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      11-22-2020, 09:46 PM   #1
vreihen16's Avatar

Drives: 2015 BMW i3 BEV
Join Date: Jun 2019
Location: Orange County, NY

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Dumb HELOC questions

I have about 4 years left to pay on our mortgage, and nothing chaining me to the insane taxes of NY State other than my job of 35 years. With COVID making WFH more acceptable for many employers and a blitz of city folks driving our local (upstate) housing market prices crazy trying to escape the urban areas, it seems like a good time to plan an exit strategy for retirement.

My DW is thinking about a proper car-person barndominum in the Carolinas, all steel shell/frame and with the ultimate open floor plan. Land down there seems to be cheap, and mortgages/taxes for 5+ buildable acres are less than my monthly cable bill.

Rather than go through the hassles of a construction loan, I've been looking at a HELOC against our current house from our local credit union to finance the barndominium construction down there. They are *apparently* offering (which seems too good to be true):

1) An initial 5 or 10 year draw period, with interest-only payments needed.

2) After 5/10 years of draw, you have 15 more years to pay it back at P+I.

3) The interest rate is adjustable quarterly, at 1/4% *below* prime during the draw and repayment periods.

Am I reading this correctly? Can I *really* build our retirement house early, and only have to pay back the interest (@ below prime!) for 10 years?

I am having a hard time believing that we can build/own our retirement house for 10 years with nothing more than a land mortgage and HELOC interest payments, and leave NY State at any time over those 10 years if our employment situations change with no mortgage whatsoever...assuming that the local housing market doesn't tank like it's 2008 all over again.

Is it really this simple, or am I missing something like a hidden balloon somewhere?????
2015 BMW i3 BEV, Giga World (Lodge interior), Tech/Driving Assist Packages, 20K miles