Home Equity Line of Credit
A home equity line of credit is an excellent alternative to refinancing in certain situations. It can be used for home improvements, consolidation of high interest debts, or buying an investment property. These types of mortgage programs can also help borrowers obtain much needed cash on hand.
Benefits of a HELOC
A credit line, which is secured by home equity, have very low closing costs or sometimes even none, which makes them much cheaper than refinancing. This mortgage loan has many similarities to a credit card. It has a fluctuating interest rate, and is based on the current prime rate, which in most cases is lower than credit card rates. It also allows you to borrow a specific amount of money for a specified amount of time, both of which are determined by the home loan lender.
About the Program
Qualifications for this loan program is given based on credit worthiness and the amount of equity in your home. A HELOC has a revolving balance, meaning you can borrow any part or all of the credit line, and when you repay the principal, you are free to use it again. The line of credit has a draw period and a repayment period. During the draw period you can withdraw funds and you have the option of paying either interest only payments, or the both principal and interest. During the repayment period, you cannot withdraw money, and you must repay the amount that is owed over the remaining course of the loan.
Alternatives
Some of the alternatives to a home equity line of credit are second mortgages, home refinancing, and home equity loans. Following home loans can be borrowed at a fixed rate, but in most situations require higher closing costs.
By State
Florida | Pennsylvania
