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can you please tell me is home equity loan interest calculated the same way as a standard mrotgage

I have a much larger equity loan on my investment property than the mortgage
205000 equity and 60000 original mortgage ... Wondering if I should just refinance property probably worth 600 ish the dilema is the small mortgage is at 4.75 fixed
the home equity variable is at about the same rate right now but to roll it to a fixed home equity loan it turns into over 7% 790 credit Lauren
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May 31 2009 - Newport
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Profile picture for CORONA NICK
The interest is calculated the same way... the difference is that the HELOC, you only have to pay the interest without paying any priniciple, unless ofcouse if you lock it... your payment will increase because you it will include interest and principle.  Having such a large HELOC is risky, due to the fact that once the FED increases the rate.... you interest will go up, since its at the bottom now....25%..lol

ex 5% if 100K is 5K... divide by 12... and thats the amount of interest you will pay monthly...
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May 31 2009
Home Equity Line of Credit or HELOC is what I believe you are asking about.  Those are interest only based upon prime (3.25% now) plus the margin.  Prime can change at any time by the way.

As an example if your rate is prime +.5% then it is currently 3.75%.  Check your NOTE also, there may be a minimum rate that is charged.  So if line amount is $205,000 x 3.75% = $781.25 per month interest only.  Once prime starts to move up it usually takes 18 months to get back up to a level of around 6%.

So you need to judge how much exposure you want to have with this variable rate 2nd.  If you decide to combine the first and 2nd together that will probable be the best deal.  Ask for a quote on Zillow and do the math and see which one is right for you.

Ed
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May 31 2009
 
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can you please tell me is home equity loan interest calculated the same way as a standard mrotgage
Profile picture for CORONA NICK
Latest answer by CORONA NICK
May 31 2009 | 2 answers
  • Asked by bradbury_lauren
  • In Refinance
  • May 31 2009
Mortgage Rates
 
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