Quick HELOC Feedback for a New Guy

[Keith Martel]

Hey, folks,

New to the forums here, and I've been inhaling everything BP over the past couple of months.

Short Story on Us: A couple looking to get into our first deal(s). Our town has a lot of single-families and duplexes that sell for under $50k. We're looking to purchase with a HELOC and most likely refi once we're able to.

Our local bank (which we love in so many ways) is offering a 100% LTV on our primary residence at $85,000

We received the terms back for the line. Here it is:

Details on requested credit line option:

LOAN PROGRAM: HOME EQUITY LINE OF CREDIT (1ST LIEN)

LINE AMOUNT: $85,000

VARIABLE RATE: 7.31% VARIABLE APR: 7.31% LOAN-TO-VALUE RATIO: 100%

ESTIMATED MONTHLY PAYMENT DURING DRAW PERIOD (FIRST 10 YEARS): $517.79 (INTEREST ONLY AND BASED ON UTILIZING TOTAL LINE AMOUNT)

● The interest rate, Annual Percentage Rate (APR) and payments above may increase. The interest rate is a variable rate that can change monthly. The APR is based on the “Bank Prime Loan” rate index, Prime +2.06. APR will never be higher than 18.00% and can never go below 2.96%. The current Prime rate is 5.25%, as of 12/05/2018, and APRs are available from 2.96% to 8.84%.

● APR displayed above is based on a 809 credit score.

Also: $60 per year fee.

So, here are my questions:

That variable rate is high, right?

If so, what do people recommend moving forward? Honestly, we feel more comfortable using a local bank since we are just getting started since we can interact face-to-face if necessary. Is this unwarranted?

What is a reasonable APR?
What would you do? .

Thanks in advance,

Keith

PS: I did some searching around on the topic.