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 Home Equity Line of Credit (HELOC)
If you need to borrow money to pay off debts or make a major purchase, a Home Equity Line of Credit (HELOC) can be useful. A HELOC is a form of revolving credit secured by the equity in your home.
This is an open ended loan that can be paid down or charged up for the term of the loan, much like a credit card. The interest rate fluctuates and can vary on a monthly basis.
With a HELOC, your lender will approve you for a specific amount of credit - the maximum amount you may borrow at any one time under the plan. In determining your credit limit, your income, debts, credit history and other financial obligations will be reviewed. An appraisal will be required on your home to determine the home's market value. Your credit limit will be based on a percentage of your home's appraised value, which is then subtracted from the balance owed on your existing mortgage.
Most HELOCs have a fixed period during which you can borrow money. Typically, you will use special checks or a credit card to draw on your line. You will be required to make a minimum payment each month – usually the interest that accrued during the draw period. The interest you pay is usually tax deductible but you should consult with a tax accountant.
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Prime Rate Lowest in Three Years
Time to Consider a Home Equity Line of Credit
The Federal Reserve announced a 75 basis points rate cut on March 18th bringing the Prime Rate to 5.25%, it’s lowest since February 2005. |
With rates this low, Home Equity products prove again they are a better alternative to other financing options like credit card debt. Pricing on many Home Equity products is based on the Prime Rate. Rate reductions have been occuring in the last several months and now there are opportunities to obtain loer rates. Home Equity remains a sound and economical way to help borrowers finance large purchases and home improvements or consolidate debt.
First Dearborn Mortgage Company LLC offers a variety of Home Equity solutions that allow borrowers to leverage their equity and fund their needs. Different features that are available include:
- Loan Amounts Up To $500,000
- No Closing Cost Options
- Second Home Programs
- Fixed-Rate Lock Option
- First Lien Lines of Credit and More
For more information, contact Dennis O’Donoghue.
Responsible Lending Statement
Each borrower has their own unique financial situation to consider when evaluating their residential mortgage needs. Although lenders may make product recommendations, the ultimate decision regarding product selection rests with the borrower. Responsible lending includes providing the information necessary to allow borrowers to effectively evaluate products and recommendations on their own merits.
In terms of what Home Equity Program an applicant may qualify for, there are several factors that affect the approval. The final rate and closing costs are determined by the following:
- Credit Score
- Total Amount of The Credit Line
- No Closing Cost Option or with Closing Costs
- Loan Amount as Percentage of the Property Value (Loan to Value)
First Dearborn Mortgage Company LLC is committed to insuring that all documentation, policies, procedures and practices employed in the making of any residential mortgage loan result in the provision of information to borrowers in a manner that will allow them to understand our products and make informed decisions. We spend more time ensuring that the borrower fully understand loan programs and how they compare to competing loan programs.
**In addition, products will not be marketed or sold in any manner that employs unfair and/or deceptive acts or practices. Promotional materials and product descriptions will provide information about the costs, terms, features and risks of the products.
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