Tags Posts tagged with "Home Equity Loan"

Home Equity Loan

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And then the corporate incompetence rears its ugly head.

So, after receiving a letter from TD Bank to fax a couple documents — w-2s from the last two years, two tax returns, and our most recent pay stub — to a fax number that wasn’t listed anywhere, on Friday morning I received an email where they’re now asking for 30 days worth of paystubs.

So, to recap… Earlier this week they asked me for, among other things, my most recent paystub.

Today, they asked me for 30 days worth of paystubs.

Couldn’t they have asked for that in the first place?

I swear, the number of pieces of mail we’ve received since initiating this process is borderline obscene.

This is the list of documents we need.

Oh wait, this too. And this.

Oh, and we forgot to mention this — send us that too.

And to expedite things, fax it to the number we never gave to you.

If it were my company, I’d have a standard letter to send out requesting everything I needed in ONE envelope. Not 15 envelopes over the span of 10 days.

I’d list a fax number too. Just sayin’.

My first impressions of the simplicity of working with TD were wrong.

So, while gathering older paystubs isn’t that big a deal — I have them handy — it’s certainly not convenient. TD’s slogan is, afterall, America’s Most Convenient Bank.

Further, I assume they’ve already confirmed my employment but a simple calculation on the paystub they originally requested would show that my last paycheck was the same as the one I provided to them.

Yep, just divide those Year-To-Date totals on the right by 22 and you’ll see that I get the same amount every two weeks and that it lines up exactly with the number I provided on the original application.

I don’t look at pay stubs all day long like I’m sure someone over there does but even I could figure that out. If it were an hourly wage listed on the stub, well, sure, I’d give them the benefit of the doubt. My stub clearly says “SALARY”.

In other news, the email also mentioned that there was a $99 application fee, which I have no qualms with, and that the entire process would take between 30 and 45 days.

Merry Christmas.

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So, even before we’ve got all of our ducks in a row, TD Bank has revised their offer from the original offer.

I know this would happen as even the hard copy printed estimate numbers are just barely more that the teaser offers they openly advertise.

I remember when I leased a VW Jetta back in 1997. I was in the dealership with my dad and I was getting ready to sign the lease when we looked at the bottom line. My payment would be $251 per month.

Confused, we pointed to the poster on the wall — with numbers 3 feet tall — that said that VW Jetta’s were $199/month. I still see car ads that hawk numbers like that… No clue how they get away with it — it’s never true.

Anyway, back then, we met half way between their advertised number and their offered number.

Today, for the home equity loan, they said the appraisal on my house came in lower than what I said it would. I kinda figured that would happen but no harm in aiming high, right?

Now I didn’t go all out and lie about what I think my home is worth. In fact, I used the Zillow zestimate which generously lists my house as the most expensive on my street. And this is BEFORE the garage is built!!!

In reality, as far as I can tell, Zillow is boosting the value of my home (in comparison to the others on the street) based on square footage and lot size.

My house isn’t the biggest — maybe 3rd largest — but it’s on the biggest lot. To them, that’s worth as much as a renovated kitchen — which I don’t have but most of the other homes on the street probably do.

No worries — the garage addition will still not price my home outside the rest of the neighborhood. Sure, my house will take the crown, officially, as the best on the street but it certainly will NOT look grossly out of place compared to the others.

So the amount I’m borrowing ($70k) is the same, the term (15 years) is the same, but they jacked the interest rate by about a half percent.

If I take all 15 years to pay it down, which I won’t, this’ll “cost” me an additional $3k.

No big deal.

It’s still a go.

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Okay, so the ambiguous disclosure (in my eyes, anyway) of the pre-payment penalty for the home equity loan has been cleared up.

No joke, for the past 4 days, we’ve received at least two more envelopes from TD Bank with additional (and often redundant) paperwork. One of the funniest/annoying aspects of the whole thing, besides the fact that they could have just asked for everything all at once, is that all of the forms so far have said to return the “documents” or whatever to the store or fax them to: ________________.

No joke, the fax number isn’t listed out. Just a blank where it’s supposed to be.

Now I understand that the fax machine is going the way of the record player but for this sort of thing — you know, transmitting documents — it’s still kinda effective.

Either that — or email. Really, I’d prefer to not have to print and mail 100+ pages worth of tax returns when a simple PDF attachment in an email would do it. They don’t offer that, apparently, either.

So, anyway, back to the pre-payment penalty.

It’s a $450 penalty if the loan is paid in full with-in 24 months.

That’s not gonna happen anyway so I’ve got nothing to be concerned with.

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823 Credit ScoreSo, we received our package from TD Bank that lists out a few details about the loan and one single page document (regarding an attorney) that we need to sign.

Easy peasy.

One of the pages in the packet, though, indicates that there *is* a pre-payment penalty.

Well, you know me, I’m not gonna take 15 years to pay this off. I’d say it’s a safe bet to be done in less than 10.

Anyway, to that end, what the packet fails to disclose is what, exactly, the pre-payment penalty is.

If we’re talking $500 or something, well, that’s a drop in the bucket. If we’re talking 10% or something, well, that’s a different story.

So we’ll need clarification on that.

I’m not sure, having never done this before, but maybe it’s a standard practice with second mortgages. I just don’t know.

We’ll see.

And, yeah, nothing gets the “I’m gonna pre-pay this thing” juices flowing like having it clearly listed out in black and white that a low 5% interest rate still works out to paying $30k in interest.

Borrow $70k and pay back $100k?

Yeah, I don’t think so… I’m planning on paying maybe $10k in interest before this one is off the books.

In separate envelopes, my wife and I received copies of our credit scores. I don’t recall this being the case with other loans we’ve taken as I flat out asked what my score was when we bought the car a few months back — maybe it’s a new regulation/disclosure type of thing — but I kinda like it.

Anyway, my score came in at 823.

So, while I might feel, and often sound, like my finances are in complete disarray, the banks think otherwise…

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Oh Snap!So, we’ve yet to even hear back from TD regarding our loan application and my wheels are already spinning.

Back in 2010, we had $40k worth of work done on the house. We’d saved up a bit — maybe $15k? You could look it up on here — but most of financing came in the form of 0% credit card offers.

In the end, the entire project (including a new tv and furniture) was paid off in full in less than 2 years, if I remember right… Again, if you care, it’s documented in the archives here on the site…

So now I find myself on the cusp of borrowing $70k but it’ll take 15 years to pay off?

Could that be right?

Sure, I could’ve done a ten year term but wanted a lower payment for added flexibility.

Even still, where did our ability to pay down debts so rapidly disappear to?

I don’t feel that, for even one second, we could pay down that kind of debt in, say, 5 years even…

Yet, for years, I made it a habit of paying down my debts to the tune of $20k per year…

The cost of daycare is the only thing I can think of that’s “new” since the days when I was able to do that so of thing…

Not with ease, mind you, but it was do-able.

Oh wait, we’re currently paying around $24k per year for daycare…

Now I get it…

We’re gonna be fine.

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Toronto-DominionSo, now having done more than minimal research, it seems I’ve now found my lender of choice.

I scoped out the rates of the big banks, the little banks, and a bunch of the local credit unions and the one thing they all had in common… was the interest rate.

Very little variance.

You might have read on all kinds of websites to “shop around” and submit applications all over the place to get the best rate. I dunno — based on my experience — that’s more a waste of time than anything else.

In the end, I selected and submitted a loan application to TD Bank.

Here was my reasoning:

  • Competitive Rate – They weren’t the highest and they weren’t the lowest but they were in the sweet spot of my target rate. The rate is 5.04% on a fixed 15-year term.
  • Proximity to Home – When we refinanced our original mortgage, my wife and I end up having to take multiple days off, visit the mortgage broker, hit a law office, and, well, it was just a bigger hassle than it should have been. The TD branch for this loan is literally right around the corner. And they’re open on weekends too.
  • Clear and Concise Website – While some of the credit union websites were far more upfront about what the monthly payments would/could be, no site was as well organized and informative as TD’s. They didn’t try to lump it all together with HELOC using terms that apply to one but not the other throughout — plain old home equity loans have their own section and aren’t littered with fluff that applies to other types of loans.
  • They’re Canadian – What can I say? It shouldn’t matter but it does… There is some expat pride going on as I see the banks in Canada flood the US market using abbreviations as names to veil their maple leaf identity. Now if they could just figure out how to connect my Canadian checking account to one opened here in the US — I’d ditch Bank of America in a heartbeat…

So I did the application online since it’s been my experience that when you do it in person, the person at the bank essentially just fills the website out for you.

No thanks, I’m pretty sure I can type out my info faster.

So it took maybe 10 minutes, a bunch of the simple questions you’d expect, the stuff they need to pull your credit, and minimal debt declarations.

Apparently, two days from now, they’ll have a “decision”.

Seems too easy.

I’m skeptical but that’s just my nature. We’ll have pay stubs, W-2’s, and tax returns handy just in case.

And I’m crossing my fingers that an interior appraisal won’t be necessary — not that I have anything to hide since our last HUGE remodel. At this point, it’s just a hassle (and day off from work) that I’d rather not have to endure.

During the application process, the site claimed that I could borrow $115k. Yowzers.

I asked for $70k and a 15 year term. Monthly payment will be $550.

Yep — right where I thought it would be.

I’ll keep you posted!

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I talked before about how I’m more apt to paying down debt than I am building savings.

I dunno — for some reason, the “money game” is more fun that way for me.

Playing with someone else’s money — and then paying them back — just feels safer than risking my own.

Reality tells me that’s a wacked out way of thinking but it’s always worked for me. Can’t argue with that.

So, going back to this garage dream that I’ve had brewing for the past few years… I’ve decided the time is now.

I’d always been afraid of the “second mortgage” — why would you ever leverage your HOUSE? — but I’ve come to realize that, well, it’s probably one of the smartest things I could do for me and my family right now.

We need this garage. We need the space. We need the re-configured yard.

My kids are getting older. I’m getting older. And, really, this is the time when, if at all possible, I should have the things I want — you know, when they’ll be appreciated the most and for the longest.

I tried “saving” up. It’s not working. Something always comes up. You know how it is…

That new car put a real damper on the savings trend line…

And, really, it would be foolish to save for 15 years only to be priced out (as things naturally increase in price) rather than get something now and pay it down over the next 15 years…

Buying my house when I did was an excellent financial move. It would be irresponsible NOT to build a garage now — regardless of the added risk.

Right now, I believe we can afford an “additional” $600 per month payment. Combined with my current mortgage, that would bring my monthly mortgage payments to $1100 per month, which, in this neck of the woods is unheard off unless you bought your house in the mid 1980’s and are 27+ years into the mortgage.

I’ve got like 27 years to go…

Really, my current sub-$500 mortgage payment is off the charts.

Like, under the charts.

Underground, even.

So, my goal is to secure at least $60k in the form of a fixed rate home equity loan. If I can secure more, great, but my primary objective is to secure a minimum of $60k at somewhere between 4 and 6 percent.

Minimal research indicates that these terms will land me a roughly $600 payment over 10 years. I’ll shoot to secure a 15 year loan for added flexibility at the onset.

My preference of a regular loan over a line of credit is simply because I’m more comfortable with a fixed rate -and- having all of the money at once is just easier to manage. There aren’t withdrawal windows, or limits, potential overdraws, or variable sized payments to be made.

Here’s the money, do what you want with it, pay us back this much each month.

Simple.

As for the dollar figure, I think it will take $60k to build the exterior of the garage that I want and, frankly, we need. It may take a bit more to “finish” it — as in make the upper level look, well, like a real finished room — but at least the expensive part will be taken care of.

My minimal research also indicated that, using my very conservative guesstimations, $60k is about what I expect a lender will offer to me based on my current loan-to-value ratio.

Time is of the essence here too, I think.

I’ve said before that I feel that I’ve plateaued when it comes to my earning power. Sure, I might be a little young to make that claim but I still feel it’s true.

It would be incredibly stupid of me not to take advantage of the “numbers” supporting my position at this very moment.

Buy low, sell high. I feel my stock is high right now…

Also worth mentioning, our oldest son will be joining the public school ranks next fall as a kindergartner. Financially, this is HUGE as it will cut our childcare expenses by at least 40%.

Forty percent is like $750 extra per month in my pocket.

Yep, that’ll make a $600 second mortgage payment that much easier.

Two years later, both kids will be in school. Barring a third smurfling (which I’m actually hoping for — we *can* afford it!), paying this loan doesn’t carry much risk as far as I’m concerned after the first few months (which, technically, I’ll be able to use the funds from the loan to pay).

Seems like a pretty solid plan, no?

Time to start getting all of my documents together and testing the waters…

Can You Dig It?

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