Should I consider a HELOC?

[Floridatennisplayer]

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

 

[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.

 

[Senator]

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.

 

[43210]

No real downside to a HELOC. It's free to have, free to set up, and a great source of fast, cheap cash.

My comment was to contradict that.

One possible downside is that they may (or may later) require more expensive insurance than you want. I dropped a HELOC for this reason.

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.

 

[RE2Boys]

Interest paid on a HELOC will no longer be tax deductible in most cases under the new federal tax law.

 

[Big_Hitter]

No real downside to a HELOC.

unless some guy calls the bank appearing to be you and they wire $180K to him outside the country

 

[jazz4cash]

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.

 

[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.

 

[Another Reader]

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.

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.

 

[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.

 

[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.

 

[davebarnes]

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%.

 

[Luck_Club]

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...

 

[Jerry1]

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.

 

[Islandtraveler]

Downside: NONE

Reason: OPTIONS

 

[jazz4cash]

According to the Third Federal web page there is a $65 annual fee for their HELOC which they waive for the first year.

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.

 

[daylatedollarshort]

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.

+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.

 

[Scuba]

Interest paid on a HELOC will no longer be tax deductible in most cases under the new federal tax law.

My understanding is it depends what you use the HELOC for. If you use it for home improvements, interest would still be deductible.

 

[Montecfo]

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.

 

[Scuba]

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.

 

[Senator]

One possible downside is that they may (or may later) require more expensive insurance than you want. I dropped a HELOC for this reason.

Are you saying that a bank may require insurance for the amount of the HELOC? Or they make you buy insurance from a more expensive insurance company?

Assuming you want to have a property replaced if it burns down, it makes sense. The Bank wants to be covered too. I have never had an issue with a bank requiring more insurance. I have never even known anyone who did either.

 

[Another Reader]

My understanding is it depends what you use the HELOC for. If you use it for home improvements, interest would still be deductible.

That's not correct. HELOCs were simply eliminated from the tax code and are therefore not tax deductible. The only exception might be if the money was borrowed for business purposes, as mine was. I used it to do improvements on a rental. I'm still waiting for a final answer from the CPA.

 

[Another Reader]

Are you saying that a bank may require insurance for the amount of the HELOC? Or they make you buy insurance from a more expensive insurance company?

Assuming you want to have a property replaced if it burns down, it makes sense. The Bank wants to be covered too. I have never had an issue with a bank requiring more insurance. I have never even known anyone who did either.

Banks do not like high deductible insurance on properties for which they have loans. I tried to raise my deductible on the rentals to $5,000, but that was a nonstarter with a couple of servicers whose insurance departments actually review insurance.

 

[mrWinter]

Are there closing costs on establishing a HELOC?

 

[Floridatennisplayer]

Huntington just offered me a 320k HELOC. No closing costs no application cost no annual fee