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Posted by Noozer on November 28, 2006, 6:36 pm
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I had a friend describe a loan that he obtained from his bank instead of a
regular mortgage. It sounds like the perfect thing for us, but I'm not sure
of it's official name.
Basically, it's a very large, low interest line of credit. The interest rate
floats and I could lock it in at any time.
We currently have a line of credit with a large limit, several credit cards
with high limits (paid off each month), and our mortgage (locked at 4.8%).
We've got more than $200,000 equity in our home, much more than all of our
current debts combined.
So... When I go to the bank what do I ask for?
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Posted by Venus on November 28, 2006, 7:13 pm
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Variable Interest Rate, you get low interest upfront, then 3 years later it
gets adjusted based on a new market rate. This is dangerous loan at this
moment. It was great in 1998-2001 when the interest signal is going down
the hill, now the signal is going up the hill, you do not want this type of
loan. Why? because you will end up with high interest and if you are unable
to pay after 4 months then you lose everything including your money down and
your equity.
Another bad thing is, every time you resynchronize with new rate, you paid
90% interest to the bank each month. You do not build equity fast this way,
fixed rate is much better. On variable rate, to build fast equitty is to buy
when the interest signal going down. I say like this because it's similar
to the stock signal.
>I had a friend describe a loan that he obtained from his bank instead of a
>regular mortgage. It sounds like the perfect thing for us, but I'm not sure
>of it's official name.
>
> Basically, it's a very large, low interest line of credit. The interest
> rate floats and I could lock it in at any time.
>
> We currently have a line of credit with a large limit, several credit
> cards with high limits (paid off each month), and our mortgage (locked at
> 4.8%). We've got more than $200,000 equity in our home, much more than all
> of our current debts combined.
>
> So... When I go to the bank what do I ask for?
>
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Posted by Venus on November 28, 2006, 7:15 pm
Please log in for more thread options Variable Interest Rate, you get low interest upfront, then 3 years later it
gets adjusted based on a new market rate. This is dangerous loan at this
moment. It was great in 1998-2001 when the interest signal was going down
the hill, now the signal is going up the hill, you don't want this type of
loan. Why? because you will end up with high interest and if you are unable
to pay after 4 months then you lose everything including your money down and
your equity.
Another bad thing is, every time you re-adjust with new rate, you paid
95% interest to the bank each month. You do not build equity fast this way,
fixed rate is much better. On variable rate, to build fast equitty is to buy
when the interest signal going down. I say like this because it's similar
to the stock signal.
>I had a friend describe a loan that he obtained from his bank instead of a
>regular mortgage. It sounds like the perfect thing for us, but I'm not sure
>of it's official name.
>
> Basically, it's a very large, low interest line of credit. The interest
> rate floats and I could lock it in at any time.
>
> We currently have a line of credit with a large limit, several credit
> cards with high limits (paid off each month), and our mortgage (locked at
> 4.8%). We've got more than $200,000 equity in our home, much more than all
> of our current debts combined.
>
> So... When I go to the bank what do I ask for?
>
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Posted by Jeff Strickland on November 29, 2006, 1:10 pm
Please log in for more thread options It sounds like an Option ARM (Adjustable Rate Mortgage. It could also be a
HELOC (Home Equity Line Of Credit) that is in a 1st position. Normally a
HELOC is a 2nd, but there are banks that offer them as a First. There are
some that allow -- actually, they demand -- that the borrower deposit all of
his paycheck into the mortgage account, then use HELOC checks issued against
the account to pay for day to day living expenses. This sounds odd on the
face of it, but the nuts and bolts actually make sense to the right kind of
borrower.
>I had a friend describe a loan that he obtained from his bank instead of a
>regular mortgage. It sounds like the perfect thing for us, but I'm not sure
>of it's official name.
>
> Basically, it's a very large, low interest line of credit. The interest
> rate floats and I could lock it in at any time.
>
> We currently have a line of credit with a large limit, several credit
> cards with high limits (paid off each month), and our mortgage (locked at
> 4.8%). We've got more than $200,000 equity in our home, much more than all
> of our current debts combined.
>
> So... When I go to the bank what do I ask for?
>
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Posted by a425couple on January 13, 2007, 8:11 pm
Please log in for more thread options > What is this kind of mortgage/loan called?
> So... When I go to the bank what do I ask for?
I normally never wish to be a smart aleck,
but to above question I'm tempted to answer,
"A teaser, to get you off your current wonderful mortgage!"
> I had a friend describe a loan that he obtained from his bank instead of a
> regular mortgage. It sounds like the perfect thing for us, but I'm not
sure
> of it's official name.
> Basically, it's a very large, low interest line of credit. The interest
rate
> floats and I could lock it in at any time.
> We currently have a line of credit with a large limit, several credit
cards
> with high limits (paid off each month), and our mortgage (locked at 4.8%).
> We've got more than $200,000 equity in our home, much more than all of our
> current debts combined.
You are doing very well.
The overall economy is doing well.
But economic cycles (despite many who would wish so)
have not been repealed.
If I am near correct in understanding you have a 15, 20, 25, or 30
year fixed mortgage at 4.8%, I would definitely keep it.
I will not try to post predicting when, but I'm confident that
at some time of that loan, interest rates will noticably rise.
So in that regard, I agree with Venus.
(Let us all hope we never see 18% mortgage rates again!
Those were kinda grim times. But likely to see up to 10%.)
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