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Author Topic: Well my living expenses are set for the next 3 years  (Read 862 times)

upNdown

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Well my living expenses are set for the next 3 years
« on: February 03, 2006, 04:39:53 PM »
I just got approved for a $75,000 interest only Home Equity line of credit at prime minus a half.  Kinda scarey, knowing that that line will be maxed out in 3 years and that will represent only half of my debt (if I'm lucky).  But anyway, its nice having that matter settled.  Good luck to the rest of you with your private loans - seems like we're never finished with this process, huh?
GPA - 2.095 (It was a long time ago and I wasn't trying.)
LSAT - 161

In - Suffolk, New England School of Law
Out - BC, Northeastern
Pending - Nothing pending . . . now what?

upNdown

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Re: Well my living expenses are set for the next 3 years
« Reply #1 on: February 04, 2006, 04:29:00 PM »

Just curious as to what makes a line of credit desirable in this particular circumstance.



As you said, I don't really need it all now.  The line of credit allows me to take it as
I need it - presumably about 20 grand a year.  If I took it all up front, I'd be paying interest on money I didn't need for a long time.  The best fixed rate loan I could find was about 6.75%.  If I took it all at 6.75 fixed and put the extra into in CD's, the best it could yield about 4.5%.  So I'd certainly be losing money in the short term.  In the long term, I guess I have to hope that the prime rate doesn't sky rocket and kill my variable rate.  (personally, I don't think interest rates are going to rise much in the next 5-10 years - and that isn't optimism; that's pessimism about our economy - but that's all conjecture)

But I think a bigger problem would be the fact that I'd be sitting on that money.  If I took 25K to spend this year and sunk the other 50K into CD's, I'd have to declare those on my FAFSA and my financial aid forms next year.  I'm pretty sure that would have a serious impact on the financial aid I'd receive.  I could be wrong, but I'm expecting to get the maximum perkins loan and I also hope to get at least 10K in need based grants from Suffolk (they say the average student gets 5K, and I'm low-income, cash-poor and have 2 kids).  But if I had an extra 50K sitting around, I'm pretty sure I wouldn't get either of those things. 

I could be wrong.  I was a history major; I don't know anything about this crap.  If anybody has any advice, I'd love to hear it.  But using common sense, this seems to be the best way to do it. 
GPA - 2.095 (It was a long time ago and I wasn't trying.)
LSAT - 161

In - Suffolk, New England School of Law
Out - BC, Northeastern
Pending - Nothing pending . . . now what?

upNdown

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Re: Well my living expenses are set for the next 3 years
« Reply #2 on: February 08, 2006, 03:56:26 PM »
Now I find out that the interest only loan has a max loan to value ratio of 70%, and the 75K I was apporved for was based on the standard equity line of credit.  The difference works out to about 40 grand - I know that a 45K line won't be enough to get me through the next 3 years, so I guess I'm back to square 1. 

The nice bank lady did tell me that they have a promotional Equity line where, if you transfer 20K in dept to them, you'll get prime minus 2 for the next 9 months and Prime minus 1 for the life of the loan.  Now, if transfer both auto loans (presently at 3.5% and 4.5%) and all my credit cards (between 7.9$ and 11.9%), I could probably get up to 20 grand.  So, the question becomes, do I want to roll my two auto loans (depreciating assets) into a higer rate, longer term loan to A) lower my monthly payments in the short term, and B) lower the rate I'll be paying on this equity line for the long term?  And, if I do that, I'll end up INCREASING my principal every month just to pay down the principal every month (because this is NOT an interest only loan).  How crazy is that?   
GPA - 2.095 (It was a long time ago and I wasn't trying.)
LSAT - 161

In - Suffolk, New England School of Law
Out - BC, Northeastern
Pending - Nothing pending . . . now what?

gwenkern

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Re: Well my living expenses are set for the next 3 years
« Reply #3 on: February 08, 2006, 10:04:00 PM »
Where do you live?  I work for Citizens Bank, and if we have banks near you, you might be able to get prime - 1 for 50k or more, up to 85% LTV, or prime - 0.5 up to 90% LTV.  I'm in Pennsylvania, and that offer is good in PA until February 11, and in several other states too.
LSN

Virginia Law '09

upNdown

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Re: Well my living expenses are set for the next 3 years
« Reply #4 on: February 10, 2006, 09:56:50 AM »
I'll check it out.  From past experience, I hate citizens, but i'm not that pig-headed that I won't take their money if they have the best deal.  But I'd be surprised if they did.  From my experience, banks just can't beat credit unions. 
GPA - 2.095 (It was a long time ago and I wasn't trying.)
LSAT - 161

In - Suffolk, New England School of Law
Out - BC, Northeastern
Pending - Nothing pending . . . now what?

upNdown

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Re: Well my living expenses are set for the next 3 years
« Reply #5 on: February 13, 2006, 11:47:52 AM »
I'll check it out.  From past experience, I hate citizens, but i'm not that pig-headed that I won't take their money if they have the best deal.  But I'd be surprised if they did.  From my experience, banks just can't beat credit unions. 

Indeed they do have much better options for an interest only HELOC.  Thanks for the tip.
GPA - 2.095 (It was a long time ago and I wasn't trying.)
LSAT - 161

In - Suffolk, New England School of Law
Out - BC, Northeastern
Pending - Nothing pending . . . now what?

gwenkern

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Re: Well my living expenses are set for the next 3 years
« Reply #6 on: February 13, 2006, 04:29:52 PM »
Hooray!  So happy I could help.  I hope everything works out for you :)
LSN

Virginia Law '09

upNdown

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Re: Well my living expenses are set for the next 3 years
« Reply #7 on: February 14, 2006, 10:50:30 AM »
Hooray!  So happy I could help.  I hope everything works out for you :)

I never expected a bank to be able to compete with credit unions in terms of rates.  Is Citizens losing money on these equity lines?  Cause they're really like a point below most big banks. 
GPA - 2.095 (It was a long time ago and I wasn't trying.)
LSAT - 161

In - Suffolk, New England School of Law
Out - BC, Northeastern
Pending - Nothing pending . . . now what?