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 Convention

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 thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as
president Nick Hiersche and ourCSO, Jose Gonzalez.
We are a lender that specializesin non QM loans.
And what we do every morning at11 a.
m.
Eastern on the show is gothrough our live mortgage rates.
And then we do a deep.
Dive into a different loantopic.
Today's loan topic is going tobe heloc.

(00:20):
So yesterday we talked about heloan second mortgages, and today
we're going to be talking aboutheloc.
So Jose, you'll get into thatshortly and the difference
between the two.
But first, let's check out ourrates for the day.
So, Nick, if you're ready, let'sgo ahead and pull up the rates.
All right.

(00:40):
So we, we will check out therates for today.
It is October 11th, just after11:00 AM Eastern.
So all of our standard programshave their.
initial rate sheets for the day.
And we will compare across theprograms.
If you'd like a full breakdownand itemized loan estimate that
itemizes all the fees that gointo the APR, please get with
our team members.
They'd be happy to send thatover.
For the demo today, as we doevery day, we'll set up a basic

(01:03):
scenario, a single family home,500, 000 purchase, 400, 000 loan
amount.
That corresponds to 80 percentloan devalued, 20 percent down
payment.
And we use an estimated 760 FICOcredit score and an estimated 40
percent debt to income ratio.
So let me go ahead and share myscreen and we'll check the rate

(01:27):
for today.
So first up is our 30 year fixedconventional for a primary home.
The most common option peoplethink of when they think of a
mortgage rates today coming inat 6.
124 final APR 6.
427.
And if for any reason, acustomer doesn't qualify for a
conventional option, wetypically want to quote an FHA

(01:48):
option to compare FHA allowsmore leniency on credit issues
and a higher overall debt toincome ratio.
Okay.
But it does have upfront andyearly mortgage insurance.
FHA comes in today, 5.
25 finally PR with all the costsand mortgage insurance 6.
217.
So when we compare across bothof our customer qualifies from
both, they could consider FHA,but they need to keep in mind

(02:10):
that the mortgage insurance,cause it could be a touch
cheaper and our customers thatneed to use it, definitely a
great option, very comparable.
And our VA options are only foreligible vets and active service
members.
If you are eligible, theseprograms are amazing.
Rates as low as 5.5.
Finally, pr, the standardfunding fee, 5.810.

(02:31):
And if we're preparing acrossthe programs, the VA's obviously
going to be the best for oureligible borrowers.
So definitely take advantage.
And moving down to the finalstandard option here, USDA
programs are only for USDAeligible areas.
That's the rural areas of thecountry.
The property is in one of thoseareas and the borrower

(02:51):
qualifies.
These are great options tocompare.
USDA comes in today, 5.5 ratefinal A PR 6.218.
Actually almost identical to FHAtoday.
Typically USDA is a touchcheaper.
Uh, is a touch cheaper thanconventional.
So those looking in those areas,definitely keep USDA in mind.
And that rounds out our standardoptions that any bank or lender

(03:14):
would have.
But if our customer doesn'tqualify, unfortunately many
banks have to deny them, but wehave 5, 000 other options
starting with our non QM alt docfor a primary home.
So if our customer doesn'tqualify with conventional
options, using tax returns, etcetera, we Uh, or FHA options
using tax returns, et cetera,needs to switch to alternative
docs, such as bank statements,1099.

(03:36):
Uh, P and L statements, etcetera.
Rates today for bank statementand similar come in at 6.
25, final APR 6.
553, just a touch aboveconventional to switch to all
docs.
So absolutely amazing for ourborrowers that need to use it
and still get them that homethey really want.
And our investment propertieshave tons of options.

(03:59):
So first up is our non QMoption.
So again, bank statement orsimilar coming in at 6.
99 for an investment property.
I like our 7.
327 and we'll compare that toour other investment options.
We don't have any governmentprograms.
So no USDA FHA or VA.
But we do have conventionalcoming in today, 6.

(04:23):
875 final IPR 7.
211, which is cheaper than ourAltdoc, but not cheaper than our
favorite loans are DSCR options.
DSCR doesn't need any income oremployment info.
Simply use estimated rents fromthe appraisal to determine a
DSCR value.
The estimated rents can coverthe estimated expenses.
That is a positive DSCR ratioover 1.

(04:45):
0, AKA the property cash flows.
Okay.
Those are preferred.
This option here is with a threeyear 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 yearprepayment to sweeten the deal a
little bit.
Rates as low as 6.
25.
Final APR, 6.

(05:07):
578.
And we do have a no prepaymentpenalty option coming in today
at 7%.
Final APR, 7.
311.
Just a touch above conventional.
So I'd still say pretty much ahundred percent of investors
would prefer a DSCR to aconventional.
And if we can add a prepaidpenalty, definitely makes it
even better.

(05:28):
Excuse me.
And our final two options todayare second mortgages fixed.
Our topic for today is our HELOCsecond mortgages.
These are going to be our fixedsecond mortgages, which are new.
So alternative to a HELOC for aprimary home.
For our borrowers that want tokeep their first mortgage in
place and get cash out with asecond mortgage using our fixed

(05:50):
rate, second mortgage raisesthose 8 percent today.
Finally, PR 8.
3, seven, zero.
And we can use the same optionfor investment properties, which
are very rare for he locks.
Hopefully Jose has an optionlater today, though.
And the investment propertiescan get cashed out as low as 9.
375.
Finally got 9.
71.

(06:13):
So those are our standardoptions that we go over, but
let's get into today's topic.
We don't do a live demo forHELOC because they're a little
bit tricky there.
So Jose will pull up some actuallive rates for HELOCs and first
talk about the difference.
Remember yesterday we had ourfixed rate second mortgages.

(06:33):
Uh, which we do our live demoon, but we also went in detail
and, uh, today Jose will comparethose to our HELOC options.
So let's check it out, Jose.
Good morning, everyone.
Thank you for joining us for adaily mortgage rate slide with
the Mortgage Calculator.
Uh, last, yesterday's topic werethe HE loans, home equity loans,
uh, second mortgages, closed endmortgage, right?

(06:55):
Uh, fixed amortization on that.
Uh, when you close the full loanamount disperses, that's another
difference, uh, versus theHELOC, which is an open ended
mortgage, right?
Uh, you pay on what you owe.
Uh, you have an option of howmuch You want to draw at the

(07:17):
closing of the HELOC.
You may not need, let's say yougot a HELOC for 240, 000, but
you don't need the full amountat closing.
You need maybe 100, 120 grand.
So you draw that amount ofclosing and get the rest of the
amount as you need it.
So you can, uh, have a differentdraw amount versus the HELOC.

(07:37):
You do, it's a open endedmortgage, 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 theHELOC, which is again a fixed
amortization, full amountdispersed at closing, and a
fixed payment throughout thelife of the loan.
So let's go ahead and share ourHELOC options with you today.

(08:02):
Our first option here is at ourmaximum CLTV.
Uh, we until recently were ableto attain 95 percent CLTV on the
HELOCs, but they were reduced acouple of months ago to 90%.
And the maximum CLTV is on aprimary residence.
Uh, in this scenario here, uh,this HELOC is fixed rate.

(08:25):
So we do have fixed rate HELOCsand variable rate HELOCs.
And this, the examples I'msharing with you today, Are with
a three year draw period.
That is the timeframe duringwhich you can draw, uh, money
from the HELOC.
And that's also the time periodduring which it is interest only
after the draw period ends, theloan does, uh, transition to a

(08:49):
fully amortizing loan.
And if you already had threeyears elapsed, it would be a
fully amortizing 27 year loan.
So here, this example, we are atthe maximum CLTV of 90%.
We have a 240, 000 firstmortgage, and we are on a 600,

(09:11):
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 abroker fee of 6, 600.
2.

(09:33):
75%.
Now our investment cash outHELOC maximum 80 percent CLTB,
uh, really great rates here.
Uh, 10.
45 percent is the rate on thisHELOC at the maximum 80 percent

(09:53):
CLTB with no additional buy downfee at that rate.
And then for our lower creditscore borrowers, this is with a
660 credit score, maximum 70percent CLTV at a 660 credit
score, and you're looking at an11.
9 percent interest rate at par.

(10:16):
And now, let me give you somevariable rate HELOCs, right?
Now, uh, the variable rateHELOCs do track with the, uh,
prime rate.
The prime rate is the index.
Now the prime rate recently justhad a half a percent drop.
So these HELOCs had a half apercent drop in their rates.

(10:36):
Uh, the margin, the fullyindexed rate is going to be
based on the index plus amargin.
The margin is going to depend onthe credit score of the borrower
and the, uh, CLTV.
So in this case, we're at themaximum CLTV, but you do see
that the rate is a little bitlower than the fixed rate.

(10:57):
I'll just go over the fixed ratein a minute so you can remember
it's 10.
7 percent was the fixed rateversus the variable rate, which
is 10.
4%, uh, with, uh, no discountpoints at that rate, 90 percent
CLTV primary.

(11:21):
So now, uh, investment optionhere, 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 investmentcash out at the maximum CLTB.

(11:43):
And our last option here.
For our low credit scoreborrowers is the investment
option at a 70 percent CLTV witha 660 credit score and the rate
we're looking at is 11.
375%.
Uh, please do remember that theHELOCs are also a good option if

(12:05):
you are looking to do acombination loan, first mortgage
and, uh, HELOC to, uh, not haveto pay mortgage insurance, for
example, or for your, uh,limited review condo loans for
Florida where the associationdoes not have reserves, you can
go 75 percent on the first.
15 percent HELOC and 10 percentdown.

(12:27):
So look to the mortgagecalculator for all your HELOC
needs.
All right.
Thank you, Jose.
Uh, let's see.
It looks like we have a questionhere.
Uh, given the draw is threeyears interest only, how is the
qualifying payment calculated?
27 years?
Qualifying payment is calculatedover a 30 year, uh,

(12:50):
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 wrapit up, but definitely great.
And if you didn't catch the heatloam training yesterday, you

(13:12):
know, make sure to go check thatout.
So you can see the difference ofboth the D locks and the heat
loams.
So thank you everybody fortuning in remember that we do
this every weekday at 11 a.
m Eastern where we go throughour live rates and then do a
deep dive into a different loantype So we will see you next
week.
Actually, uh, monday is aholiday So the next time we'll
see everybody will be tuesday 11a.

(13:34):
m Eastern for the next episodeof daily rates live with the
mortgage calculator.
Everyone.
Have a great weekend