My neighbor's HELOC story from last year in Denver still makes me nervous

He got a home equity line of credit with a variable rate that started at 4.5% to fund a kitchen remodel. When rates jumped, his payment went up over $300 a month, and he said he 'didn't really grasp how fast that could change.' It stuck with me because he's usually so careful with money. Has anyone else had a variable rate loan turn on them like that?

3 comments

3 Comments

adams.linda1mo ago

Wait, he didn't realize the rate could change? That's the whole point of variable!

holly71321d ago

Right? It's like buying a car because the first tank of gas is free. You're gonna have to fill it up eventually, and that price changes every day. My buddy got a variable rate on his truck loan and acted shocked when it went up. He said the bank didn't tell him. They definitely did, it was page three of the paperwork he just signed without reading.

lilykelly29d ago

You ever think about how people just hear "lower rate" and stop listening? I was the same until my cousin's payment shot up last year. Totally get it now.