HI, we have several lines of credit on our rental properties, and on our personal residence. The equity lines are always free of charge, though we occasionally have to pay a fee to hold it for a year ($50). It’s a great deal, anyway. We bank with Wachovia and another local bank here in CT. Most banks are pretty eager to get your business on your personal residence. Wachovia will lend equity lines on up to four properties. Several other major banks will not, however. Gary
I’m in the process of getting a line of credit from my bank in order to buy some investment properties.
Question: What should a line of credit “cost”?
I’ve not heard from my banker yet, but his secretary told my wife that it would probably be the “prime” rate. Is that a typical charge for the use of such money? Are there also some extra bank fees charged on top of the interest rate charge?
Re: Line of Credit – What should it cost? - Posted by Rick in Erie
Posted by Rick in Erie on September 04, 2003 at 20:14:36:
A line of credit at prime rate is a good rate. Prime rate is posted in the Wall Street Journal. It is the governing factor for most revolving credit lines. Currently it is 4%. Usual fees would be a recording fee and/or document prep fee from the bank to be paid only at the opening of the loan…other than that you should only have to pay for the principal and interest that is on the loan (unless it is an interest only line of credit, then you would only have to pay the monthly interest on the loan). I would not pay more than $100 for the up-front costs—otherwise go looking for another bank. I work for a major bank and we currently charge $67.50 for the recording fee (closing costs) and our rate is as low as 3.5% (locked at .5% below prime rate) if it is a home equity line of credit that is for $75,000 or more and the property is at 90% loan-to-value or less. Hope this helps…Rick in Erie