Check this Mortgage Out....

Chagi,

Thanks for the explanation.

I would value your opinion of this loan, if you have one.

Michael B.


Quote from Chagi:

I can draw a graph for you later if necessary, but what is being described is that the full amount of the line of credit (e.g. $200,000) would be available for the 10 year interest-only period, and then the maximum amount available would start amortizing. For example, after your 11th year of holding the HELOC, you might only be able to access $190,000 (I didn't calculate that, just chose an arbitrary number less than $200K).
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Can't The USA just go BK and start over?


Quote from McCloud:

I believe very few "disciplined" consumers may be able to utilize this the right way but over all it will provide even more "credit" to consumers and we all know where that could lead...

I guess another creative financial vehicle to offer even more credit and liquidity after they exhausted cash out refi's and other means.

Interesting to see how this all will end some day....
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I'll take the other side on this one.

"Home Ownership Accelerator"

LMAO

It's an interest only loan for 10 years.

The only thing it accelerates is how fast the lender can change the rate of interest you pay -- which is monthly on this monster. You don't even have the protection of fixed for 3 years or fixed for 5 years that you can get elsewhere on ARMs. Plus you started out at the higher LIBOR rate. The life of loan cap of 5% higher may even be more likely to be reached in a shorter time too, if it's adjusting monthly -- haven't thought that through though.

The only way you get principal paydown is by having an income to give them that is greater than your accruing interest. If you had that kind of income, why would you be with them in the first instance?
 
Here is the chart, showing the maximum available loan balance as the HELOC product being described amortizes. Keep in mind that you could actually owe less than your maximum available amount, this is just illustrating how much you would be able to draw on.

I will comment more on this later this weekend.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1098796>
 

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I will look forward to seeing more. This will help for those few.

Could you please post, or send me, the actual spreadsheet? I would like to work with it and change the data to fit different scenarios for my situation(s).

Thank You!
Jeffrey
 
Quote from Jeffrey:

I will look forward to seeing more. This will help for those few.

Could you please post, or send me, the actual spreadsheet? I would like to work with it and change the data to fit different scenarios for my situation(s).

Thank You!
Jeffrey
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Sure, here you go, though there isn't much to the spreadsheet (I didn't bother with any formulas).

I'm not certain how they would go about calculating required payments for this product after the end of the interest-only period, since a normal amortization schedule ($200K over 20yrs am) would result in loan balances above the max loan balance. For example, with payments of $1424.38/month, interest 6%, 20yrs am and $200K borrowed, the balance after 1 year would be about $194,615 (assuming semi-annual compounding of interest, not sure what the standard is for mortgages in the US).
 

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