Here are a few buzzwords that are thrown around in the home lending industry often. You my hear of a HEL or a HELOC.
HELOC is just the short form of Home Equity Line of Credit meaning an open-end line of credit. A home equity line of credit (Heloc) is a revolving line of credit with an adjustable interest rate which is indexed to the prime rate. Another form of a Heloc is a fixed-rate loan that allows you to leverage the equity in your home into cash, refinancing or to consolidate debt. Home equity lenders give you a line of credit up to 85% of your appraised homes value, minus the current mortgage loan balance. This of course is decided on your credit and your amount of debt.
What can a Heloc do for me?
You can get a loan at a lower interest rate than other loans and be able to get cash to use the way you want:
Benefits of the HELOC loan
- Low Interest Rate
- Large sum of cash to spend, A HELOC is normally considered the cheapest source of cash
- Different ways to access your line of credit including checks or credit cards
DisAdvantages of the HELOC loan
- You must use your home as collateral
- Large final payment, ballon payment
- Could put you more in debt if you do not plan ahead
Click here to Compare HELOC Lenders
Comparing Rates with HELOC. Home Equity Line of Credit is the rate on open-ended lines of credit based on a $10,000 line, or on the minimum to borrow if it is above $10,000. The LTV is 80%. Introductory rates may be included, but only if the introductory rate applies to a $10,000 credit line or to the minimum line offered if it is above $10,000. Home equity loan (HEL) is a 60-month fixed rate, fixed term secured loan based on a $10,000 loan or on the minimum to borrow if it is above $10,000. The LTV is 80%. A lien must be placed on the property for this type of loan.
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