What HELOC Rate Option Should I go with?

[Lorna Kaaloa]

Hi Everyone,

I just joined BP and read through some other threads on HELOCs...lots of great info but being the newbie that I am, I am so overwhelmed, a little scared but determined to take my first step.

Okay here goes.  

First, instead of using a broker (not sure if I should have done that), I did the legwork myself and narrowed it down to two options, both credit union rates. One offers a 1 yr @ 0.35%, then 2-5 yrs @ 3.50% and their current index rate at 5.00%. No annual fee, receive up to $500 in Closing Credits with an initial draw of $10,000 at closing.

The other CU is offering the below rates.

I also checked with a couple local bank who gave me the same rates at: 1 yr - 1.00%, 2 yrs - 1.75%, 3 yrs - 2.75% with current variable APR at 4.75%

So, of the above options, which should I go with?

Thanks in advance for your help.

[Isi Nau]

Aloha @Lorna Kaaloa

Good job on doing the legwork!

Personally, I don't care for minimum draw criteria, but if you're using it to invest then you will probably be taking out more than $10k anyways.

I think the best option will depend on what your plans are with the money.  Whether you will be using the money for short stints (flipping) or longer periods (buy and hold).

Also, I believe HELOC rates will be going up later this year and into the next. The one year option may be vulnerable to higher rates shortly after the initial one year term. So the two or three year option may be better, so your rate is locked for longer, even if it is a slightly higher rate.

[Lorna Kaaloa]

Aloha @Isi Nau

Mahalo for your response.

Coincidentally, I am locking in my rates today.  I watched Yellen's speech to congress yesterday and also read this morning's newspaper both confirming the upping of interest to come.

Since I hadn't heard from the forum (before you of course), I did some further research and learned how to read and understand the finer prints of the HELOC offers which helped me make my decision.

I haven't set my mind yet on what will be my first RE investing buy.   So while I wait for the approval, I am listening to a bunch of podcasts/webinars and doing a ton of readings to learn about the options.  Networking would be my next step.  Would you know of any local group out there that I can start with?  I saw a bunch of Hawaii BP members and hoping to connect with some of them sometime soon.

Thanks again....

[Isi Nau]

Hi Lorna.  I'll send you message.