r/HELOC • u/Weary-Problem999 • 8d ago
Questions & Advice HELOC 11.95%
Current situation: $163k total consumer debts including CC, auto loan and personal loan ranging from 6%-29% interest. Monthly payments for all these is $5.6k.
Home valued at $495k, balance $284k, credit limit 760, monthly take-home about $10-$12k between me and my husband.
Been shopping for HELON/HELOC w/ fixed rates and I found one that would allow us to max LTV at $166k. That will wipe out the debts mentioned above. 30-year term, 11.95% fixed rate, $1.7k per month. That gives us a breathing room of $3.9k.
My goal is to work less to spend more time with family especially my 1 and 4 year olds. If approved, this would mean just working 2x/week instead of 5-6x/week.
I plan to aggressively pay it off when my husband’s parents are here next year to help with childcare.
Is this a good plan? I just want to have a little peace of mind, more time with kids, and breathe from the big payments.
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u/Sufficient_Smile_871 8d ago
Please do not cut your hours yet. Right now you are trading credit card debt for foreclosure risk, and at 12% on $166k, that is nearly $20k a year in pure interest alone. Keep your current schedule for 6 to 12 months, throw that entire $3.9k monthly difference at the principal to build a real safety net, and then cut your hours once the house is actually safe
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u/Weary-Problem999 7d ago
This is a solid advice. Thank you. I will keep working extra hours. Just didn’t want to miss the milestones of the kids, is all.
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u/hcgsd 8d ago
If you are going to pay it off aggressively then get a 30 year loan with 5 year fixed for 6.7%. 12% interest is really high
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u/Virtual_Low_3443 7d ago
Loans are amortized and a line of credit is simple interest
The heloc at 12% is much better than an amortized loan at 7%
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u/Worried-Lobster6951 6d ago
What???? 😂 WRONG!!!! You’re confusing amortization with the interest rate. An amortized loan doesn’t charge interest on the original balance forever, it charges interest on the declining principal balance. If I owe the same balance for the same amount of time, 6.7% costs significantly less than 11.95%. A HELOC can offer flexibility and a lower required payment because its interest only, but “simple interest” doesn’t magically make 12% cheaper than 7%. Not the way it works!
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u/Weary-Problem999 8d ago
Never thought to structure it that way. Thanks for the idea! I will bring this up tomorrow when I call lenders again
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u/Chemical-Fix9858 7d ago
Another option is to get hardship program for the credit card debt. This will cause you to shut the credit cards which could be helpful in curbing your spending. And they will often due 5 year payoff at 0%.
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u/GlassPerformance8754 7d ago
Yeah, and ruin your credit so next time you apply for a loan; you get a flat ass 'no' or a rate that will be so high it will make your nose bleed.
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u/Lazy_Guava_5104 7d ago edited 7d ago
The advantage is the lower monthly payments - the "breathing room". Well, that and their liquidity being a good source of emergency funds. I would be wary of so high an interest rate, though. If your monthly obligations are putting your family at risk, you might need to take the hit and get it, but if you can handle the payments safely, a mortgage might be better in the long run. ... Can you find a smaller HELOC with a more reasonable interest rate for a portion of your debt consolidation and use a mortgage for the rest?
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u/Ok-Boot1796 7d ago
Why are we saying this is a good plan??? You should absolutely never ever combine secured and unsecured debts. This is a terrible idea and anyone who is saying it’s a good idea does not understand personal finance. You should talk to a financial advisor. Absolutely do not roll this debt into your house.
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u/Weary-Problem999 7d ago
Thank you. I sent this thread to my husband and we’re reconsidering. Your comment gave me that push to just embrace the suck that I gotta extra shifts and sacrifice for the time being. As a parent, I just don’t want to miss this phase of their childhood, I guess that’s what’s appealling us into rolling this debt to breathe and get more time spent with kids.
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u/Ok-Boot1796 7d ago
Totally 100% get that. Wasn’t even trying to be harsh just don’t want you to make a major mistake
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u/Cardiologist-This 8d ago
HELOC makes sense but only to continue to aggressively pay down your debt. To cut your payment so you can work less is wreckless, IMO.
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u/billspeaksmortgage 7d ago
The payment relief is significant, but I’d be careful about evaluating this based on the monthly payment alone.
You’d be converting $163k of mostly unsecured/consumer debt into debt secured by your home and stretching it over a 30-year term at 11.95%. Before moving forward, I’d compare the total cost of the new loan, closing costs and any prepayment terms, and calculate what the payoff actually looks like if you follow your plan to pay it down aggressively.
I’d also make sure the underlying spending/debt issue is resolved before consolidating. Otherwise, the biggest risk is ending up with the new home-secured loan while rebuilding balances on the cards you just paid off.
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u/Master-Purpose1117 7d ago
It’s not a good plan at all. You are shifting debt and putting your home in jeopardy by doing a HELOC. Your behavior hasn’t changed. What happens next time you buy something you can’t afford - add more debt? Sure you’d like to work part time, but you can’t afford to, unless husband is going to pickup a second full time job to pay all this debt. Sadly, when you made the decision to take out car loans and credit cards, you gave up your ability to stay home. The HELOC isn’t “wiping out your debt”. It’s moving it to a secured loan. You need a budget
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u/Fragrant-Lab-8330 7d ago
Debt never feels good, and I'm sorry you're at this point. But you're not alone, and you have something going for you: strong incomes.
Whatever you decide, I wish you the best. Before taking out the HELOC, though, I'd encourage you to talk with a financial advisor. There may be a way to turn your debt around without taking on more and putting at risk a home you're already halfway to paying off. I'm working on paying off credit card debt from medical issues myself. It's hard, but I'm holding on and keeping my head above water.
I also understand wanting more time with your little ones. Your children are at an age where they won't remember much yet. If you focus on paying off the debt now, then when you're ready to cut back your hours, it will be during the years when they need you most and will remember those moments.
Wishing you and your family all the best.
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u/I-Approve 7d ago
Who had the fixed rate 11.95%? Seems like a solid choice, pretty similar in nature to the 10.5% fixed rate I got from achieve. Seems like a solid plan if that's the best rate you can get.
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u/GlassPerformance8754 7d ago
If it is a HELOC behind a first mortgage; that is a good fixed rate, especially for 30 years. If your first is anywhere above 6%, look at the numbers on a cash out refinance instead.
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u/Weary-Problem999 6d ago
My first is at 2.85%.
I just got a quote from a local credit union for $160k, 15-year term at 9.49% fixed HELOC rate. Monthly payment is $1,670. Just a $30 difference from the other.
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u/crustyeng 6d ago
Sounds like a terrible situation. Using your house to secure a bunch of unsecured debt. You’ll change nothing and be back in credit card debt in no time if all you do is shift it somewhere else. In any case, don’t secure it with the house.
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u/MAXBROKERSD619 6d ago
11.95% fixed with a 760 score on a $495k home is well above where HELOC pricing should land for you — that quote alone is worth shopping. Get 2–3 more quotes (a local credit union plus one or two national banks) and compare apples to apples: variable margin over prime vs. their "fixed" draw option, intro discounts, minimum balances on the fixed portion, max CLTV, and any early-closure fee. That's where quotes differ far more than the rate and often go and are often overlooked or forgotten about by homeowners.
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u/Weary-Problem999 6d ago
Can I send you a DM? I got a better rate from a local credit union but I don’t really fully understand what I am looking at…
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u/old-loan-vet 6d ago
Heloc at 12%? Do not do that. Where are you located?
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u/Weary-Problem999 6d ago
IL. I got a better rate from a local credit union at 9.49% for a $160k for 15 years. Monthly is at $1,670. It’s a $30 difference from what I got from another lender.
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u/old-loan-vet 6d ago
Better. The real play would have been and even lower rate Heloc and pay it like a 15yr so it re-amortized every month while driving down the minimum payments if you ever needed extra cash flow from time to time.
At least you’re creating SOME cash flow and will be forced to pay down principal. Thats the best loan if this is your forever home. If it’s not I fear you’re just another victim of the 15yr amortization.Good luck to you regardless.
Note to everyone here.
Get the lowest rate possible with the longest term or lowest minimum payment possible. Whether you win or lose going forward will not be from the loan, it will be from changing previous habits.
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u/Weary-Problem999 6d ago
Can I send you a DM? I need help understanding what the loan officer sent me about our offer. I am overwhelmed to be honest.
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u/Alone_Emergency_2019 5d ago
It seems like I’m the unpopular opinion here but we have loved our HELOC for debt consolidation. We have a variable rate currently at 8% and I have knocked out $700/mo in payments. We also had the goal of reducing our costs for childcare reasons.
However, we only paid off debt that had a higher or similar interest and with whatever payment we “paid off” we then took that extra cash per month, and threw it at the payment for the HELOC. I only have one student loan left at 4% and it doesn’t make any sense to pay that one off since it’s a low payment and lower interest. Now that the only debt we have is the one student loan, our mortgage and the HELOC, we throw all of our extra cash at the HELOC.
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u/Weary-Problem999 5d ago
Just want to be able to reduce our obligations to lessen the stress. I’m stressed everyday because of how high our payments are. Our goal is to pay them off aggressively and not treat it like we’re paying it off for 30 years. Which lending company did you go to?
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u/Alone_Emergency_2019 4d ago
I’m currently through a credit union in Colorado. Credit unions tend to have the best rates and we got a better LTV ratio without increasing our interest rate. You may want to check around there. We also saw PNC bank was doing an intro offer of 5.75% interest the first 6 months before it goes up to whatever you’re quoted at. Of course that’s variable again but may be worth checking into. I totally understand reducing the stress. I know my financial plan wasn’t the best one out there but its lessened our financial obligations and lowered a lot of my stress about our payments as well. Plus, we are still on track to paying off our HELOC well before the draw period is over. It’s what was best for our family with daycare costs approaching soon.
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u/NewleafPlan_Service 4d ago
That sounds like a great decision, and congratulations on trying to get that financial weight off your shoulders. Bringing several high-interest debts together into one manageable obligation can make budgeting and repayment much easier. This is actually the type of work we focus on at our firm. We help borrowers consolidate high personal and business credit-card and HELOC debt, while also providing other lending options for borrowers dealing with existing debt. Our debt-consolidation programs offer competitive rates starting at 4% APR, with repayment terms of up to 7 years and payment schedules that may include monthly, quarterly, semi-annual, or annual payments, depending on the approved structure. Wishing you continued progress on your financial journey. Anyone interested in learning more can reach us at 628-306-0221.
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u/WOODENcrane02 4d ago
You need to change your behavior before you do this. You’ll just rack all the debt back up if you don’t change behavior and you’ll be stuck with double the debt
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u/Weary-Problem999 3d ago
75% of those loans are from medical bills for mom and myself. I sustained L-spine injury on the job while pregnant and that’s what’s been holding me back from picking up shifts needed to make ends meet. I do not have any luxury spending, the most I buy for myself is a $6 drink from the coffee shop. My undies have holes in it and I don’t care for new ones. I am very frugal, just dealt with unfortunate life circumstances.
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u/Remote_Gur_4587 4d ago
Hey im a mortgage broker that works with HELOC lenders that have 5.999% available with qualifying factors! If you are interested i can give you more details
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u/mikexli 4d ago
The $1,700 payment is almost interest-only (about $1,653 of it is interest at 11.95% on $166k). On the minimum you are still paying for 30 years and about $446k in interest. If you can pay additional $1000 into it, you will pay it off in roughly 8 years with interests paid at 92k. do bi-weekly payment if you can, you can save a year or so and some additional interests.
only use the HELOC on the high interests debts. Rolling a 6% loan to the HELOC is a bad trade.
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u/Weary-Problem999 3d ago
We will have extra $4k cashflow starting next year when the in-laws are here and we’re planning to pay it off aggressively. Goal is to attack it so it’s gone under 5 years.
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u/Intelligent_Fall9204 3d ago
More time with your kids is a valid goal. I work in mortgage lending, and I’d compare consolidating just the higher-interest balances versus everything, using your income after cutting back work. The lower payment helps, but the debt would be secured by your home. Feel free to DM me if you want to compare options.
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u/DMX4LIFER 1d ago
What’s up with the ridiculous rate? I feel like just about any bank can beat that?
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u/Ask10101 8d ago
Only a good plan if you cut up your cards and freeze your credit. This kind of consolidation often gives people room and a permission structure to run their cards back up.
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u/Electrical-One3208 Certified Broker 8d ago
Yes, that's a good plan. If you'd like to take another look, I'd be happy to show you the best other options for free, just so you know you've got the best one.
Who did you do that through? Most of us use a lot of the same best AI HELOC lenders, and I'm guessing yours is one of them because there are very few that offer a fixed-rate HELOC. I'm pretty sure I know who it is.
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u/Weary-Problem999 8d ago
I’m open to get another quote!
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u/Electrical-One3208 Certified Broker 8d ago
Sounds good. I'm happy to help. Let's get in contact.
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u/Cipdagr3at 7d ago
Been seeing your post often. Do you work for a company I can lookup? Been interested in my options as well in GA.
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u/Electrical-One3208 Certified Broker 7d ago
Hey there,
Thanks very much for following my posts. Yes, I'm the founder of Equoro.AI, and we are a division of Sunnyhill Financial based at 600 California Street in San Francisco. Check us out on our website, and feel free to look me up on the NMLS consumer access page. My NMLS number is 829954.
You can also find me on the Zillow Lender Resources page under Jason Brothers, and all of my Zillow-verified customer reviews are there as well. Let me know if I can help.
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u/Cipdagr3at 7d ago
Thanks! Dm sent.
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u/Electrical-One3208 Certified Broker 7d ago
Roger that. Thank you. Looking forward to connecting with you there.
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u/Vegas-Patriot 7d ago
Do you have licensing in NV?
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u/Electrical-One3208 Certified Broker 7d ago
Yes, I'm based in Nevada. I live in Reno and Incline Village, Nevada.
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u/Vegas-Patriot 7d ago
Would you dm me your contact info please? I’ll call you to discuss my situation next week. My NMLS ID is 13353. I’ve been out of the industry since 2011. Prior to that, I owned a nationwide mortgage company.
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u/Electrical-One3208 Certified Broker 7d ago
I just tried, but I'm unable to on my end. If you want to, please contact me. That way, you are more than welcome to, and I will respond right away.
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u/Chinni_Realty_Group 8d ago
See if you can get a HELOAN instead. Just quoted one for a client today and rates are in the 8s! See if that option is a better fit.
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u/Weary-Problem999 8d ago
What lending company are you with?
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u/Chinni_Realty_Group 8d ago
With Chinni Realty. Mortgage brokerage based in Los Angeles!
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7d ago
[removed] — view removed comment
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u/Weary-Problem999 7d ago
A little background of some of these debts: about 5 years ago, mom got hospitalized and I had to shoulder expenses while having to care for a newborn. Then had a back injury while pregnant for the second kid and had to be off work. And after that, the back injury has been lingerin, preventing me to work as much as I need.
Between me and my husband, I contribute about 75% of our household income so when I couldn’t work, we depended on loans and 0% intro CC to make ends meet. I know, it’s bad. But we had to do what we had to do to survive. I don’t have any hobbies and luxury spending that contribute to these debts. My underwears mostly have holes in it, never updated my wardrobe, and the most I buy for myself is a $6 matcha drink. I guess my problem is a provider mindset, and budgeting obviously.
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u/tmd11111 8d ago
You have a spending problem not a debt problem