Page 13 - July 2023 Issue.indd

lowering of inflation over the next several months. But they Remember, interest rates can go up like a rocket and can come

could increase rates again if inflation numbers do not move down like a tugboat.
in the right direction.
Be an informed consumer and get all details about a HELOC
You are billed monthly for interest only on the balance owed. If before signing on the dotted line and always consider an exit
you do not have a balance, you have no payment, same as your strategy, starting with only borrow what you need, pay back
credit card. But if using our example, you had drawn $97,500 as much principal as you can reasonably afford and most

at a rate of Prime + .5% (9%) your interest only payment would importantly be prepared to refinance the HELOC into a fi rst
be $731, and the principal balance would remain at $97,500. mortgage when interest rates can justify it.
For ten years, you can draw funds from the balance available
Mr. Rowe is Vice President/Lending for Bay Capital Mortgage
and pay any amount of principal at your discretion. You are
Corp. with offices in Easton and Annapolis. He has lived in
only required to pay interest on the balance owed.
Caroline for his entire life and supports the county by volunteering
At the end of the 10-year draw period, you can no longer in a variety of ways. He currently lives near Greensboro with his
draw funds and the balance owed is frozen and a principal wife Jeanne and daughter Kelsey.
and interest payment is set based on a 20-year repayment
term. The rate is based upon the terms of the HELOC. In this

example if the rate were 9% for 20 years on the full balance of TRINITY UMC CALVARY UMC Trinity United
$97,500 the payment would be $877.
Methodist Church
If you do not have a mortgage on your home a HELOC may
not be the best option if you are looking for funds to make 302 Church Lane, Goldsboro, MD
home improvements. A HELOC is technically a second
mortgage in cases where a fi rst mortgage already exists. For Sunday Worship and
those without a first mortgage, a HELOC is a fi rst mortgage. HENDERSON UMC Sunday School at 9:15 AM

If you do not have a fi rst mortgage and you want to borrow
Pastor Dale Krupla

a specific amount of money for a specific purpose, such as
home improvement, you may be better off getting a fixed

rate at 7% rather than a variable rate at 9%, especially if you
are not looking at paying it off in a short period of time, fi ve

years or less.
the market is
Using a HELOC to consolidate debt can be very risky and

eventually a bad financial decision. Only having to pay interest

can significantly reduce monthly payments, especially when
consolidating installment debts like vehicle, boat, or camper
loans where the loan is paid in full at the end of a term.
It can become quite easy to get comfortable paying an interest
only payment of $731 in lieu of other payments that may
total well over $1,000 per month. Even worse than only being
required to pay interest on what you owe is to use a HELOC
to pay off credit card debt.

Many lessons have been learned by homeowners who have

refinanced their first mortgage or used a home equity loan

to take out equity in their home to consolidate debt. Some
found that two to three years later they had replaced the
paid off installment or revolving debt with new revolving or

installment debt. 10794 Greensboro Road
Denton, MD 410-479-4663
Outstanding credit card debt stood at $987 billion at the end
of the first quarter of 2023. This is an increase of over $200

billion (26%) from $780 billion at the end of the 4th quarter of www.TheBrenton
2020 when the influence of Covid money fattened American’s RealtyGroup.com

bank accounts.
KATHLEEN BRENTON, BROKER
Interest rates will remain around current levels into 2024 and KATHLEENBRENTON@GMAIL.COM
when they do start to move down it will be at a snail’s pace. (410) 829-3430
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