OFF TOPIC - Home equity loan interest questions???

USMC_6115

For an approximate ten year loan, what's the better deal:

7% fixed, or 4% variable.

Over the next ten years, what's the odds of the variable going up significantly.

I apologize for the off topic post; but, I know there are some financial wizards here...Thanks

LAWMAN

7% fixed. Interest rates have been low a long time and the world situation and value of the US dollar are getting shakier and shakier. Remember '80-'82 when the prime went to 22%?

Trooper

Mass
If your not going to pay it off early from selling your yet found 72 type 2 ms67, I'd personaly go with the fixed rate. That's my opinion but i'm not a financial wizard.
My home equity loan is an open loan with I believe a quarter point above prime(?) I get a checkbook to write checks for a minimum of $500 bucks. I can pay it off early or just pay the minimum.
But if your looking for a big time loan that will take the full ten years, do the fix.

Tom

USMC_6115

Trooper,

My bank has the same deal as yours. I'm not sure yet of the amount I need, I may be able to pay it much quicker than ten years. Doing some home renovations and I'm using 50K as a max. It's no closing costs. no fees, $500. minimum like yours, and no early payoff penalties.

baccaruda

Bought my house about 8 years ago and locked in that 8.25% fixed rate - it was never going to get any lower. Refinanced about 4 years ago at 6.75% fixed - it was never going to get any lower. Just refinanced about 6 months ago at 5.375% fixed - I'm pretty sure I'll never get a better rate than that.

Anyway, I've owned a home for going on 13 years now and rates have consistently declined during that period.

razorface1027

7% fixed

mhnies

What is the yearly amount the variable can increase?
What is the maximum it can increase over the ten years?
These are imortant questions to ask if you want to make
a sound decision.

I wont worry about the Lawmans comment the 80-82
interest rates......I don't think Jimmy Carter will be in the
White House again.

braddick

<< <i>Bought my house about 8 years ago and locked in that 8.25% fixed rate - it was never going to get any lower. Refinanced about 4 years ago at 6.75% fixed - it was never going to get any lower. Just refinanced about 6 months ago at 5.375% fixed - I'm pretty sure I'll never get a better rate than that. Anyway, I've owned a home for going on 13 years now and rates have consistently declined during that period. >>

At this rate the Bank will be paying you to borrow money.

One factor is the cap on the variable. 7% is attractive, but if you're not going to be living in the property for more than two or three years I'd go with the 4% rate. If you're going to settle down and stay, go with the fixed, if anything, for peace of mind.
By the way, good for you for going with a ten year loan and not a 30.
Home ownership is a joy.

IrishMike

Well you know the old banker had to chime in on this one. Home Equity loans with variable rates often do not have a rate cap other than what is your state limit. If you plan on paying off the loan over ten years 7% fixed is a terrific deal on a fixed home equity. Rates are at historic lows now so in the long run rates are more likely to go up rather than down. I guarantee you that the bank hopes you take the variable option, its helps them match up better with what they have to pay for deposits.

No one can tell you what rates will be 3 months from now let alone what they will do over next ten years. However if you had taken the 7% ten years ago you would have been pleased. I would only take the variable loan if I was planning to pay it off within the next two years and then I would want to darn sure of it.