WHY,When Trying To Borrow Money........

oldfrt

Quick Overview,

Trying to help step-daughter pay off College.


I have no mortgage on my home,just a line of Credit(100,000)

Present Interest rate on it is 2.99%
I only owe about $50,000)
Assessed value about $300,000

What the lenders want!

Pay off LOC and roll into new Mortgaee with College
expenses at a 5.5% rate.

Why?
To be in first lein position


My Question

So,why on God's green earth would I give up a 2.99% .

I would think that if my monthly expenses are kept lower(By keeping the LOC),I'd be in a better position to keep up payments.

It makes sense to me ,financially,how come the banks don't see it that way?

__________________
https://www.facebook.com/pages/John-...94183374011504

Framer53

She could borrow the money, and consolidate.

Winchester

So why don't you ask for an increase on the LOC?

I don't see a reason to give up the 2.99

__________________
Ryan

oldfrt

Once I increase the LOC,I lose the current rate,and it jumps up 2%.

I may try and use some of it to lighten her burden,but I have to keep a buffer zone in case work slows too much.

__________________
https://www.facebook.com/pages/John-...94183374011504

Warren

That 2.99% is variable. If you throw in the college costs and max out that 2nd mortgage, how long do you think it will take to pay off? Some people would like the security of a 5.5% fixed rate over the unknown of a variable. When things finally improve, the Fed is going to start raising rates at least a little. It is totally within reason to think that your variable could exceed 5.5% within the next 5 years or so.

From the lenders perspective, a first mortgage is much easier to forclose on and is therefore a more secure loan. Not to mention they would like you to borrow more so that they can make more. Not to mention, they will also make money on closing costs, points, fees, etc.

oldfrt

Her best rates for consolidating are up around 6.99%.
Since her hubby went back to school,they're getting kind of strapped for cash.

__________________
https://www.facebook.com/pages/John-...94183374011504

oldfrt

I plan on paying the LOC way down before the end of the year,and with the ,below prime rate,it's hard to give up.

__________________
https://www.facebook.com/pages/John-...94183374011504

Warren

I have one of those too and a daughter in college. Unfortunately, I don't have enough room on mine to throw in the college too. Check with the colleges as the one my daughter goes to has a plan that we use to pay the tuition in monthly installments over a 42 month period. They also lock in the tuition, so we know what the price will be. As an added bonus, after she completes her degree, they give her a bonus of $1000 towards post grad work.

oldfrt

Maybe I can supplement her current payments till I get enough paid on the LOC,to squeeze her on,and watch the interests rates for a opportune time to get a good lock in on a low rate.

She's expecting a good promotion ina few months,so she may be able to drop the LOC back ,so I can get a buffer zone for cash.

She a smart girl,did 4 years of college in three.I need to help her out so hubby can get his masters deg.and help relieve the expenses.

When you consider the closing costs and lost time for working,I want to gamble on the rates coming back down.

__________________
https://www.facebook.com/pages/John-...94183374011504

Winchester

5.5 is crazy.

I' m pretty sure our rates here are like 3-something for fixed, 2.75 for variable.

__________________
Ryan

oldfrt

That's a whole different world than here!

Maybe I should borrow from a Canadian Bank?

__________________
https://www.facebook.com/pages/John-...94183374011504

BreyerConstruct

I'm sorry, I don't know how to say this nicely...


The answer to your question, is that every bank has their financial head firmly planted up their financial @ss.

That's the reason!
You guy's have seen what "lowest bidder" gets you... look at your local bank, chances are it's filled with "Lowest Graduate"...

~Matt

__________________
Custom Deck Builder Deck Designer Lancaster Deck Builder Berks Deck Cleaning
Breyer Construction & Landscape, LLC Facebook Page
www.BreyerConstruction.com

Williams Ex Co

Why is it that your bank tells you what you can and cant spend your LOC on? Mine doesnt.... Its at my discretion who I write any check to.