Ok, I thought maybe one or more of you might know the answer to this. I’ll try to make effort with the traditional lender tomorrow afternoon, but …
I went out to Bankrate.com and used Georgia, Lawrenceville, $30K HELOC, and Excellent FICO and garnered three institutions and their rates. Two of the three are traditional lenders that I happen to bank with (and they are 1.5% apart on their respective rates).
Then I noticed that they have something called a HELOC High LTV and wondered if the LTV is based on the home’s value, or just the equity in the home. BTW, for that website $30K was the minimum, no mention of how long the HELOC was for, etc.
And when I got crazy and tried the $50K HELOC the only institutions were by Internet only (IGN and Chase), but with slightly better rates.
Replies
LTV is usually based on appraised price.
Loan to Value is the sum of all your loans (your outstanding mortgage balance plus the HELOC credit limit you are looking for) divided by the appraised or assessed value of your home (the value).
Most lenders will only do up to 80%. A few will do 90%, although it's challenging.
Ok, this is what someone told me today. Well, the HELOC market cannot be good considering mortgage+HELOC/ApparisedValue <0.80. I say this only in that markets with previously artificially high market values have probably deflated the most.
On a side note, I often found it somewhat absurd my county claimed a) the county assessment is based on something like 80% fair market value, and b) will not be lowering anyone's property taxes now that the market has been drastically deflacted meaning they'll simply offset with a large milliage rate increase. :)
Nuke,
When I borrowed against my old house for the kitchen and windows, i did it online. For some reason that I can't remember, the HELOC wasn't as great a deal as it seemed at first.
15 year fixed second, no points, no prepayment is what I ended up with and the rate was the same as what i would have gotten on a first at that point.
Beware the online lender. lots sent me quotes for "seconds", but in the fine print it was really a refi of my exisitng mortgage.
Robert, it almost sounds like you got a Home Equity Loan and not Line of Credit. Points are not offered on any of the HELOCs I've been looking at.
I know some folks in the banking industry and for years and years and years HELOCs are really what banks really wanted to push in their local markets. Banks make a lot of money off of them. Since the credit card markets are controlled by a few big companies, this is their cash cow. Tougher for them now that home values are falling in some markets.
I'd recommend that you be wary of them.
Ed, i think you are right. While I have not had my home appriased since early 2003 (refi), if I go online I can see where 18-21 months ago it peaked and is now ~$30K lower, or about 10%. This makes the idea of considering a HELOC a non-option.
So, another Fed initiative makes of no benefit to folks in the same kind of boat as I am. And perosnal loans are as high as the credit cards. It is interesting have no credit card debt, household income in Georgia of $125K, excellent credit, and no ability to attain a HELOC or similar product. :)
Congrats on that great income. Gee why would you ever want a loan? Not trying to sound like a put-down or anything, just mentioning that some folks have a different philosophy on that sort of thing. Best of luck, Ed
PS: I drive through Gwinnett County frequently, driving from East MS to Charlotte - wow that area has grown up with a lot of development! Doesn't sound like folks that live there necessarily like it.
Ah..what's a HELOC?
Home Equity Line of Credit.
Thanks....
I'm amazed that I keep getting credit card offers.....that may or may not be the next shoe to drop, depending on who you listen to....
Just looked into one today. In Michigan the top was 90% LTV off of appraised value.