Home eq Loan vs. mortgage
Question: I have an existing 5 years’ balloon mortgage on the prime residence, with 4.25% >interest rate. I’m planning to pay it off fully in 5 years, making extra >payments. >ING Direct is offering home equity loan with 4% interest rate and no >points(http://home.ingdirect.com/open/open.html) . This sounds like a very good >deal, they confirmed there are no prepayment fees, and extra payments would >still go towards the interest. Are there any caveats in changing conventional >mortgage to a home equity loan?
Answer: You can do better. Plenty of banks and credit unions offer Prime minus 0.5%. That would make the rate 3.5%. Also, you didn’t mention whether you needed to get a HELOC for more than 80% loan-to-value. Given that you expect to pay off within 5 eyars, I assume that you have huge equity in your house and don’t care whether the limit is 80% or 90%.
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Filed under: Home Equity Loan
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