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Should I consider a HELOC?
01-10-2018, 03:28 PM
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#1
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Recycles dryer sheets
Join Date: May 2014
Posts: 485
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Should I consider a HELOC?
Age 63 in March. Plan to work another year. Home in Ohio paid off as well as condo in Florida. No debt.
I know that if I do it needs to be done while working. What are so reasons for having a HELOC.
And if so, best place to get one?
Thanks
__________________
Central Ohio and Ft.Myers, Florida
Retired January 2019, age 63
35/65 AA
0.00 WR
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01-10-2018, 03:31 PM
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#2
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Recycles dryer sheets
Join Date: Nov 2017
Posts: 275
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One possible downside is that they may (or may later) require more expensive insurance than you want. I dropped a HELOC for this reason.
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01-10-2018, 03:37 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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No real downside to a HELOC. It's free to have, free to set up, and a great source of fast, cheap cash.
A possible downside of you sell, you will have to close it. I have a $500 fee if I close the line in less than 36 months.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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01-10-2018, 04:10 PM
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#4
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Recycles dryer sheets
Join Date: Nov 2017
Posts: 275
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Quote:
Originally Posted by Senator
No real downside to a HELOC. It's free to have, free to set up, and a great source of fast, cheap cash.
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My comment was to contradict that.
Quote:
Originally Posted by 43210
One possible downside is that they may (or may later) require more expensive insurance than you want. I dropped a HELOC for this reason.
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If you are forced to have excessive insurance, then there is a very real cost. (This can also be an issue for car loans.) I had had a HELOC for several years that was "free" in the way you said, but then they began to insist on very low deductibles, requiring much more expensive insurance than I wanted, and so it wasn't worth keeping.
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01-10-2018, 04:14 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jul 2002
Posts: 1,587
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Interest paid on a HELOC will no longer be tax deductible in most cases under the new federal tax law.
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01-10-2018, 04:18 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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Quote:
Originally Posted by Senator
No real downside to a HELOC.
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unless some guy calls the bank appearing to be you and they wire $180K to him outside the country
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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01-10-2018, 04:33 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,327
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We just closed at Third Federal Savings and Loan. Prime minus .75 variable. Ten year draw, 20 yr repayment. Very low payments. I had a conversation with them about using retirement account assets to qualify and they seemed pretty flexible, but ultimately did not need to provide that info. The last two HELOCs we closed on had monthly rate revisions and no caps. Rates went up on the day we closed.
Edit: They are based in Cleveland with branches in FL, but they lend all over, I think.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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01-10-2018, 04:35 PM
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#8
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Recycles dryer sheets
Join Date: May 2014
Posts: 485
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Yikes.....just went online to LendingTree to check them out. Within minutes.....my email is blowing up.....over 14 emails wanting to give me a loan!
Told them I have zero need for a loan. Just looking for a HELOC in case a short term need would ever arise in the future. Wow, they are swarming like sharks.
__________________
Central Ohio and Ft.Myers, Florida
Retired January 2019, age 63
35/65 AA
0.00 WR
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01-10-2018, 05:38 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jan 2013
Posts: 3,413
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Quote:
Originally Posted by Floridatennisplayer
Yikes.....just went online to LendingTree to check them out. Within minutes.....my email is blowing up.....over 14 emails wanting to give me a loan!
Told them I have zero need for a loan. Just looking for a HELOC in case a short term need would ever arise in the future. Wow, they are swarming like sharks.
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NEVER use Lending Tree or any of the lead aggregators. You will get every shady broker in the country calling and e-mailing you. Shop directly instead.
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01-10-2018, 07:07 PM
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#10
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Dryer sheet aficionado
Join Date: Sep 2007
Posts: 41
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According to the Third Federal web page there is a $65 annual fee for their HELOC which they waive for the first year.
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01-10-2018, 07:18 PM
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#11
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 800
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A reason for a HELOC, is to manage income. If you need to lower income one year, you pay expenses with your HELOC. I did that last year to have lower income for Medicare evaluation and will get the added benefit of lower taxes on the income used to pay it off this year.
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01-10-2018, 07:22 PM
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#12
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gone traveling
Join Date: Dec 2015
Location: Berkeley, Denver, CO, USA
Posts: 1,406
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Ages 69/60.
Have HELOC at 3.5% for $50K.
$45K utilized for kitchen renovation.
Stock market seems to be doing better than 3.5%.
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01-10-2018, 07:22 PM
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#13
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gone traveling
Join Date: Dec 2016
Posts: 733
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Thought:
I've heard a bunch of advertising recently about title theft. Would a HELOC prevent that, since the bank would need to clear the debt?
I'm looking at winding down debt, but thinking there are protections to having a BANK watch after my title...
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01-10-2018, 07:25 PM
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#14
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Moderator
Join Date: Nov 2014
Posts: 9,174
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We are in the process of getting a HELOC right now. The appraisal is tomorrow. I will be riding the lower tax bracket (was for me 15%, now 12%). If I need a new roof or some other large expense after I have already hit the bracket maximum, every dollar I have to draw out of a 401K/IRA is taxed at the next higher rate (was 25%, now 22%). A 10% higher marginal tax rate. With the HELOC, I can borrow the money and manage it better in the subsequent year. Saving 10% on taxes less some level of interest expense. The HELOC is no fee, our current insurance is fine for them ($1,000 deductible), and the rate is low. So I didn't see any reason not to secure the line before I move into retirement. Honestly though, I don't think I'll ever need to use it. Just got it because I figure it would be easier to get now (still working) than later when retired.
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01-10-2018, 07:56 PM
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#15
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Recycles dryer sheets
Join Date: Apr 2012
Location: Long Island
Posts: 141
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Downside: NONE
Reason: OPTIONS
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01-10-2018, 08:07 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,327
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Quote:
Originally Posted by almost_there
According to the Third Federal web page there is a $65 annual fee for their HELOC which they waive for the first year.
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Yup. Maybe not worth it if you're just going to have the HELOC sit there as a contingency. They do give 100 buck Home Depot gift card so that covers another 1.5 yrs of annual fee. Can't recall if there's a minimum initial draw.
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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01-10-2018, 09:11 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by akck
A reason for a HELOC, is to manage income. If you need to lower income one year, you pay expenses with your HELOC. I did that last year to have lower income for Medicare evaluation and will get the added benefit of lower taxes on the income used to pay it off this year.
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+1. We use ours to stay under the ACA limits. If we are getting close on the MAGI limit, we can use the HELOC money to get us through the tax year without incurring any taxable income.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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01-10-2018, 10:34 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 4,663
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Quote:
Originally Posted by RE2Boys
Interest paid on a HELOC will no longer be tax deductible in most cases under the new federal tax law.
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My understanding is it depends what you use the HELOC for. If you use it for home improvements, interest would still be deductible.
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01-10-2018, 10:38 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2016
Location: Northern Virginia
Posts: 7,591
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Lots of positives. Good idea to have a standby HELOC if you have significant home equity.
My mortgage is with Third Federal. I called them some time ago as they were promoting the HELOCs. As I recall, max was 150K. I am looking for more so did not pull the trigger. But they do have competitive and low fee the mortgages (at least the ARMs). Relock the rate at any time.
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01-10-2018, 10:38 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 4,663
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I’d get a HELOC if I were you. You can always close it later if you find it doesn’t meet your needs, but it’s easier to get while still working and offers more flexibility than if you didn’t have it. We originally got ours while we were still working and used it to help finance a home renovation. The rate is still pretty low so we haven’t paid it off fully, although we’ve paid it down by about two thirds of the amount we had drawn. We have a nice source of funds that could support us temporarily if need be in the future at a very low cost.
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