Morgage or HELOC?
by Mortgage Rates on Tuesday, September 14th, 2010 | 6 Comments
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good plan the only negative drawback is the heloc can change on the rate of interest monthly, right now the way the economy is its no big deal, but and that is a really big butt lol, if it changes u r going to be in a pickle financially, a variable rate is locked for a period of time normally 1 plus years, where as a heloc changes monthly, and yes us old timers can remeber double digit interest rates, if the economy goes south, u will face a major situation financially, think twice, as when u try to finance out of the heloc, u may for personal, job reason, accident, illness, etc. in other words u need a job to prove income not be able to do so. also if ur credit gets whack for any reason u may not be able to reifnance, my advice to all my clients is take the fix rate, yes it may be higher, but u will always know what it is, its not going to change, if good fortune smiles on you, make additional principal payments as quickly as u can, but if ur world goes down the tubes, divorcee, separation, job loss, u get the idea u will at least always know what ur worse case scenario is and it wont change. thats y i advice think this over carefully, u mentioned finance what do u do if she walks, and u can no longer count on her income for example, not that it will happen, but the world changes, proceed cautiously gl.
I don’t understand why in this volatile period you would get an adjustable rate mortgage at all. I understand the HELOC but the alternative should be a fixed rate mortgage, and a 15 year fixed rate mortgage is a much better option than a HELOC, unless you know for sure that you are not going to withdraw anything on that account. If you have that self control, and you trust inflatin isn’t going to hit, I’d go with the HELOC.
u need to stop and learn about buying a house.
HEll Lord Oh Crap HELOC is not a mortgage and will get u in trouble or homeless.
u get fixed rate , 30 or less yrs .
P&I equals one week of TAKE home pay yours. so we do not visit u.
ur math forgets any RISK so is invalid.
u want to pay down house ?
get a budget, 2 extra jobs, cash car and money knowledge u can pay off 30 in less than 15.
note DO NOT buy house with finance until u life to gethermarried for year.
visit dave ramsey.com to learn what u need to.
Variable-rate mortgages can change very quickly as we have all seen with the subprime mortgage mess. The monthlyl payment can quickly become unreasonable. It seems to me that a fixed-rate mortgage is the way to go these days. Lots of folks don’t see the point in paying off a house early since the interest is tax-deductible; however, be free and clear of a mortgage provides peace-of-mind as one gets older and closer to retirement.
Just get a fixed-rate mortgage that provides you with a fixed rate for the life of the loan. If you want to pay the house off quicker, apply additional money to the principal each month. Don’t treat a HELOC like a checking account. A home’s equity is priceless in today’s market and should be preserved at all costs!
If you can get a HELOC instead of a mortgage, I don’t think there would be any advantage to a mortgage that I can think of.
With a HELOC will have the flexibilty to pay it off as fast as you want. Plus after you’ve paid it off, you can use the HELOC for investments and then the interest is tax deductable, if you want to go that route.
I just had to refinance our mortgage and decided on a HELOC. Ours can be converted to a fixed rate if we decide to do that because interest rates look like they will climb, yours is probably the same. Historically in Canada people have paid less interest in variable rate mortgages than fixed rate ones. A HELOC is sort of like a totally open variable.
I think this was the best option for us as my husband’s job is sort of iffy and while at present we have set our payment at more than the maximum it would have been at the highest rate – we can switch to interest only. If we do that we will be, in effect, paying really cheap rent.
It also means that instead of having a nest egg in a low interest savings account we can pay off a higher interest HELOC and still have the security of funds if we need them.
Mortgages and tax implications are very different in the US and in Canada. Housing markets are different too.