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Lines of Credit
A Home Equity Line of
Credit (often referred to as a “HELOC”) is a mortgage with special
characteristics:
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It can be a first or
second mortgage
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It is an Interest
Only loan
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The interest rate is
most often the Prime Rate + (.5%, 1%, 1.5%, etc.) depending on
the available equity in your home (80%, 85%, 90%, and 95%)
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At the time of loan
closing the customer usually has the option to use or receive
the entire approved loan amount. They also may choose to not
use or receive any of the funds, and will have access to the
funds using a checkbook or credit card
-
The balance and
available cash in the equity line will fluctuate as the customer
either uses the cash or pays off the equity line of credit
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The payments are tax
deductible as the interest paid is mortgage interest
Home Equity Lines of
Credit are most often used for large expenses such as home
improvements, tuition expense or for the availability of capital for
a wide range of personal and family investments.
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