HELOC with Prime minus 0.76%

[DaCounselor]

If you’re looking at a loan that is indexed to the Prime rate, you may want to identify with specificity who’s Prime rate is being used. Every bank sets their own Prime rate – but for practical purposes I think most big banks offer the same or similar Prime rate. The WSJ publishes a Prime rate that is the rate being offered by the nation’s biggest banks – this is the WSJ Prime and may be the Prime index for alot of loans.

I don’t know of any mandate that Prime must have a +3% margin over the FFR and/or that Prime must move lockstep with the FFR, but that seems to be the case, at least recently. I don’t know about historically. I think you are probably fairly safe operating with the assumption that a +3% margin will remain in place.

For what it’s worth (which ain’t much) I believe we are looking at a low FFR and Prime for the next few years at least. I think there is a 50% probability of the FFR/Prime going down a bit more before going up. There is also an international effort underway to reduce LIBOR down into a tighter position with the FFR.

[Raybyrnes]

cv2

Why is it all or nothing. If you are looking to lower your rate and maintain some level of securrity why not heloc out part and keep the othe wher it is at. For instance if you have 400K outstanding at 7% by going with %25 heloced you now have a weighted average interst rate of 6.31. If interest rate did start to move adversely you would only have to worry about a small amount. In the interim You could continue to pay down the 7% loan with the saved interest reducing the amount of years that you are paying on the loan.

It is not an all or nothing scenario and it seems like ther is definitity to lower your borrowing cost with a modest amount of added risk.

[Raybyrnes]

cv2

Why is it all or nothing. If you are looking to lower your rate and maintain some level of securrity why not heloc out part and keep the othe wher it is at. For instance if you have 400K outstanding at 7% by going with %25 heloced you now have a weighted average interst rate of 6.31. If interest rate did start to move adversely you would only have to worry about a small amount. In the interim You could continue to pay down the 7% loan with the saved interest reducing the amount of years that you are paying on the loan.

It is not an all or nothing scenario and it seems like ther is definitity to lower your borrowing cost with a modest amount of added risk.

[Raybyrnes]

cv2

Why is it all or nothing. If you are looking to lower your rate and maintain some level of securrity why not heloc out part and keep the othe wher it is at. For instance if you have 400K outstanding at 7% by going with %25 heloced you now have a weighted average interst rate of 6.31. If interest rate did start to move adversely you would only have to worry about a small amount. In the interim You could continue to pay down the 7% loan with the saved interest reducing the amount of years that you are paying on the loan.

It is not an all or nothing scenario and it seems like ther is definitity to lower your borrowing cost with a modest amount of added risk.

[Raybyrnes]

cv2

Why is it all or nothing. If you are looking to lower your rate and maintain some level of securrity why not heloc out part and keep the othe wher it is at. For instance if you have 400K outstanding at 7% by going with %25 heloced you now have a weighted average interst rate of 6.31. If interest rate did start to move adversely you would only have to worry about a small amount. In the interim You could continue to pay down the 7% loan with the saved interest reducing the amount of years that you are paying on the loan.

It is not an all or nothing scenario and it seems like ther is definitity to lower your borrowing cost with a modest amount of added risk.

[Raybyrnes]

cv2

Why is it all or nothing. If you are looking to lower your rate and maintain some level of securrity why not heloc out part and keep the othe wher it is at. For instance if you have 400K outstanding at 7% by going with %25 heloced you now have a weighted average interst rate of 6.31. If interest rate did start to move adversely you would only have to worry about a small amount. In the interim You could continue to pay down the 7% loan with the saved interest reducing the amount of years that you are paying on the loan.

It is not an all or nothing scenario and it seems like ther is definitity to lower your borrowing cost with a modest amount of added risk.

[cv2]

Hi Raybyrnes,

Thanks for your input.

In my case, the loan amount is that high, a little over $100K. Let’s say if I pay off half of 100K, I still have to pay the same monthly payment for my original loan at $100K. Then I will have two payments: the monthly payment for $100K at 7% and the new payment for 50K. Roughly speaking my monthly payment will increase 50% right away. Granted, this will speed up my payoff schedule but I got a cash flow problem on my hand by doing this.

[cv2]

Hi Raybyrnes,

Thanks for your input.

In my case, the loan amount is that high, a little over $100K. Let’s say if I pay off half of 100K, I still have to pay the same monthly payment for my original loan at $100K. Then I will have two payments: the monthly payment for $100K at 7% and the new payment for 50K. Roughly speaking my monthly payment will increase 50% right away. Granted, this will speed up my payoff schedule but I got a cash flow problem on my hand by doing this.

[cv2]

Hi Raybyrnes,

Thanks for your input.

In my case, the loan amount is that high, a little over $100K. Let’s say if I pay off half of 100K, I still have to pay the same monthly payment for my original loan at $100K. Then I will have two payments: the monthly payment for $100K at 7% and the new payment for 50K. Roughly speaking my monthly payment will increase 50% right away. Granted, this will speed up my payoff schedule but I got a cash flow problem on my hand by doing this.

[cv2]

Hi Raybyrnes,

Thanks for your input.

In my case, the loan amount is that high, a little over $100K. Let’s say if I pay off half of 100K, I still have to pay the same monthly payment for my original loan at $100K. Then I will have two payments: the monthly payment for $100K at 7% and the new payment for 50K. Roughly speaking my monthly payment will increase 50% right away. Granted, this will speed up my payoff schedule but I got a cash flow problem on my hand by doing this.

[cv2]

Hi Raybyrnes,

Thanks for your input.

In my case, the loan amount is that high, a little over $100K. Let’s say if I pay off half of 100K, I still have to pay the same monthly payment for my original loan at $100K. Then I will have two payments: the monthly payment for $100K at 7% and the new payment for 50K. Roughly speaking my monthly payment will increase 50% right away. Granted, this will speed up my payoff schedule but I got a cash flow problem on my hand by doing this.

[cv2]

Thanks, HLS and DaCounselor.

Hi HLS and DaCounselor,

I want your opinion on the impact of the low Jumbo Conforming loan rate, now below 6%, on housing market. Granted, this is still too early to see the trend since we do not know the loan qualification details and people’s reaction to it. I hope you could update your opinions as the time goes by.

[cv2]

Thanks, HLS and DaCounselor.

Hi HLS and DaCounselor,

I want your opinion on the impact of the low Jumbo Conforming loan rate, now below 6%, on housing market. Granted, this is still too early to see the trend since we do not know the loan qualification details and people’s reaction to it. I hope you could update your opinions as the time goes by.

[cv2]

Thanks, HLS and DaCounselor.

Hi HLS and DaCounselor,

I want your opinion on the impact of the low Jumbo Conforming loan rate, now below 6%, on housing market. Granted, this is still too early to see the trend since we do not know the loan qualification details and people’s reaction to it. I hope you could update your opinions as the time goes by.

[cv2]

Thanks, HLS and DaCounselor.

Hi HLS and DaCounselor,

I want your opinion on the impact of the low Jumbo Conforming loan rate, now below 6%, on housing market. Granted, this is still too early to see the trend since we do not know the loan qualification details and people’s reaction to it. I hope you could update your opinions as the time goes by.

[Author]

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