, i little high but i've seen worse.
APR usually means amount approved
And well 120 would be in months.
If these terms are correct 84500$ over 120 months at 8.45% interest , its gonna cost roughly 1038.39$./month , you would save money if went on a accelerated bi-weekly payment plan, you would save almost 5300$ over the term.
2007-03-09 04:04:35 · answer #8 · answered by Jason P 1 · 0⤊ 0⤋