Daily Mortgage Rates LIVE - 10/11/2024 - 2nd Mortgage HELOCS

In this episode of "Daily Mortgage Rates LIVE," we’re diving into the world of 2nd Mortgage HELOCs (Home Equity Lines of Credit), a flexible financing option that allows you to tap into your home's equity whenever you need it. If you’re looking for a way to fund a renovation project, cover education expenses, or even consolidate debt, a HELOC could be the perfect solution.

2nd Mortgage HELOCs work like a credit line secured by your home, offering you the ability to borrow funds as needed rather than taking a lump sum all at once. Our expert hosts will help you understand how these loans work and how they can fit into your financial plans.

🏠 What is a 2nd Mortgage HELOC, and how does it differ from other types of home equity loans?
💸 What are the key benefits of using a HELOC, and when is it the best choice for homeowners?
🔄 How do interest rates, repayment terms, and draw periods work for a HELOC?
⚠️ What are the potential risks, and how can you avoid common pitfalls?

Tune in as we break down the eligibility criteria, the application process, and the best ways to use a HELOC wisely. Whether you're looking for a way to access funds without a fixed repayment structure or want to learn more about how to leverage your home's equity smartly, this episode is packed with actionable insights.

Don’t miss out on this informative discussion! Subscribe to "Daily Mortgage Rates LIVE" and discover how a 2nd Mortgage HELOC can give you the financial flexibility you need to achieve your goals. Get ready to unlock the power of your home's equity—one draw at a time!

For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

About The Mortgage Calculator:

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conven

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! Non QM Loans include Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

To apply for a mortgage please visit our Quick Mortgage Quote Page at https://themortgagecalculator.com/Mortgage/QuickQuote

The Mortgage Calculator is a registered DBA of Mortgage Calculator Company LLC. NMLS ID #2377459. Programs and rates are subject to change without notice. Mortgage Calculator Company LLC is licensed in the following states that require specific licensing disclosures: AZ (#1040352), CA CFL (60DBO-171188), GA Georgia Residential Mortgage Licensee (#2377459), IL MB.6761755 Illinois Department of Financial and Professional Regulation, Division of Banking, 100 West Randolph, 9th Floor, Chicago, IL 60601 1-888-473-4858. Not licensed or conducting business in New York.

For more info visit https://themortgagecalculator.com...

Transcript

Restream recording Oct 11, 2024 • 03:06:51 PM: 0:09

All right. So welcome everyone. My name is Kyle Hiersche. I'm the COO of the Mortgage Calculator joined here by our president Nick Hiersche and our CSO, Jose Gonzalez. We are a lender that specializes in non QM loans. And what we do every morning at 11 a. m. Eastern on the show is go through our live mortgage rates. And then we do a deep. Dive into a different loan topic. Today's loan topic is going to be heloc. So yesterday we talked about he loan second mortgages, and today we're going to be talking about heloc. So Jose, you'll get into that shortly and the difference between the two. But first, let's check out our rates for the day. So, Nick, if you're ready, let's go ahead and pull up the rates. All right. So we, we will check out the rates for today. It is October 11th, just after 11:00 AM Eastern. So all of our standard programs have their. initial rate sheets for the day. And we will compare across the programs. If you'd like a full breakdown and itemized loan estimate that itemizes all the fees that go into the APR, please get with our team members. They'd be happy to send that over. For the demo today, as we do every day, we'll set up a basic scenario, a single family home, 500, 000 purchase, 400, 000 loan amount. That corresponds to 80 percent loan devalued, 20 percent down payment. And we use an estimated 760 FICO credit score and an estimated 40 percent debt to income ratio. So let me go ahead and share my screen and we'll check the rate for today. So first up is our 30 year fixed conventional for a primary home. The most common option people think of when they think of a mortgage rates today coming in at 6. 124 final APR 6. 427. And if for any reason, a customer doesn't qualify for a conventional option, we typically want to quote an FHA option to compare FHA allows more leniency on credit issues and a higher overall debt to income ratio. Okay. But it does have upfront and yearly mortgage insurance. FHA comes in today, 5. 25 finally PR with all the costs and mortgage insurance 6. 217. So when we compare across both of our customer qualifies from both, they could consider FHA, but they need to keep in mind that the mortgage insurance, cause it could be a touch cheaper and our customers that need to use it, definitely a great option, very comparable. And our VA options are only for eligible vets and active service members. If you are eligible, these programs are amazing. Rates as low as 5.5. Finally, pr, the standard funding fee, 5.810. And if we're preparing across the programs, the VA's obviously going to be the best for our eligible borrowers. So definitely take advantage. And moving down to the final standard option here, USDA programs are only for USDA eligible areas. That's the rural areas of the country. The property is in one of those areas and the borrower qualifies. These are great options to compare. USDA comes in today, 5.5 rate final A PR 6.218. Actually almost identical to FHA today. Typically USDA is a touch cheaper. Uh, is a touch cheaper than conventional. So those looking in those areas, definitely keep USDA in mind. And that rounds out our standard options that any bank or lender would have. But if our customer doesn't qualify, unfortunately many banks have to deny them, but we have 5, 000 other options starting with our non QM alt doc for a primary home. So if our customer doesn't qualify with conventional options, using tax returns, et cetera, we Uh, or FHA options using tax returns, et cetera, needs to switch to alternative docs, such as bank statements, 1099. Uh, P and L statements, et cetera. Rates today for bank statement and similar come in at 6. 25, final APR 6. 553, just a touch above conventional to switch to all docs. So absolutely amazing for our borrowers that need to use it and still get them that home they really want. And our investment properties have tons of options. So first up is our non QM option. So again, bank statement or similar coming in at 6. 99 for an investment property. I like our 7. 327 and we'll compare that to our other investment options. We don't have any government programs. So no USDA FHA or VA. But we do have conventional coming in today, 6. 875 final IPR 7. 211, which is cheaper than our Altdoc, but not cheaper than our favorite loans are DSCR options. DSCR doesn't need any income or employment info. Simply use estimated rents from the appraisal to determine a DSCR value. The estimated rents can cover the estimated expenses. That is a positive DSCR ratio over 1. 0, AKA the property cash flows. Okay. Those are preferred. This option here is with a three year pre print ability, which is pretty standard. Rates come in today 6. 375. Final APR 6. 707. Beating conventional. That's pretty awesome. And we can add a five year prepayment to sweeten the deal a little bit. Rates as low as 6. 25. Final APR, 6. 578. And we do have a no prepayment penalty option coming in today at 7%. Final APR, 7. 311. Just a touch above conventional. So I'd still say pretty much a hundred percent of investors would prefer a DSCR to a conventional. And if we can add a prepaid penalty, definitely makes it even better. Excuse me. And our final two options today are second mortgages fixed. Our topic for today is our HELOC second mortgages. These are going to be our fixed second mortgages, which are new. So alternative to a HELOC for a primary home. For our borrowers that want to keep their first mortgage in place and get cash out with a second mortgage using our fixed rate, second mortgage raises those 8 percent today. Finally, PR 8. 3, seven, zero. And we can use the same option for investment properties, which are very rare for he locks. Hopefully Jose has an option later today, though. And the investment properties can get cashed out as low as 9. 375. Finally got 9. 71. So those are our standard options that we go over, but let's get into today's topic. We don't do a live demo for HELOC because they're a little bit tricky there. So Jose will pull up some actual live rates for HELOCs and first talk about the difference. Remember yesterday we had our fixed rate second mortgages. Uh, which we do our live demo on, but we also went in detail and, uh, today Jose will compare those to our HELOC options. So let's check it out, Jose. Good morning, everyone. Thank you for joining us for a daily mortgage rate slide with the Mortgage Calculator. Uh, last, yesterday's topic were the HE loans, home equity loans, uh, second mortgages, closed end mortgage, right? Uh, fixed amortization on that. Uh, when you close the full loan amount disperses, that's another difference, uh, versus the HELOC, which is an open ended mortgage, right? Uh, you pay on what you owe. Uh, you have an option of how much You want to draw at the closing of the HELOC. You may not need, let's say you got a HELOC for 240, 000, but you don't need the full amount at closing. You need maybe 100, 120 grand. So you draw that amount of closing and get the rest of the amount as you need it. So you can, uh, have a different draw amount versus the HELOC. You do, it's a open ended mortgage, so you only pay interest on what you owe. As you bring the balance down, uh, the interest expense will go down as well, uh, versus the HELOC, which is again a fixed amortization, full amount dispersed at closing, and a fixed payment throughout the life of the loan. So let's go ahead and share our HELOC options with you today. Our first option here is at our maximum CLTV. Uh, we until recently were able to attain 95 percent CLTV on the HELOCs, but they were reduced a couple of months ago to 90%. And the maximum CLTV is on a primary residence. Uh, in this scenario here, uh, this HELOC is fixed rate. So we do have fixed rate HELOCs and variable rate HELOCs. And this, the examples I'm sharing with you today, Are with a three year draw period. That is the timeframe during which you can draw, uh, money from the HELOC. And that's also the time period during which it is interest only after the draw period ends, the loan does, uh, transition to a fully amortizing loan. And if you already had three years elapsed, it would be a fully amortizing 27 year loan. So here, this example, we are at the maximum CLTV of 90%. We have a 240, 000 first mortgage, and we are on a 600, 000 value. 10. 7 percent is our cost at par, and these are all borrower paid prices on the HELOC. This is not lender paid pricing. Just let me know that. So 10. 7 percent is at par with a broker fee of 6, 600. 2. 75%. Now our investment cash out HELOC maximum 80 percent CLTB, uh, really great rates here. Uh, 10. 45 percent is the rate on this HELOC at the maximum 80 percent CLTB with no additional buy down fee at that rate. And then for our lower credit score borrowers, this is with a 660 credit score, maximum 70 percent CLTV at a 660 credit score, and you're looking at an 11. 9 percent interest rate at par. And now, let me give you some variable rate HELOCs, right? Now, uh, the variable rate HELOCs do track with the, uh, prime rate. The prime rate is the index. Now the prime rate recently just had a half a percent drop. So these HELOCs had a half a percent drop in their rates. Uh, the margin, the fully indexed rate is going to be based on the index plus a margin. The margin is going to depend on the credit score of the borrower and the, uh, CLTV. So in this case, we're at the maximum CLTV, but you do see that the rate is a little bit lower than the fixed rate. I'll just go over the fixed rate in a minute so you can remember it's 10. 7 percent was the fixed rate versus the variable rate, which is 10. 4%, uh, with, uh, no discount points at that rate, 90 percent CLTV primary. So now, uh, investment option here, variable rate, three year draw again, uh, 80 percent CLTB, uh, and, uh, our rate on this one is 10. 25 at par for our investment cash out at the maximum CLTB. And our last option here. For our low credit score borrowers is the investment option at a 70 percent CLTV with a 660 credit score and the rate we're looking at is 11. 375%. Uh, please do remember that the HELOCs are also a good option if you are looking to do a combination loan, first mortgage and, uh, HELOC to, uh, not have to pay mortgage insurance, for example, or for your, uh, limited review condo loans for Florida where the association does not have reserves, you can go 75 percent on the first. 15 percent HELOC and 10 percent down. So look to the mortgage calculator for all your HELOC needs. All right. Thank you, Jose. Uh, let's see. It looks like we have a question here. Uh, given the draw is three years interest only, how is the qualifying payment calculated? 27 years? Qualifying payment is calculated over a 30 year, uh, amortization. Fully indexed. And it's fully drawn. Usually it's drawn live. Yes, absolutely. Thank you for the question. I don't see any others. I think we'll go ahead and wrap it up, but definitely great. And if you didn't catch the heat loam training yesterday, you know, make sure to go check that out. So you can see the difference of both the D locks and the heat loams. So thank you everybody for tuning in remember that we do this every weekday at 11 a. m Eastern where we go through our live rates and then do a deep dive into a different loan type So we will see you next week. Actually, uh, monday is a holiday So the next time we'll see everybody will be tuesday 11 a. m Eastern for the next episode of daily rates live with the mortgage calculator. Everyone. Have a great weekend