Heloc Home Equity Line Of Credit

What is Home Equity Credit Line of Credit (HELOC), whst is the advantage and disadvantage of that?

A Home Equity Line of Credit is a line of credit based on the precentage of your home you have already paid for. For Ex. you have a loan for $100,000 and you have paid 30,000 of it off and owe $70,000 still. The equity would be the $30,000 that you own. YOu could then take line of credit out on the $30,000 that you own. HELOC interest rates are based on the prime rate on Wall Street posted each month, which means that it changes monthly. Prime right now is on the rise. Recently it has been at 7.75% for the last couple of months and now it is at 8%. The prime rate is then added to what is called the Margin. Your margin is based on you FICO(credit score). The better credit you have the better margin you will have. I have even seen negative margins on some loans. So for example lets say you have a 2% margin and then prime rate is 8%. Your HELOC would then have a 10% interest rate. This is pretty high, but lower than most peoples credit card interest rate. Let's say you have 10,000 in credit card debt and the average interest rate on the collection of cards is 22%. It would be a good decision to take out a HELOC and then use that money to pay off your debt on the credit cards. You would save because of the interest rate. HELOC's have a cap rate of 18% so that would still be lower than the 22%. Unfortunately the down side of this is that the interest rate changes monthly, as well as the payment amount. There are all different kinds of HELOC/2nd mortgages you can get. Some are No Cost HELOC's and don't require you to pay closing costs, but the fine print says you cannot pay the loan off or refinance within a certain time period. Also watch out for prepayment penalties or termination fees. These usually only last for 6 months, but make sure read all the fine print! Also sometimes there is an account maintenance fee that is waived only if you never make a late payment within the first year. If you do miss a payment in the first year you end up paying a maintenance fee yearly for the life of the loan, after the first year you don't have to worry about being late except paying the late charge. You really should try a fixed rate 2nd mortgage right now instead of a HELOC since interest rates are on the rise.

2006-06-03 00:53:45 by Ricky Mo

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household income is around 130k. we have a mortgage loan of 280,000. our HELOC interest rates is the PRIME RATE plus 3/8ths.
we got this home equity line of credit with Countrywide Financial. Our mortgage is with JP Morgan Chase. I'm wondering if I could have done better on the HELOC by going straight to JP Morgan Chase for the HELOC and possibly might have avoided the $500 closing fee? Is this a bad deal I have with Countrywide? Do others know if Countrywide is competitive. I should have compared more before I got the loan. Does Countrywide loan to risky customers and therefore expect a higher interest rate from all its customers?

you definitely should have done research before going into any loan with any bank. Most banks are prime- 0.50% and you probably should have looked around for one that didn't charge closing fees.....the good news is, do your research now, wait a few months and pay off this one with a more competitive offer.

2006-11-02 10:04:58 by Mark

Price: $29.99

My wife and I are both own our house are are listed on the title, but she has bad credit. Can I apply for a HELOC myself so that we get approved and/or get a better rate?

Yes, you can apply alone. Only your credit will be consider, but also only your income. If that's ok, go ahead. The spouse will still have to sign the disclosures, the mortgage or warranty deed to acknowledge she's aware that property she has some kind of right in is being used as collateral, and the right to cancel.

2008-07-02 09:01:56 by Grant in Florida

Price: $87.45 $75.75

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I own a condominium that I rent out and owe nothing on the mortgage. I've applied for several HELOCs online, but all have denied me because it is considered an investment property. Does anyone know of any bank that offers this type of loan?

Why not try your ;local credit union allot of them are loaning money right now at a pretty good rate

2008-10-26 10:43:09 by Sperly J

interest rate. it is with chase bank. if the fed cuts rates this wednesday should i look into locking the balance? they probably are done cutting. does anyone have a good knowledge of the mechanics of these kinds of locks on whether this would be a good idea or not?

One, call up Chase and get a Customer Service Rep. If they are in India, ask to please be transfered to the United States. They usually have to and this just makes everything go easier!

Two, ask Chase to convert a chunk of your HELOC to a fixed rate. This will be kind of a sub-account under your HELOC. You still owe the money, only the interest will be a fixed rate for a certain amount of time.

This is probably a good idea the way rates are going. It is always nice to have a fixed payment amount anyway. Maybe in 6 months it might be lower... it might not. But then you could always to a refinance and payoff the whole thing with a fixed or another HELOC with a lower rate.

2008-04-29 12:55:04 by Mark