Um, neither?

To answer your question seriously though. Can you even take a HELOC for an originating second? Either way, I’d take the one with the lowest effective rate, factoring in closing costs and considering pre-payment penalties.

To my first point though, you’re not really considering 100% financing at this point, are you? Heck, mix that with some type of neg-am loan and it will blow your mind how under water you stand an excellent chance of becoming.

SDCELLAR
Washington Mutual has a program they are touting that includes all kind of new features including a fixed first and a equity line. I don’t know if wamu allows anyone to take a draw on the second for puchase or why anybody would want to do that. I think it is probably for refinancing and wamu’s stategy is to Coax better returns by getting “second” money beacuse they know people are going to spend it. Kind of like like a credit card company startegy? I am going to study the loan to see if it can be used effectively for any of my purposes. I think they are promoting it on their hompage.

WElls Fargo has it too. It’s a HELOC where a portion is fixed but there is also a credit line you have access to on top of it.

So you’re thinking of 100% financing and having an equity line at your disposal in case of emergency? Just trying to understand where you’re going with this.

(I’ll leave the why for later…)

Alex_angel
“I guess you just have to be smart about it. Not like these wannabes in San Diego with their BMWs and Mercedes that they bought with the credit line they had.”

Why would they have bought any other way. Net after tax on a 7% Equity line in 35% tax bracket is %4.55. Cash in the bank is earning 5%. Sort of miss why you would elect for another form of financing.

Now if you have not saved up and could not afford the car otherwise I will go along with your statement that they should not have bought that type of car.

Raybyrnes– This savvy borrower also needs to remember that he needs to pay it off in a timely manner as well. Again, a “smart” person might do this, but someone else might buy the car over 10 years or more. There go those interest “savings”.