I refinanced my $90K 2nd mortgage as a 20-yr term Home Equity Loan with US Bank @ 9% interest fixed rate, earlier this year in March/April of 2024. Now with lower interest rates 6 months later, I'm trying to refinance it again (zero closing costs, all fees rolled into new loan) at a new quoted fixed rate of 8%, with the same 20-yr term, no $$ out of pocket, and lower monthly payments.
However, the representative presented me with the exciting offer of a HELOC instead and told me it was fixed at the quoted rate of 8% but I have the option to lock it in at a lower rate for free any time rates fall over the next 10 years. Then after 10 years it is locked in at that rate with amortized payments over the next 20 years. The HELOC would have a $75 annual fee.
Aside from the relatively small annual fee for the HELOC.... what's the catch? The representative could not present me with any other downsides and gushed about how much better it was than a Home Equity Loan (that requires costly applications fees to refinance to a lower rate each time rates fall).
I feel like I must be missing something, otherwise I don't know why a Home Equity Loan would even be offered as a product vs. the HELOC.
Can anyone enlighten me as to the downsides of a HELOC or fine print that I'm missing?
However, the representative presented me with the exciting offer of a HELOC instead and told me it was fixed at the quoted rate of 8% but I have the option to lock it in at a lower rate for free any time rates fall over the next 10 years. Then after 10 years it is locked in at that rate with amortized payments over the next 20 years. The HELOC would have a $75 annual fee.
Aside from the relatively small annual fee for the HELOC.... what's the catch? The representative could not present me with any other downsides and gushed about how much better it was than a Home Equity Loan (that requires costly applications fees to refinance to a lower rate each time rates fall).
I feel like I must be missing something, otherwise I don't know why a Home Equity Loan would even be offered as a product vs. the HELOC.
Can anyone enlighten me as to the downsides of a HELOC or fine print that I'm missing?
Statistics: Posted by dollars and sense — Thu Sep 26, 2024 3:54 pm — Replies 5 — Views 243