Is There A 30-Year Fixed Home Equity Line of Credit?? YES! (What To Know and Step By Step) 🏠

https://www.youtube.com/watch?v=Jb5jPedhgh4

Summary:

Traditional HELOC Disadvantages:

• The speaker expresses a strong dislike for traditional HELOCs due to their variable interest rates and interest-only payments.
• Traditional HELOCs often start with low interest rates but can quickly become expensive as they are subject to market fluctuations.
• Clients often end up in a difficult situation where they have to combine their first and second mortgages to handle the increased payments.

Benefits of the New Fixed-Rate HELOC:

• The speaker highlights the key advantage of the new Guaranteed Rate HELOC, which is that it offers a fixed interest rate.
• Borrowers have the flexibility to choose the duration of the fixed rate, ranging from five to 30 years.
• This fixed-rate feature makes the HELOC more appealing, especially to those who are cautious about variable rates.

Planning for Specific Financial Goals:

• The new HELOC is suitable for borrowers with specific financial goals, such as home renovations.
• Borrowers can budget how long it will take to repay the loan based on their plans.
• Unlike traditional HELOCs, this fixed-rate option eliminates the uncertainty associated with interest rate changes over time.

Considerations for Paying Off Credit Card Debt:

• The speaker advises against touching a low-interest-rate primary mortgage, especially if it was refinanced recently.
• Borrowers looking to pay off credit card debt are encouraged to explore the fixed-rate HELOC instead of refinancing their primary mortgage.
• It's essential to compare the rates and calculate the time needed to pay off the debt comfortably.

Choosing the Right Term and Fees:

• Borrowers are urged to carefully consider the term of the HELOC, such as five, 10, or 30 years, based on their financial situation and goals.
• The speaker suggests that borrowers should not automatically opt for no fees and should evaluate the fees' impact on the interest rate.
• A thorough analysis of the numbers specific to each borrower's situation is recommended.

Credit Score and Loan-to-Value Considerations:

• The new HELOC program accepts credit scores as low as 620, making it accessible to a broader range of borrowers.
• The combined loan-to-value (CLTV) varies based on credit score and the amount of cash being withdrawn.
• CLTV can go as high as 95 percent, but this typically applies to small amounts and borrowers with excellent credit.

Online Accessibility and Soft Credit Pull:

• The HELOC application process is entirely online, providing convenience for borrowers.
• The initial credit check is a soft pull, which doesn't impact credit scores until borrowers commit to the loan.
• This ensures that borrowers can explore their options without affecting their credit rating.

Geographic Availability:

• The new Guaranteed Rate HELOC is available in 41 states, providing accessibility to a wide range of borrowers.

Consideration of Fixed vs. Variable Rates:

• The speaker emphasizes the importance of choosing fixed-rate HELOCs over variable-rate options, especially in times of economic uncertainty.

Feedback and Discussion:

• The speaker invites viewers to share their thoughts on the new HELOC program and whether any improvements are needed.
• This demonstrates a commitment to transparency and continuous improvement in the service.

Final Thoughts:

• The speaker concludes by highlighting the significance of the fixed-rate feature in the new HELOC and encourages viewers to explore it as an alternative to traditional HELOCs.
• Borrowers are reminded to carefully assess their financial goals and requirements when considering this product.

Contact Information:

• The speaker mentions that she is licensed in 48 states and welcomes inquiries from borrowers seeking advice on whether to opt for a cash-out refinance or a HELOC.

Today, we're going to be talking more about the new Guaranteed Rate Home Equity Line of Credit. So traditionally, especially like I have clients who've known me for years, I hate HELOCs, I hate them with a passion. And the reason I hate them is because traditionally what you'll see in the market is you'll see a home equity line of credit where the interest rate's really low at first but it's variable and it can move with the market. And then it will have interest-only payments for the first few years, and then all of a sudden it jumps, and I hate that because I've seen so many clients for what they have to do is they end up in a position where they have to combine their first and their second mortgage in order to handle that payment that was so cheap at first that has become very expensive. Okay, and that's why I traditionally do not like HELOCs.

Now, even with this product, what I like about this product is I like that it's fixed, and I like that you guys can pick how long it's fixed for. Is it fixed for five years or is it fixed for 30 years? What's your plan? So from my perspective, as someone who really doesn't generally like HELOCs, I was like, okay, like when is this a benefit, you know? Because I wasn't interested in it until I saw that it was fixed, and I was like, okay, I like this. Now, if you guys, let's say, have a specific renovation plan that you're thinking of doing, what's nice about this product is you can budget out how long it's going to take you to pay it back. Okay, because that's what we would see with the traditional HELOCs is we would see people go, they get sold by lenders into, "Oh look how low the payment is, the payment's so low, oh yeah, let's do a 60 first and a 30 second, you know it's going to be great, the payment's so low, so low," but then it would change, or they were being sold HELOCs where it was a variable payment, they didn't understand that it was going to go from interest only to a full repayment period over 20 years, they didn't properly prepare, no one's having conversations with them. So that's what we've traditionally seen.

Now, if you guys are thinking, okay, hey Jen, I need to take out some money to pay off credit card debt, okay? I don't want you to touch your main mortgage right now because if you refinance in 2020, 2021, you know, the beginning of 2022, your rate is so low compared to where we are now, it can do more harm than good depending on how much money it is. And that's a conversation I have a lot with clients is they'll be like, "Hey, I really need 15 grand," and I'm like, "But the rate's higher, that 15 grand is going to cost you XYZ," right? But a lot of lenders don't do that, they just say, "Okay, we'll do a cash-out refi for that 15 grand," and you're like, "Well, the percent, it's a percent higher on 400,000, but I'll get my 15K." No, no. So, the beautiful thing about this is that you can keep that first loan you have with that beautiful interest rate that I don't want you to touch. Now, if you didn't refinance during those periods, it's a different story, but if you're one of my VA clients at two and a half or two and a quarter or conventional at 2.875, you need to keep that rate, cuddle it at night, tell it you love it, and thank it.

So, if you're thinking of doing a project, this is a good way to not touch your sweet baby low rate mortgage, and you can map out how long it's going to take you to pay it off. And that's what I would really suggest. My suggestion would be, so you go to the website, and you guys can pick like, do you want any fees when you do it or no fees? A lot of times people just default to no fees. I would probably look at the fees as well just to see because you will get a lower interest rate if you do pay some sort of fees, just the way it works. So, I would suggest looking at it but then really getting those numbers, what are those numbers for what you guys want to accomplish?

If it's paying off credit card debt, I think I have an ant on me. Do you guys have ants? We have ants in California during the season, they come out of the woodwork, it's terrifying. Um, anyways, so take your credit cards, write down all your credit cards, how much you owe, what the interest rate is, map out how much it would take you to pay it off. At that point, you go on the website, see where your rate's going to be for the same amount of debt, and see how long it would take you to pay it off based on payments you're comfortable with. If you look at the five years and you're like, "Oh, that's going to be a stretch," do not do it. You know, in these times of inflation, you guys need to make sure that the rates that you're locking in long term will help you where if gas goes up... Sorry, it was an ant. If gas goes up another dollar a gallon, you're not going to not be able to make your payments.

So, I would really be looking at, you know, five years, 10 years, 30 years so that you guys can map out a way that you can pay that back without ultimately having to combine those two loans for something else. So, I love that aspect of it. I really like the 30-year option because when people are trying to do a cash-out refinance, they're trying to do it because they want the payment over 30 years. What's beautiful about this is you can take that section of debt and do it off of 30 years and keep your current mortgage the way it is.

And then if there's no fees, if you go that option as well, it's a really lovely way to do it. Now, are the rates higher than if you were doing a regular mortgage? Yeah, they are, they definitely are. That's something that you have to look at as well. However, you know, if you're at two and a half on a VA loan, and you're talking about trying to cash out and going up to five percent, right? Having a HELOC at a higher rate and keeping that two and a half is going to save you a ton of money. So, as with anything, math matters, you know, and we've got to look at the math. But in this case, I really like this program because it's fixed, it's fixed guys, it's super transparent.

Now, a few things to know, credit scores as low as 620. We can go up to 400,000 with the amount of cash you get. The loan-to-value, meaning the combined loan-to-value will vary based on credit score and how much cash you're going to take out. So, that's something to know, you know, it will go as high as 95 percent, meaning that you only have five percent equity in the house. Do I love the concept of that? No, but it really only does that if you're taking out a small amount and you have very good credit. So, important to know that if you have a 620 and you're trying to take out 400,000, is it going to let you go to a 95 combined loan-to-value? No, it's not.

Okay, and this is all online, so there will be a link to it, you guys can play with it. It does do a soft pull on credit, it doesn't do the hard pull until you guys are committing, so you know, some people are very sensitive about that. But you guys get to choose the term, it gives you different options, you get to play with it. And if you saw the investor video, you know, tell me what you think. Did the tech guys do a good job? Do we need to, are there improvements we could make? What do you guys think? But I thought it was worth talking about because, you know, for most of my career, I haven't offered HELOCs, I've always said go to a credit union, because they generally will have some fixed products, maybe.

But in this case, we've got it, we've got a fixed product now up to 30 years. Oh my God, so magic. So, check it out, it's only in 41 states. Any questions, feel free to ask me. There's a lot to the program, but I just want to give you guys the highlights to let you know this exists. There's a lot of people pushing variable rate HELOCs right now, and you just really have to know what you're getting into with those, whereas a fixed rate's very easy to understand and to plan for. That's the most important part. So, I hope this has been helpful, as always, feel free to reach out. I'm licensed in 48 states, so I'm happy to discuss, should I do a cash-out refi or should I look at a HELOC? Thanks so much for watching, guys.

2023 Update on a Fixed HELOC - Home Equity Line of Credit (A Fixed Second Mortgage)

https://www.youtube.com/watch?v=LpBsCcYWYqI

Key Information:

1. This is a fixed home equity line of credit, essentially a fixed second mortgage.
2. It's not meant for emergencies but for planned expenses where you need a specific amount of money.
3. You cannot use the funds to buy cryptocurrency.
4. You must take out the entire amount at once, not for ongoing use.

Advantages:

1. It offers fixed-rate terms for repayment, which provides payment certainty.
2. It's quick to get the money, typically in less than five days.
3. The application process is entirely digital, making it convenient.

Disadvantages:

1. It uses AI to determine property value, so it may not reflect recent improvements.
2. You can't take out all the equity in your house; usually, you need at least 20% equity.
3. It requires precise income and asset verification during the application.
4. The program does a soft credit pull upfront to offer customized rates.

Overall Recommendations:

1. Suitable if you have a specific purpose for the funds and a clear repayment plan.
2. Not recommended for emergencies or if you want an ongoing line of credit.
3. Understand the limitations regarding property value assessment and equity requirements.

So, a couple of months ago, I did a video on our home equity line of credit. Um, I'll have a link to it if you guys want to check that out. But here's the basics. The basics are it is a fixed home equity line of credit, which is basically a fixed second mortgage. Okay, now the deal is this: if you're looking for a home equity line like in case of an emergency, like, "Oh gosh, the roof caved in, I need twenty thousand dollars," I'll take out the money. You know, if that happens, this is not the right product. This is a product for when you have exactly how much money you want to get out, and you've got a purpose for it. Very important.

It does have a random rule where you cannot take out money to buy crypto. I know, I know, I thought you guys would like that one random rule. Anyways, you have to take out all the money at once. That's very important for you guys to know. It's not a home equity line where you just have it open in case of an emergency. But if you are looking to take out money, let's say you want to take out ninety thousand dollars in order to, you know, I don't know, put in a deck and then something for the pool, right? So, if you want to take out ninety thousand dollars and you want to repay it on a fixed term, right, whether it be five years, 10 years, 15 years, 30 years, this is a great product. Okay, because this is a fixed-rate home equity line of credit, whereas most of the time they are not fixed. Okay, generally, they're going to be on an adjustable, um, or they're just going to be switching with the market as the market goes up depending on what it's tied to. This is a fixed-rate key lock, that is why I like it. Okay, I like certainty, you guys know that about me, you know that about this channel. I am very conservative, okay? I don't like the concept that something's going to go up. I like knowing what my payment is so I can budget for it and prepare for it. This is a great program for that.

Now, let's talk about pros and cons because I always ask my clients, guys, what'd you think? And I've had mixed reviews on it, and that's fair. And it's because it is new technology. So, this is not a product where you call me and you say, "Hey Jen, I need 80k, can you get it for me?" Nope, it is our online application. It is 100 percent digital mortgage. And what's interesting about it is like we have an online application for our normal mortgages too, but then my team gets involved. We can change the numbers if something's wrong, we can alter, you know, we can move stuff around to make it work. This does not have that ability. Okay, so I want to be really clear on that one. And what's important to note is it is new technology. So, instead of uploading documents, you link them. Okay, and it gives you really good instructions. And from what I've heard from most of my clients, it's pretty darn easy. You know, once you kind of wrap your head around, "Oh wait, this isn't Jen and her team who are going to be collecting my paperwork, this is 100 percent digital." Okay?

Now, look, how quickly can you get the money? You can get the money in less than five days. It is really quick. But they do verify income, they do verify assets, you know, the information that you put in the application when you're applying for this home equity line of credit, they do verify. So just make sure you know that because a lot of times people go, "Oh, it's just a home equity and I also makeup whatever, oh, I make a million dollars, so I make a dollar, doesn't matter." It does matter. So really fill out that application as precisely as possible. Um, now if you guys get paralyzed by that, just call me. And if you're like, I mean look, guys, if your salary is 120,000 a year, you make ten thousand dollars a month, right? If you're hourly and you always work 40 hours a week, then it's going to be 40 hours plus whatever your hourly rate is. And it does make it easy for you, so I don't want you guys to be paralyzed by that.

The one con and the part that, you know, I always feel bad about because I can't control it, there's no actual appraisers with this program. This is 100 percent digital. So, it's a robot, a robot sounds like a, you know, um, it's, it's AI trying to determine the value of your property, and there's certain risk factors put in there as well. So, you may look at Zillow or Homebot or something else, and the value may be higher than what this comes back with, and we don't have the ability to just type in an address and see what the value is going to be on our end. That would be great if we did, but we don't have the ability to interact with this program, okay? So just know, like, look, the value, it's not the same as if an appraiser went to your house, if you just spent a hundred thousand dollars on your kitchen, this program is not going to know that, and there's no way to alter it.

So, if you have a good chunk of equity in your house, you know, if it's pretty clear you have Equity, this can be a great program.

**The other thing to note is that you can't take out all the equity in your house. So what do I mean by that? If your house is worth five hundred thousand dollars and you owe four hundred thousand dollars, you can't take out a hundred thousand dollars, okay? That would be taking out all your Equity. So, with this program, you actually need to have for most of the scenarios at least 20 equity in the house, meaning that if the house is worth 500 between your current loan and the money you want to take out, it can't be over 400k, okay? So, like, if I was gonna do this program right, um, I can't believe I'm getting out of a calculator for this because I'm nervous on camera, um, if, let's say, my house is worth seven hundred thousand dollars, right? And 20 percent of that, right, because I need to have at least twenty percent, is 140. That means my loan on my house and the money I want can't be more than 560. So, if I owe 500, I could, in theory, take out 60k. Got it?

Okay, now look, you guys don't have to be math Wizards for this program. I feel I'm probably over complicating it, but I wanted you guys to know kind of the stuff that I've seen people hit that I think could be tailored because it's like, look, if you're like, "Oh, I owe 480 but it's worth 500, and I wanted 20K," it's not gonna work. Like, we'll just save you the time and the headache. It's not gonna work. You've got to have some Equity left over in the property, um, what else? I mean, that's really the big stuff is the concern about the appraisal value, people trying to take out all the equity, um, not filling out the application correctly, it does verify all your income, oh, credit polls.

Now what's interesting about this program is up front it does a soft credit pull, and it lets you play with it in that like you get to choose how long you're doing if you're doing it locked for five years or 30 years that's up to you, you get to play with it, and it's an interactive program where you're basically deciding what you're comfortable with, and the rates that you're offered are based on that, of course, a shorter term is going to have a lower rate than a longer term, and that's because, you know, you're paying back the money quicker, so keep that in mind.

Really where this is a great program is if you guys know what that money is for, it's going to be way less than a credit card, right? And you don't want to touch your first mortgage, okay? That is what HELOCs are for.

Now, if you had a first mortgage at a higher interest rate than the market, then doing a cash-out refi probably would be the best move, but what we're seeing a lot of is people who had mortgages from 2020-2021 where the rates are so darn low, you guys never want to touch that, but you do want to take out some money to improve the property, this is a great program for that.

So overall, I haven't had a lot of complaints about the program. The only hiccups that I see is, you know, it is frustrating that you can't have a real appraiser go out, and it can be a little bit frustrating, you know, just trying to figure out how to link documents.

But once you learn it, it's a great skill to have, it's something that we're going to see more and more and more of because it is the future of technology. So overall, I think it's a fun product. I like that it's just a soft credit pull up front so you guys can play with it and see if you want to move forward before you commit to the hard credit poll and you commit to the rates. So as always, questions, comments, let me know, but once again, this is a digital program, so I will have a link to it if you guys want to play with it, um, but I hope that helps. I hope that helps you guys get on the path to, you know, fixing up that house without touching that first because please, if you guys have a low rate, protect it with your life. Thanks for watching.

Take Out An Equity Line or a HELOC? (Home Equity Line of Credit Step By Step Guide)

https://www.youtube.com/watch?v=9MHXIgSBwkg

Introduction:

• Welcome to this step-by-step guide on whether you should consider taking out an Equity Line or a Home Equity Line of Credit (HELOC) for your financial needs.

Step 1: Evaluate Your Financial Goals

• Before considering an Equity Line or HELOC, assess your financial objectives.
• Determine if you need funds for specific purposes such as home improvements, medical expenses, or other significant life events.

Step 2: Understand the Risks

• Be aware of the risks associated with equity lines, especially during economic downturns.
• Learn from past experiences, like the 2008 financial crisis when many equity lines were cut.

Step 3: Differentiate Between Fixed and Adjustable Equity Lines

• Understand the difference between fixed and adjustable equity lines.
• Fixed equity lines provide stability, while adjustable ones can lead to uncertainties.

Step 4: Assess Your Ability to Repay

• Consider your financial stability and ability to repay the equity line.
• Ensure you can handle fully amortized locked payments, especially if you opt for a fixed equity line.

Step 5: Identify Valid Reasons for an Equity Line

• Determine if your reasons for taking out an equity line are valid.
• Examples include funding medical procedures or home renovations.

Step 6: Choose a Fixed Equity Line for Stability

• If you decide to proceed, it's recommended to choose a fixed equity line for payment stability.

Step 7: Be Cautious of Misleading Marketing

• Beware of lenders pushing equity lines without considering your best interests.
• Understand that some lenders profit from refinances related to equity lines.

Step 8: Protect Your Financial Well-being

• Remember that your primary responsibility is to protect your financial well-being.
• Do not rush into an equity line or HELOC just because it's promoted.

Conclusion:

• Taking out an equity line or HELOC should align with your financial goals and be a well-informed decision.
• Ensure that you are safeguarding your finances and not succumbing to misleading marketing tactics.

Story time, okay. So, before I start my story time, if you like this channel, hit like. If you hate me, hit hate. If you haven't subscribed, please do. I'm trying to prove that you can actually have a mortgage channel and have more than 12 subscribers. Shocking, I know. Probably won't happen. Anyways, okay, so I was on Instagram because that's how I calm down, which is not healthy at all. But like, if I'm stressed, whatever, I go and I scroll until my mind is numb. Not good, but common, right?

And I saw this lender, and this lender has some interesting graphics always going on, which I can't talk about, but it's always funny. And I was watching him, and he's like, "Guys, the number one thing everyone should be doing right now is taking out an equity line." No, that is absolutely not what you should be doing.

So, for generations, decades, since the millennium of lending, lenders have been pushing that you should take out an equity line in case of an emergency. Okay, um, here's the fun fact. So, a lot of people did that prior to 2008. They took out equity lines in case there was an emergency. Do you know what happened as soon as 2008 hit? All those equity lines were cut. That's right, as soon as a lender sees risk, they cut it, and they have a right to do that with equity lines. Now, that's unless you pull out all the cash now, but if you're pulling out all the cash now, that's going to be at a pretty high interest rate if you look at what's going on in the market. So, do you really want to be paying, gosh, I don't even know, six plus, seven plus, eight plus, nine plus, ten plus, twelve plus, to have money sitting there in case of an emergency? No, that doesn't make a lot of sense, does it? No.

Now, why is this lender pushing equity lines? Oh, there's so many reasons, okay. Number one, he gets paid on every equity line that he does. Number two, number two, guess what we do a lot of refinances because of equity lines. I know I'm being annoying in this video, but equity lines, that's what we do, a lot of refinances of. It's like normal. So basically what's going to happen if someone takes out an equity line right now and let's say rates do go down at the end of next year, every lender is going to be reaching out, going, "Hey, don't you want to combine those two? You know that equity line's like a bomb, right?" There's not a lot of equity lines that are fixed. The one that we offer is fixed. It's fixed, guys. It's not this adjustable mortgage of doom, but most of the equity lines being sold are adjustable mortgages of doom. So, they lead to refinances because people get into a position where maybe it's 10 years interest only, but then when it goes to principal and interest, they can't afford the payment. So, they have to combine the first and second. So, the more people with equity lines, the more people who will ultimately need to refinance.

So, what are good reasons to take out an equity line? Um, let's say that you need to do something like in vitro. Okay, that's fair, right? Let's say that you have to. You don't want to sell your house, but you really need another bathroom, otherwise you're miserable. Okay, you know a remodel could be a good reason for an equity line. With both of these, I would be saying you should do a fixed equity line instead of playing, you know, roll the dice of doom, right? Make sure you can afford the fully amortized locked payment because if you can't afford that, you're just putting yourself in a position where you may have to refinance that beautiful low mortgage that you're trying to preserve by getting an equity line.

So, there are some reasons where getting an equity line makes sense. But just getting one to have one, that doesn't make sense, not for you guys, for the lender it makes a lot of sense, but for you it doesn't. So, really be careful, guys. Watch out for this type of marketing. I've said it a million times this year, lenders are starving, mortgage companies are closing, they're consolidating. It is not your job to feed them. It is your job to protect your wallet, to protect your family's finances, and to protect yourself. Okay, so once again, buyer beware. Helocs. Do not get one just to get one. Thanks for watching.