HELOC or fixed for second mortgage.

[Raybyrnes]

Hey, God bless the 91 day treasury bill auctioned off in may because that is what student loans are pegged too prior to July 2006. Dropped down to 1.17 with a fixed rate over the T-Bill of 1.7 while in my grace period and 2.3 if you waited until the end of the 6 month grace period. No envy talking. I will admit that I was a bit lucky. Lenders don’t really care what rate I pay because the government is guaranteeing them a rate of around 7%. So you are probably right, your tax dollars go into subsidizing my student loans.

[Raybyrnes]

Hey, God bless the 91 day treasury bill auctioned off in may because that is what student loans are pegged too prior to July 2006. Dropped down to 1.17 with a fixed rate over the T-Bill of 1.7 while in my grace period and 2.3 if you waited until the end of the 6 month grace period. No envy talking. I will admit that I was a bit lucky. Lenders don’t really care what rate I pay because the government is guaranteeing them a rate of around 7%. So you are probably right, your tax dollars go into subsidizing my student loans.

[Raybyrnes]

The HELOC have the smae characteristics as my student loans. I jsut tried to use something that I efffectively used as you had asked.

I am certain there are more than a few people who had much lower rate on equity lines from 2004 and 2005. I am certain that many of them are in a similiar positon to my student loan example. If we were to go into an infaltionary period and saw interest rates rise than CD would carry a much higher rate of interest as well as muni bonds etc.

Bottom line is I understand what you are saying. You don’t see a significant advantage to the carrying cost of borrowing. Do I understand you?

[Raybyrnes]

The HELOC have the smae characteristics as my student loans. I jsut tried to use something that I efffectively used as you had asked.

I am certain there are more than a few people who had much lower rate on equity lines from 2004 and 2005. I am certain that many of them are in a similiar positon to my student loan example. If we were to go into an infaltionary period and saw interest rates rise than CD would carry a much higher rate of interest as well as muni bonds etc.

Bottom line is I understand what you are saying. You don’t see a significant advantage to the carrying cost of borrowing. Do I understand you?

[sdcellar]

Do you mean same characteristics as in they’re both loans? Are you saying there are a lot of 2% HELOCs floating around out there? (please don’t answer that, it’s rhetorical)

You keep tweaking your examples until they sound pretty good, so sure if I could borrow money for about 2% and count on a 10% return elsewhere, I’d do it.

But to take it back to what you originally stated, no, I don’t think it’s a good idea to borrow money to earn marginal interest. So yeah, I guess you understand me.

What about this poor guy and his 100% loan, do you think he should do that? (and please, don’t tell me about 2003…)

[sdcellar]

Do you mean same characteristics as in they’re both loans? Are you saying there are a lot of 2% HELOCs floating around out there? (please don’t answer that, it’s rhetorical)

You keep tweaking your examples until they sound pretty good, so sure if I could borrow money for about 2% and count on a 10% return elsewhere, I’d do it.

But to take it back to what you originally stated, no, I don’t think it’s a good idea to borrow money to earn marginal interest. So yeah, I guess you understand me.

What about this poor guy and his 100% loan, do you think he should do that? (and please, don’t tell me about 2003…)

[Raybyrnes]

SD Cellar

I am probably in your camp more than you think. I am all for 100% financing if and only if I have that money sitting in an account and it simply becomes a point where the bank or lender is giving it away. This doesn’t happen often but it happens. Otherwise I am not going to recommend going a 100% just to get into something. That would not be my recommendation.

Here is the flip side to the equasion. IF you had 100K invested in a variety of investments would you go and liquidate all investments just to avoid having to borrow. Again you would probably say it sort of depends on what I am earning on my investment and what the bank is going to charge me.

[Raybyrnes]

SD Cellar

I am probably in your camp more than you think. I am all for 100% financing if and only if I have that money sitting in an account and it simply becomes a point where the bank or lender is giving it away. This doesn’t happen often but it happens. Otherwise I am not going to recommend going a 100% just to get into something. That would not be my recommendation.

Here is the flip side to the equasion. IF you had 100K invested in a variety of investments would you go and liquidate all investments just to avoid having to borrow. Again you would probably say it sort of depends on what I am earning on my investment and what the bank is going to charge me.

[recordsclerk]

There are some home loans floating out there from 2003-2004 that are at Lower rates then current CDs. I have two such loans. I have a fully amortized 15yr loan fixed at 4.75%, so I don’t make any extra payment into principle. I also have a 3.75% IO loan that will reset in a couple of years. Both of these loans are First loans (no seconds). I’m the type that likes to make extra principle payments, so for now I just put money into my high yield checking @4.75% min. balance 20K. I also have a couple of CD’s @5-5.25%. Then when the loan resets I will make a large payment to pay down the loan. This also works for car loans. If you can get a HELOC for the same rate as a car loan, it would be better to use the HELOC because you get a tax break.

[recordsclerk]

There are some home loans floating out there from 2003-2004 that are at Lower rates then current CDs. I have two such loans. I have a fully amortized 15yr loan fixed at 4.75%, so I don’t make any extra payment into principle. I also have a 3.75% IO loan that will reset in a couple of years. Both of these loans are First loans (no seconds). I’m the type that likes to make extra principle payments, so for now I just put money into my high yield checking @4.75% min. balance 20K. I also have a couple of CD’s @5-5.25%. Then when the loan resets I will make a large payment to pay down the loan. This also works for car loans. If you can get a HELOC for the same rate as a car loan, it would be better to use the HELOC because you get a tax break.

[Raybyrnes]

recordsclerk

To improve on the situation Charles Schwab is now offering 4.25% on checking accounts and there MMA are paying 5% if you are not already taking advantage of this. You can sweep money from the checking into the brokerage money market accounts. Not that you want to keep much money in your checking account but it seems to be a good way of making your money work for you. I am still playing around with it. 4.75 and 3.75. That is cheep money. Well done.

[Raybyrnes]

recordsclerk

To improve on the situation Charles Schwab is now offering 4.25% on checking accounts and there MMA are paying 5% if you are not already taking advantage of this. You can sweep money from the checking into the brokerage money market accounts. Not that you want to keep much money in your checking account but it seems to be a good way of making your money work for you. I am still playing around with it. 4.75 and 3.75. That is cheep money. Well done.

[SD Realtor]

recordsclerk it sounds like you nailed the financing right around late spring early summer in 03/04. The 10 year totally dumped then. Very good for you!

SD Realtor

[SD Realtor]

recordsclerk it sounds like you nailed the financing right around late spring early summer in 03/04. The 10 year totally dumped then. Very good for you!

SD Realtor

[Alex_angel]

I haven’t bought but after speaking to a mortgage lender this was a second option. I can put down anywhere from 5-10% of the home but that would still require a 80/15/5 type loan. For the second loan it was mentioned a HELOC can be used or I can get into a fixed rate. The benefit of the HELOC is that if I do pay it down that credit is available if I ever had a need for a huge amount of cash in an emergency. The drawback is the chaning interest rate.

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