Talk to me about margin % on HELOC

[doggielover]

DH and I are applying for an HELOC to do some home reno's.  We have 100k equity however we're only taking 60k.  The credit union (who doesn't have our mortgage) is doing everything and told me the margin is 1.24%.  I get the whole APR thing but I've never been given a margin % before.  Please school me.  

FYIW our APR is 3.5% 

[mommin]

I *think* the margin percent is what they add on top of the prime rate to make money off the line of credit. So basically, if I understand it properly, the prime rate they charge all borrowers is 2.26 plus your bank’s chosen margin % of 1.24 for the benefit of having a line of credit and you get your apr of 3.5.
Can anyone confirm this? Yes? No? Maybe?

[simpsongal]

I googled and it sounds like mommin is correct.

Are you getting a fixed rate HELOC? We have a variable one and the rate is like 2.1%

[doggielover]

Apr 16, 2021 12:22:51 GMT -5 simpsongal said:

I googled and it sounds like mommin is correct.

Are you getting a fixed rate HELOC? We have a variable one and the rate is like 2.1%

Yes, it is a fixed rate.  I just wasn't sure about the margin.  
Basically then this isn't a bad rate right? 

[simpsongal]

doggielover, for a fixed rate it sounds pretty good. If you plan on paying off the HELOC quickly (e.g., 2 years), you would probably be better off with a variable rate. But life happens and the best laid plans....so locking in at 3.5% sounds pretty sweet.

[mommin]

Apr 16, 2021 12:52:50 GMT -5 doggielover said:

Apr 16, 2021 12:22:51 GMT -5 simpsongal said:

I googled and it sounds like mommin is correct.

Are you getting a fixed rate HELOC? We have a variable one and the rate is like 2.1%

Yes, it is a fixed rate.  I just wasn't sure about the margin.  
Basically then this isn't a bad rate right? 

In our first house we took out a heloc to pay for windows and heating/AC. Our rate was 7.5% so I feel like 3.5 is great.