Author Topic: HELOC  (Read 1038 times)

87tweetybirds

  • 5 O'Clock Shadow
  • *
  • Posts: 71
HELOC
« on: August 09, 2018, 10:58:56 AM »
A little back story; DH and I sold our home, purchased while house prices were down in our area, sold now prices are above where they were before the housing crash. We used the equity from that sale to purchase 2 properties, both requiring some sweat equity, one that we'll either keep as a rental, or fix up and sell, and the other which we are fixing up as we live there. Plan is to sell our primary residence again in a few years after we've fixed it up nice and do it again, or have saved up enough for another down-payment and either buy another renal property or buy another primary residence and rent our where we're currently living, all depending on the economy once we get the house fixed up. In the purchase of both properties we purchased the rental outright, and have a loan on the primary residence, to which put a little over 20% down. Both houses appraised about 10k higher than our purchase price.
I got a call from our lending institution the other day, "Hello 87Tweetybirds, I'm calling to check that everything went well with the purchase of your home on W Street..(more platitudes etc), I was wondering if you had ever heard of a HELOC?"
 Why yes I have.
"Well since we just processed all of the paperwork on that purchase, and I see that you have enough equity, now would be a good time to open up a HELOC."  What do most people use their HELOC for?
"Well, its a great low interest source of money for whatever." (Were we to do so we'd use it just for e-fund purposes)
 And what's the interest rate on that?
"5-8%"  (*thinking* I'm not certain I want to leverage my home for anything, thanks, and at that rate, even using the equity for other investments probably wouldn't really be worth it in the end.)
I can see many people getting in BIG trouble, especially if there's another housing bubble, and from what I read, it sounds like my area is shaping up to have one.

Dabnasty

  • Handlebar Stache
  • *****
  • Posts: 1156
  • Age: 29
  • Location: North Carolina
Re: HELOC
« Reply #1 on: August 09, 2018, 12:06:19 PM »

87tweetybirds

  • 5 O'Clock Shadow
  • *
  • Posts: 71
Re: HELOC
« Reply #2 on: August 09, 2018, 02:38:49 PM »
I think I read that thread a while ago, and thought it interesting. Even though we're using the equity and I hope to make money off my home, I still have a hard time viewing it as an investment, I think of it as a purchase.

Scortius

  • Bristles
  • ***
  • Posts: 434
Re: HELOC
« Reply #3 on: August 09, 2018, 02:53:03 PM »
Lol.

https://forum.mrmoneymustache.com/welcome-to-the-forum/equity-shaming/

MMM recommends using a HELOC as a stand in for your emergency fund. For short term bumps it makes some sense. As far as the thread you're linking, the discussion centers around fixed lower rate longer term refinancing options.

AMandM

  • Pencil Stache
  • ****
  • Posts: 593
Re: HELOC
« Reply #4 on: August 09, 2018, 08:14:30 PM »
Several years ago, we opened a HELOC in advance of a one-year move overseas, thinking it might be useful in case of a gap between income at home and payments due abroad. The way the banker talked about it ("You just write these checks like regular checks"), you'd never have known it involved debt.