Clear Talk About Mortgages

Common Uses of Home Equity Line of Credit
HELOCs have certain limitations. Each loan features a combined loan-to-value ratio, which is the fixed limit a homeowner can borrow. Even if you were to borrow the maximum dollar amount allowed, you'll make interest-only payment in the first few years. The affordability of HELOC makes them wise choices for home improvement projects, debt consolidation, college tuition, or start-up capital for a business.

HELOC Terminology
Borrowers must familiarize themselves with specific HELOC terms before applying for the loan. Every home equity line of credit features a "draw period" and a "repayment period." Even though the average HELOC has a minimum term of 15 years, borrowers may refinance and repay the balance early, and close the loan.

Inexpensive Loan Origination Fees
With a traditional mortgage loan, borrowers can expect to pay an origination fee of 1% of the loan balance. Home equity lines of credit have lower origination fees. The low annual fee of approximately $50 makes these loans attainable. Borrowers can setup a line of credit and use the money to care for emergency expenses.

Adjustable Interest Rate
There are a variety of HELOCs. A large number of these loans have variable interest rates. Loans are attached to a prime rate, which is currently 8.25% in the United States. The prime rate has increased significantly since 2003. At this time the rate was about 4.0%. As the economy improved, the Federal Reserve in stages increased interest rates in increments of 0.25%. The majority of HELOC rates range between 7.75% and 12.50%, depending on how often the Federal Reserve decides to make rate adjustments. Borrowers with a high FICO score usually obtain a lower rate on the home equity line of credit.

Home Equity Line of Credit offers Flexibility
Home equity lines of credit are extremely flexible. Borrowers can use the money as needed, and choose to withdraw a small amount or a large amount. Furthermore, you can payoff the HELOC early. Withdrawing funds from the account is simple. Borrowers are provided with convenient checks or a debit card for the account.

Fixed Rate HELOC
There are HELOC products that offer a fixed rate. Borrowers will have to do their homework and consult with a good mortgage broker. Homeowners who don't have a first mortgage on their property can take advantage of a variety of loans with excellent terms such as HELOANS©. These loans are also ideal for borrowers who want to improve their credit score. The key is to make timely payments and keep the balance low.