The loan officer for the Condo HELOC called today. He was just as surprised as I was when he reviewed the Note and saw the payment terms. He admitted that he didn’t realize we weren’t signing an interest only loan and apologized. He then offered me a “solution.” Basically, he advised me to make the automatic minimum payment that the Bank requires, and then transfer back any excess payment from the HELOC to the checking account. So, let’s assume that the current minimum payment of $885 is $185 interest and $700 principal. When the payment is made, the outstanding loan balance will be reduced by $700. The day after the payment is made, I would transfer $700 back to the checking account, increasing the outstanding loan balance by $700 (which is the original amount), and thus actually making an “interest only” payment. While this is a clever solution, it isn’t what I thought we signed up for. Not to mention the minimum payments are going to require a substantial chunk of change to be available on a monthly basis. Grr. #FirstWorldProblems
I was aghast (that’s a real emotion, I think) when I opened the first statement from the new Condo HELOC to find the first minimum payment due to be $885.55. While the interest rate is amazing and the credit line has increased substantially, I was under the assumption that we had 10 years of interest-only payments, because, when I first emailed the loan officer about the terms, this is what I received: “The rate would be prime 3.25% interest only. 10 year commitment. This loan requires you to pay closing costs, which would be the appraisal, title search, filing fees around 600 dollars.”
It took over a month for the appraisal to come back. The loan officer had assured me that we could have a line up to 65% of the equity based on the appraisal. When we scheduled the first closing date, and I asked for the final terms, he emailed me the Credit Agreement and Terms form. I didn’t even make it past the first line, because the loan amount was $40,000 less than I was expecting. He also wrote that we “[h]ave the line set at $100,000 at prime 0%, great rate of 3.25%.” Does this mean NOT interest-only? When was he planning to tell me? When I figured it out after I received my first bill?
I will admit that the Credit Agreement and Terms form does seem to indicate that we are required to pay 1.5% of the loan balance, but it looks just like the other HELOC Credit Agreement and Terms form and I swear he confirmed at the closing that it was interest-only for 10 years. I never had any reason to assume otherwise. I know better, though.
While it isn’t our intention to carry debt, the flexibility that comes with paying less than $200/month for interest only as opposed to $885/month is substantial. It almost makes the increased credit line worthless.
I hope he will provide me with an explanation soon. And it better be a good one. I’ll make sure to read the fine print next time, too.
Just six weeks after her fall, Mr. PFL’s grandmother, Old Iron Hip, is returning home today. After her discharge from the in-patient part of the hospital, she spent about a week in the rehab unit in the hospital. Then, all of a sudden, they were ready to discharge her even though she could not really walk or use the bathroom on her own. Thankfully, another rehab facility was willing to take her and she has come a long way. At a home visit last Monday, she walked up and down the flight of 16 steps in her home.
There has been some family drama and controversy through this process, but returning home eventually boiled down to two factors: her mental state and money. It has been eye-opening to run the numbers on how much alternate forms of care can cost. It has also been amazing to see how stubborn an 89-year-old lady can be when she just wants to go home; she has repeatedly refused to use her call-button and also won’t even try to make any new friends.
I’m hopeful the transition home will be good for Old Iron Hip. She’ll have in-home care for a couple of hours in the morning and at night. She’s also going to have a hot lunch delivered on weekdays. If she ends up spending all of her savings, she should qualify for Medicaid and they have many services aimed at helping seniors age in place.
My grandfather passed away just about a year ago, at age 91. He lived at home the entire time. He, too, was stubborn and blatantly refused help from any outside caregivers. My mom and dad spent a lot of time taking care of him. I was lucky enough to see him the week before he passed and I’m grateful I was able to say good-bye. I feel confident that he was ready. I hope that Old Iron Hip is able to maintain some control over her situation and that she will be ready when her time comes.
I finally have MLS (multiple listing service) access thanks to passing my real estate license exam and paying membership dues with the local board of REALTORS®. Mr. PFL and I have been looking for a new place to live, and looking at comps for our current house, this weekend. The single-family housing market in our neighborhood is on fire. We should be able to list our house for at least $100,000 more than we bought it for in 2011 (which was $430,000), but could potentially list for $250,000 or more over our purchase price. On the other hand, we have been looking at condos with low monthly fees and a price-point that we could pay cash from our HELOCs (less than $175,000). The condo market seems to be fairly stagnant, at least at the lower end of the price spectrum. I still need to work on the logistics of how to set up showings, but I feel like we are finally making real progress toward the next chapter in our life.
While I can’t imagine making a car payment ever again, I have to grudgingly admit that my car is getting old. This week, I’ve sprung a leak!
Yep. Raining inside. While I assume it is getting in from the seam between the windshield and the roof, it is hard to tell exactly where the breach might be due to all of the rust spots. Oh, and the crack in the windshield from the polar vortex two winters ago might be having an impact.
I did just get the oil changed and the only thing that needed to be replaced was a brake light. But, I think indoor rain = my car is officially a beater. Let this serve as a reminder that you can’t judge someone’s net worth by the car they drive. Unless they are a teen girl driving a 1985 Ford Conversion Van to high school in the mid-90’s (cough, cough, that was me): she broke.
The last month in America has been historic and controversial. Everyone seems to have an opinion, not that there’s anything wrong with that. But, I’m concerned that some important financial information has been missed through the melee. The first article that caught my eye reports on a survey of wealthy Americans with more than $1 million in net worth. The article reports that “UBS found 77% of millionaires grew up middle class or below, with 61% aspiring to become millionaires and 65% feeling that $1 million was an important milestone. A full 74% of millionaires surveyed feel like they have “made it” and the vast majority (85%) attribute their success to hard work.” I find it heartening that 77% of millionaires are self-made. On the other hand, another article reports that the usual American response to being advised to save more is “outrage. Americans don’t save enough because by and large they seem to believe it’s not possible to save that much money.” A third article explains that “the biggest reason you can’t retire noticeably earlier than average is you. Nobody cares about your money or financial future more than you. If you don’t have the desire to improve your financial situation and knowledge, you are destined for mediocrity.”
These last two articles, along with thousands of other resources, provide advice on how to save more, spend less, and retire well. While everyone’s situation is unique, the underlying take-away principle is that each person must take personal responsibility for their financial well-being. Is this controversial? Maybe.