HELOC prime minus margin rate ?
HELOC prime minus margin rate ?
Shopping for HELOC rates. Some banks are offering prime plus or minus margin rates.
DCU and Third Federal are prime minus 0.25%. I understand prime rate is variable but what happens to margin? Once I get HELOC does margin of 0.25% remains same for duration of my loan?
I called CU and banks and asked this question but got parrot script answers that HELOC rate is variable. Nothing about margin itself is fixed or variable.
This is not about teaser margin rates.
Thanks
DCU and Third Federal are prime minus 0.25%. I understand prime rate is variable but what happens to margin? Once I get HELOC does margin of 0.25% remains same for duration of my loan?
I called CU and banks and asked this question but got parrot script answers that HELOC rate is variable. Nothing about margin itself is fixed or variable.
This is not about teaser margin rates.
Thanks

 Posts: 4490
 Joined: Thu Feb 25, 2016 7:11 pm
Re: HELOC prime minus margin rate ?
The margin is written into my ThirdFederal HELOC that I opened a year ago when it was 1.01%. My rate is currently 2.24%. I drew $50k on the line after the margin % had already changed.
I don’t believe they can change the terms on me but know that they could easily close lines/zero out the limit if they chose to.
Cheers
I don’t believe they can change the terms on me but know that they could easily close lines/zero out the limit if they chose to.
Cheers
Re: HELOC prime minus margin rate ?
Margin's are fixed, and do not change for the life of the loan.
However, some banks may have an interest rate floor  if prime + margin is less than the floor, then the interest rate would be the floor. (e.g. 3.25 %  .25 < 4%, so the interest rate is 4%).
However, some banks may have an interest rate floor  if prime + margin is less than the floor, then the interest rate would be the floor. (e.g. 3.25 %  .25 < 4%, so the interest rate is 4%).
Re: HELOC prime minus margin rate ?
I have a Third Federal HELOC also with the same rate. I have been real happy with Third Federal by the way and I do recommend them. I am afraid to make any payments to pay the balance off because of the possibility you mentioned that they may zero out the limit. It happened to me during the last recession and it is real frustrating because I use / need it all the time...I believe chances are high unfortunately that the banks may do that again...Silk McCue wrote: ↑Tue May 19, 2020 5:35 pmThe margin is written into my ThirdFederal HELOC that I opened a year ago when it was 1.01%. My rate is currently 2.24%. I drew $50k on the line after the margin % had already changed.
I don’t believe they can change the terms on me but know that they could easily close lines/zero out the limit if they chose to.
Cheers
Re: HELOC prime minus margin rate ?
Also have a 3rd Federal HELOC. Mine has a 2% interest rate floor with P1.01%, so if Prime drops another 1/4% I'll hit that floor. Sucks but all the banks have wised up since the 2009 recession.

 Posts: 4490
 Joined: Thu Feb 25, 2016 7:11 pm
Re: HELOC prime minus margin rate ?
At 2.24% I'm not paying any more than the minimum payment at this time. I'm actually thinking about drawing down $50k and funding this Savings account offer from Capital One. Easy, no risk money. $500 bonus.xerxes101 wrote: ↑Tue May 19, 2020 10:04 pmI have a Third Federal HELOC also with the same rate. I have been real happy with Third Federal by the way and I do recommend them. I am afraid to make any payments to pay the balance off because of the possibility you mentioned that they may zero out the limit. It happened to me during the last recession and it is real frustrating because I use / need it all the time...I believe chances are high unfortunately that the banks may do that again...Silk McCue wrote: ↑Tue May 19, 2020 5:35 pmThe margin is written into my ThirdFederal HELOC that I opened a year ago when it was 1.01%. My rate is currently 2.24%. I drew $50k on the line after the margin % had already changed.
I don’t believe they can change the terms on me but know that they could easily close lines/zero out the limit if they chose to.
Cheers
https://www.capitalone.com/score500
Cheers
Re: HELOC prime minus margin rate ?
Most banks have floor of 3% and ceiling of 18% on HELOC rates. Given a choice it looks better to go with bank offering full 1% below prime rate. In future if prime rate increases why pay more interest for same loan with bank charging prime plus?
In past TF offered prime 1%. Can anyone suggest if other banks or CUs in the past offered such 1% rate below prime?
In past TF offered prime 1%. Can anyone suggest if other banks or CUs in the past offered such 1% rate below prime?

 Posts: 4490
 Joined: Thu Feb 25, 2016 7:11 pm
Re: HELOC prime minus margin rate ?
Don't know of anyone consistently offering 1% below prime in recent history ThirdFederal had been the consistent leader for quite some time with 1.01% on HELOC threads here. Others may have examples though.rakamaka wrote: ↑Thu May 21, 2020 7:50 amMost banks have floor of 3% and ceiling of 18% on HELOC rates. Given a choice it looks better to go with bank offering full 1% below prime rate. In future if prime rate increases why pay more interest for same loan with bank charging prime plus?
In past TF offered prime 1%. Can anyone suggest if other banks or CUs in the past offered such 1% rate below prime?
It looks like Third Federal raised their floor to 2.75% from 2% (which my loan has) when they changed the Margin from 1.01% to .26%.
CheersFloor: The floor is a minimum rate for which the interest rate can adjust down. Third Federal’s current rate floor is 2.75%.
Re: HELOC prime minus margin rate ?
What happens when the rate resets, either up or down, while you are drawing on HELOC and making minimum (interestonly) payments? Do the payments change with the rate change, or are they locked into the rate when the line was originally drawn?
Re: HELOC prime minus margin rate ?
Yes they change with the rate. If rates went down, wouldn't you want the minimum payment to go down?
Re: HELOC prime minus margin rate ?
Re: HELOC prime minus margin rate ?
Every monthly payment will be based on the outstanding balance, amortizing the current interest rate over the remaining life of the loan.