Right now Home Equity Lines Of Credit are a great product because of the flexibility and super low rate. Some banks also offer a fixed rate option, if you see the Prime rate increasing. Right now Prime is 3.25, and a lot of banks are offering Prime minus .25.
Most banks also offer them as a No Closing Cost loan. Please be aware that you must leave the line open for 3 years. You can have a zero balance, but it must remain open. What a lot of banks are doing these days, is adding a floor to the rate. The normal floor is 4.5%. What that does is, make your payment based on 4.5%, even though the terms say 3.25-.25.
The disadvantage is you don’t truly get Prime minus .25, but the good thing is, Prime could keep rising and you will be at 4.5 until Prime hits 4.75 (Prime minus .25, per the terms of your HELOC). The HELOC is a much better option for a lot of transactions.
You will not be able to borrow money at a cheaper rate, especially since most HELOCs are interest only payments for the first 5-10 years. You should be aware that most banks will want to stay under an 80 Combined-Loan-To-Value.
Alex Echeandia, MD loan officer
301-881-8900 x208
Friday, November 20, 2009
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment