Mel Feller Explains The Home Equity Process in Texas
Mel Feller, MPA, MHR with Offices in Texas and Utah
Mel Feller Seminars, Coaching For Success 360 Inc. /Mel Feller Coaching
Getting a home-equity loan/line FAQ
Not knowing if your loan has a pre-payment penalty clause. If you are getting a “NO FEE” home-equity loan, chances are there’s a hefty pre-payment penalty included. You will want to avoid such a loan if you are planning to sell or refinance in the next three to five years.
Getting too large a credit line. When you get too large a credit line, you can be turned down for other loans because some lenders calculate your payments based upon the available credit — not the used credit. Even when your equity line has a zero balance, having a large equity line indicates a large potential payment, which can make it difficult to qualify for other loans.
Not understanding the difference between an equity loan and an equity line. An equity loan is closed — i.e., you get all your money up front and make fixed payments until it is paid in full. An equity line is open — i.e., you can get numerous advances for various amounts as you desire. Most equity lines are accessed through a checkbook or a credit card. For both equity loans and lines, you can only be charged interest on the outstanding principal balance.
Use an equity loan when you need all the money up front — e.g., for home improvements, debt consolidation, etc. Use an equity line when you have a periodic need for money, or need the money for a future event — e.g., children’s’ college tuition in the future.
Not checking the life cap on your equity line. Many credit lines have life caps of 18 percent. Be prepared to make payments at the highest potential rate.
Getting a home-equity loan from your local bank without shopping around. Many consumers get their equity line from the bank with which they have their checking account. Consider your bank, but shop around before making a commitment.
Not getting a good-faith estimate of closing costs. See item number four above.
Assuming that your home-equity loan is fully tax-deductible. In some instances, your home-equity loan is NOT tax deductible. Do not depend on your mortgage company for information regarding this matter — check with an accountant or CPA.
Assuming that a home-equity loan is always cheaper than a car loan or a credit card. Even after deducting interest for income tax purposes, a credit card can be cheaper than a credit line. To find out, compare the effective rate of your home-equity line with the rate on your credit card or auto loan.
Effective rate = rate * (1 — tax bracket)
Example: The rate of the home-equity line is 12 percent, your tax bracket is 30 percent, your effective rate is .12 * (1 — .3) = .12 * .7 = .084 = 8.4 percent.
If your credit card is higher than 8.4 percent, the equity loan is cheaper.
Getting a home-equity line of credit when you plan to refinance your first mortgage in the near future. Many mortgage companies look at the combined loan amounts (i.e., the first loan plus the second) when refinancing the first mortgage. If you plan to refinance your first, check with your mortgage company to find out if getting a second will cause your refinance to be turned down.
Getting a home-equity line to pay off your credit cards when you are spending is out of control! When you pay off your credit cards with an equity line, do not continue to abuse your credit cards. If you cannot manage the plastic, tear it up!
Mel Feller a Texas /Utah Personal Development, Business, Real Estate, Branding, Business Funding and Finance Coach. In addition, Mel Feller has served in a variety of executive leadership roles for medium and large organizations, including multiple Fortune 500’s. He is a charismatic leader who has facilitated change and growth in all sized organizations, including non-profit and Board development. Mel Feller has successfully led organizations in the areas business development, marketing, sales, operations, and the like.
Mel Feller is committed to serving. In the Texas / Utah community, he chairs several organizations. Mel Feller volunteers his leadership at two churches in a variety of ways, including serving on council, bible study facilitator, and more.
Mel Feller has been a featured speaker for career professional is groups, business leaders and continuing education sessions, and aspiring business startups.
When he is not coaching, you can find Mel Feller reading, listening to podcasts, exercising, fishing, or with his kids and grandkids exploring the greatness God has gifted us all.
Mel Feller states, “An effective coach is someone who tells you what you may not want to hear, helps you navigate around your blind spots, and helps you identify opportunities…so that you can be who you’ve always known you can be” Mel Feller
Mel Feller’s purpose is to add tremendous value to those business owners/entrepreneurs by helping them reach their potential.
Mel Feller is an effective, charismatic and powerful speaker, corporate advisor, and best-selling author. In 1998, Mel founded Coaching for Success 360 to help professionals worldwide design subtle changes in their presentation, attitude and leadership style that increases their personal and professional effectiveness and subsequently their financial status. This also includes both real estate as an agent and/or investor. See www.melfeller.com and www.melfellersuccessstories.com . Now with offices both in Texas and Utah.
As a business, executive, personal development, and real estate coach, I work with a wide range of professionals and offer a highly personalized approach tailored to each individual in concert with the organizational environment. In a supportive atmosphere, I work to build trust and support the professional in the attainment of goals and measurable outcomes.
Mel Feller offers sessions, both in-person and virtual. We will start with an initial assessment to clearly define your short and long-term goals, everything from communication skills to personal acceptance. We will use these goals as a foundation to create a strategy and build the path for attaining these objectives. Change is typically a major component of reaching goals and sustainable change becomes more likely in a coaching partnership.