I Am Getting Ready To Close On A House In The Next Seve
Q: I am getting ready to close on a house in the next several weeks, and I am exploring my options afterwards to place myself in the best long term financial picture. I have no credit card debt, about 4000.00 left on a vehicle - 2 years, 7.5% auto loan. No other debt at all. I am taking a loan out for 76,000 on a 95,000 home on a 30 year 6.5 fixed. I am putting down 20% using a variable credit line against my portfolio - currently prime + 3 spread through UBS PaineWebber. I am thinking that perhaps what might be a good idea is to immediately take out a Home Equity Loan against my property as soon as I close and pay off my car and use the rest to pay off the variable rate credit line in my portfolio. That way I am protected against the rates rising in my credit portfolio through a 10 year fixed loan for at least half the amount plus I will no longer have a 202.00 a month payment on my vehicle, so I can pay that amount towards the variable rate credit line until it's back at a zero balance, and then I will simply have the 76,000 at 6.5/30 and the 10,000 at (I am thinking 7.5/10). Does anyone have any ideas towards this?
A: It is rare for a lender to allow a borrower to borrow the down payment. That threw me off. I imagine you have told the lender about it, right? And yes, you will have equity, but like you said it is just different debt. So your margin loan is at 7.75%? Is your portfolio earning more than that? Have you compared the margin loan versus two other options?: 1- Liquidate and put down 20% cash? 2- Get a normal second mortgage. The rate is higher, but (very likely) tax deductible, and you avoid pmi. Remember to estimate the tax implications in the interest rates. .