How to Shop for a Home Equity Line of Credit (HELOC)

Must Read

Pay day loans – The Spot-on Solution to Fast Moolah!

When looking for quick funds without the need of any form of collateral, pay day loans are an absolute...

Canon 7D Composing People and Portraits

When photographing people it can be easy to get carried away with focusing on their expressions and checking your...

Online Marketing Guide – Top Tips for your success

Using the internet to market products and services is very powerful and not particularly complicated. Yet 97% of people...

Shopping Tips For Early Black Friday Sales

Take advantage of early black Friday sales to beat the shopping rush. Black Friday, the Friday after Thanksgiving Day,...

Marketing Guide Book Miss Parloa’s New Cook Book; A Guide to Marketing and Cooking

General Books publication date: 2009 Original publication date: 1881 Original Publisher: Estes and Lauriat Subjects: Cookery,...

Extending IronPython Using Visual Basic.NET

Considering C# and VISUAL BASIC.NET Extension Similarities Visual Basic.NET does have some distinct advantages over C# when building an extension....
Admin
test

Shopping for a home equity line of credit (HELOC) is a relatively simple process compared to shopping for a mortgage mainly because with a HELOC the most important features you need to look for are the same from one lender to another. Still, it has some specific characteristics you need to be familiar with in order to shop successfully.Here are some of the most important features of home equity lines of credit you should understand and examine when shopping for a HELOC.Risk exposure:Before you decide to apply for a home equity line of credit you should be well aware of the risks involved and particularly the higher exposure to interest rate risk. HELOC is an adjustable rate line of credit, rather than a loan for a specified amount, and its interest rate adjusts every time there is a change in the prime rate, on the first day of the month following the change. This characteristic makes HELOCs riskier in case of interest rate increasing than the standard ARMs which have longer periods for adjustment.Interest rate charges and margins:Generally, all HELOCs are tied to the prime rate, as stated in the Wall Street Journal. This considerably facilitates their shopping in contrast to adjustable rate mortgages, for example, which can be tied to different indexes and require more researching.However, HELOCs typically charge variable rather than fixed interest rates. In order to obtain the interest rate the borrower will be charged, a certain amount, known as margin, is added to the prime rate. Borrowers and shoppers should always find out what the margin is because it varies among different lenders.Lenders of home equity lines would typically offer a temporarily discounted, low interest rate lasting for a relatively short introductory period (for example 6 months). After the introductory period ends the rate is based on the prime rate plus the margin.Minimum draw limits:One of the things the borrower needs to look for when applying for a home equity line of credit is whether there are a minimum draw limits, or a minimum average loan balance. Some plans have limitations on how you use the HELOC and may require a minimum draw amount each time you borrow money and the keeping of a minimum amount outstanding.Costs and fees:Many of the up-front costs and fees of setting up a home equity line of credit are of the same type as on regular mortgages. Such charges include a property appraisal fee, an application fee, and points (though lenders seldom charge points). In addition to those, shoppers would have to pay an annual fee (which is often waived the first year) and a cancellation fee (which is often waived after 3 years).If you are shopping for a home equity line of credit you should examine and evaluate each of the above features to ensure that the terms of the plan you choose corresponds to your borrowing needs. Always have in mind that failure to repay the lines of credit may cost you the loss of your home.

Latest News

Digital Marketing for Beginners

Digital marketing for starter, Let to basic learning about connecting with your audience in the right place at the...

What are 7 things poor people do that the rich don’t?

1. poor people watch TV in which people read books how many hours you spend in front of the TV and when was the...

Top 18 best small business ideas for beginners starting

A small business can be frightening and requires plenty of careful planning there are many small business ideas which can be beneficial as well...

Summer that makes you happy

We saw were already here I've been thinking about some of the things. I used to do with my husband even though he had...

4 Point to helpful tips specifically for caregivers

What you need to take a vacation. I know it sounds impossible creative and try to make it work for you almost everyone needs...

More Articles Like This