r/HELOC

We owe about $340k on a home valued around $750k, interest rate is 3.25%. Low DTI (1 car and some credit card debit @ 0 Interest). Looking to take do some repairs/upgrades to the home for about $65k. My credit union has pretty good rates (7.5%) with a 30 year term, 10 draw, 20 repay. There are no fees involved with the HELOC process, unless I close it within the first 3 years, which I don't plan on. I would also like to ask for a larger amount for future upgrades as needed, but don't have anything planned just yet.

I am thinking that this is a good option, but open to ideas.

Thanks!

I've originated HELOCs for 30 years. Here's what I wish every borrower knew.

I started as a loan officer trainee in 1993 and I've spent most of the years since on home equity. I read this sub a lot. A good number of my clients found me here, and more of them learned what a HELOC actually is here than from any lender's website, mine included. So this is me putting the most common first-call conversations in one place.

**Everybody chases the rate. Almost nobody asks about the payment.**

It makes sense. For most people the rate is the only question they know to ask. But the rate is one component. The payment is the thing you live with every month, and I almost never hear anyone ask about it first.

**Start with your scenario, not the rate.**

What exactly are you trying to do? Pay off cards, fund a renovation, bridge to a sale, hold a cushion you may never draw? Your scenario shapes your rate before you ever see a quote, because it decides which product you should even be looking at. I rarely see people post their actual scenario and ask which HELOC fits it. I see a lot of people chase the lowest number and end up with the wrong product. Start with the scenario. The rate is what your scenario qualifies you for.

**Not all HELOCs are adjustable.**

This is the biggest piece of misinformation I see here. Fixed-rate HELOCs exist. The best non-bank HELOC lender in the country offers both fixed and adjustable, and the terms are more flexible than most people know: 10-, 15-, 20-, or 30-year terms, draw periods up to five years, fixed or adjustable, your pick. Every HELOC lender I'm aware of has no prepayment penalty. If a lender tells you it's adjustable or nothing, you're talking to the wrong lender for your scenario.

**What actually separates the best providers**

Speed and efficiency. When it doesn't take an army of people to process and fund a HELOC, that economy of scale shows up in your rate and your terms. Secondary marketing, capital markets, and securitization are what set the price of your money. Fewer humans doing what software does faster means the price reflects that.

Right now the best non-bank HELOC lender in the country runs the entire process, start to finish and including the post-closing work, on-chain. Most people don't know that and probably don't care. The reality is that AI does the heavy lifting, every step is documented on the blockchain, and a lot of work happens that borrowers never see. Everyone will be doing this eventually. HELOCs are leading the charge. Boring to most people, I know. If you're curious, ask me below. It's far simpler than most people think.

**Why your odds are better with someone who lives in HELOCs**

I have countless examples of people who tried to DIY their HELOC and got no offers, or an offer much lower than they needed. It comes down to something simple: experience pays, and your scenario has a lot to do with it.

How your information is presented on a digital HELOC application is the difference between a denial from a simple data-entry error and an approval on the first pass. Many of my clients came to me after a lowball offer from going direct to one of the top digital HELOC providers, or their bank or credit union. We got them instant approval after a five-minute conversation about their scenario and completing the application together.

The application isn't complicated. It's usually one or two small errors in how it was filled out that produced the bad outcome. Structuring it the right way and getting income and employment verified in seconds is the whole trick. It just takes reps to know the systems and what they're looking for. I love that part.

**Ask me anything.**

This is an interactive community with a lot of lenders and a lot of borrowers in it, and the threads here have been more useful than most industry resources I've seen. Post your questions below. If you want, post your scenario too: value, what's owed, what the money is for, your state, and roughly where your credit sits. I'll do my best to answer every one as quickly as I can, and I'd rather answer here where everyone can see it.

good afternoon,

I am looking to take out a home equity loan. I will share my current situation to share a clear picture of why this is the direction.

I currently own a townhouse. It does not have a mortgage on it and I bought it outright in cash so it never had a mortgage. If I sold it right now, I probably could get 300k but likely more but let’s just put it on the minimum side. Two whole baths & 1/2 bath. two bedrooms upstairs and one bedroom/office space in the basement. I am not looking to sell it. I am planning on putting a renter in it.

I want to buy another townhouse. Right now I have about 100 K in savings but soon it’ll be closer to 120k.

I want to borrow 150k. The rest of it I will pay in cash to buy another house so that I don’t have to use a mortgage.

Are there better options? I am a business owner so I would prefer to not get a mortgage. I also strongly prefer owning a house outright rather than having a mortgage so I would prefer anyway to borrow money that is safe such as a home equity loan.

edit: I am not trying to get a HELOC. I’m trying to get a fixed loan. I also do not qualify for a traditional mortgage only a bank statement loan and the rates are pretty high and so it’s very close to a fixed loan so that’s what I’m trying to figure out.

My brother (68M)is trying to figure out how to pay off credit and medical debt (now $30K). He retired 3 years ago, and took his SS, but a medical issue is costing him Thousands in hospital co-pays.He IS still married, but he and his wife have lived in different cities but have not shared finances in decades. She still works (govt employee), but they have little contact - no help there.

He has about $300k in equity on a home solely in his name, but needed a loan mod a decade ago, so the mortgage company (PHH) put the $28K in missed payments in a 2nd mortgage. He has NO retirement savings - but wants to pay off his debt - as he can only afford minimum payments on his CCs, and the debt will never go away.

His sole income is about $4K p/mo from SS, but it is just enough to pay bills, food, and the mortgage, so no extra cash to pay down debt. He said he tried to get a HELOC, but the lender stated that the HELOC must be in 2nd place, so the 2nd mortgage loan would HAVE to be included -and paid off as a part of any HELOC loan, which means making payments on the 2nd mortgage (current rate on both loans 3.5%) @ around the current HELOC rate of ~7%. He is considering going back to work, as he has NO spare income and is just getting by - despite medical issues. I know that will just worsen his health!

How can he get a HELOC for about $60K by tapping his equity (no heirs to worry about - his kid is doing fine, but dealing w/ her own family, and can't help!) He doesn't want to refinance the home cuz his interest rate would double (3.5% to 7%), and he hoped to one day own it outright! Current mortgage payment is $2400 p/mo.

The HELOC would pay off the CCs & remaining debt, but leave him the added monthly HELOC payment. To get $60,000 cash would mean a $90,000 HELOC @ 7% or more, which he expects to pay off w/ a new job! He doesn't want a Reverse Mortgage, as he hopes to pay it off someday (weird - I know)... His credit is 720+, BTW, w no bankruptcies ever, but is just managing to pay the interest to keep his FICO in good standing! He says he is 'too old' for 'rent-paying roomates', and wants to stay alone! A Re-Fi would Double his current interest rate.

He doesn't plan to use hiss CCs EVER again, but he knows debt consolidation would ruin his prized credit score, and he DOESN'T want to file bankruptcy. He wants to use part of the money to upgrade his beater to a decent, reliable used car - paying cash! He has a nice pool, too, btw...

(The Home is worth +/- $600K, and he owes a total of $280K - including the 2nd mortgage...)

Questions:

1. Is there a way to get the HELOC - OR Home Equity loan, WITHOUT having to pay off the 2nd mortgage of $18K - at double the interest rate?

2. Are there Other options available? Hard Money/ or a different type of loan?

3. How to get the $60K WITHOUT having to include the $28K 2nd mortgage - (the interest rate would double on the 2nd mortgage part of the loan).

4. What kind of financial guru should he consult with - that WON'T Charge him for advice?

5. What is the best advice to give him? (His old company would probably hire him back - but I'd like to find a way to keep him from trying to go back to work!)

ALL IDEAS ARE WELCOME! THANKS! Feel free to DM me for a discussion, as i want to give him the best advice! Any other financial vehicles that work here?

EDIT: The house is worth +/- $600. The remaining 2 mortgages total $280. Does that change the equation?

Hey all,

I’m looking for some honest financial advice because I’m in a situation where my monthly debt payments are becoming difficult to manage, and I’m trying to figure out the least damaging way forward.

I have an Ascent/Launch Servicing private education/career-training loan from a BloomTech program. The balance is roughly $20,000–$25,000, and the payment is now around $600/month. I’ve already explored options with Ascent/Launch, including trying to negotiate a settlement or different payment arrangement, but they’ve told me they aren’t offering those options.

I’m also considering/looking at a fixed-rate HELOC for approximately $45,000, with a payment of around $456/month. The idea would be to use the HELOC to deal with the higher-cost debt and hopefully make the overall monthly situation more manageable.

My concern is that while the HELOC payment is lower than some of the alternatives, I would obviously be putting debt against my home, so I don't want to make a decision that solves one problem while creating a much bigger one.

I’m currently looking at refinancing/consolidation options as well, but I’m running into the usual problems with lenders either not wanting to refinance career-training/private education debt or offering terms that don't really improve the situation.

What would you do in my situation?

Would you:

- Take the fixed-rate HELOC and use it to consolidate the Ascent loan?

- Refinance the Ascent loan separately?

- Try to negotiate with Ascent/Launch longer?

- Take the hit on the $600 payment and avoid putting the debt against the house?

- Look at some other option I may be missing?

I’m not looking for someone to tell me what I want to hear. I’d really appreciate practical advice from people who understand debt consolidation, HELOCs, private student/career-training loans, or have dealt with Ascent/Launch themselves.

Thanks in advance.