No Closing Cost Home Equity Line of Credit - When looking for a home equity line of credit you will have many options to choose from. Most notably you will have the option of a no fee home equity line of credit. The lender will pay all fees associated with he closing of your HELOC for an increase in the margin charged over prime.When choosing your line of credit also be sure to know what your rate will be after the initial teaser rate if there is one. Often times these lines of credits have a a short term teaser rate.
Many Equity Lines of Credit, and especially no cost home equity lines of credit, will still have an annual fee. Most of the time the annual fee is waived for the first year and then each anniversary date of when you obtained the loan you will have a annual fee assessed. This fee is usually around $50, give or take a little, but it just depends on the actual lender.
A no closing cost HELOC is always a good idea to have. It costs you no money to take out, and it gives you emergency money for any incidentals for the homme or unforeseen costs that you may have.
Often, you will have the choice of no closing costs or to pay these costs. Ask your mortgage professional to do a comparison of the two for you. Closing costs for equity loans are usually quite low and, depending upon how long you will have the loan, the lower interest rate you pay may offset the closing costs.
Many no cost HELOCs are also not available to borrowers without platinum level credit scores.
The monthly payment on a HELOC is based upon the outstanding balance, not the credit limit. Advantage - you only pay for it if you use it!
Home Equity Line of Credit - A HELOC (Home Equity Line of Credit) is a lien on your property in the form of revolving credit secured by the equity in your home.
HELOC's have a draw period and a repayment period. The draw period is the amount of years that you are allowed to use the credit that is in your account (or draw money out). Your minimum monthly payment is interest only. When you HELOC reaches its repayment period your minimum payment increases to include payment of the principal.
Home Equity Lines of Credit work very similarly to credit cards. You have a maximum credit limit and you can use any amount of the credit line up to that maximum limit. You only pay on what you borrow so if you have a equity line with a 20k limit and you only use 1k of the equity line you only have to make minimal payments on the 1k that has been used. If you have no balance on the equity line there is no payment to make.
Home equity lines of credit are used often for debt consolidation. Paying off high rate credit cards and consolidating them into one low monthly payment helps with monthly cash flow. Usually the rate on the home equity line of credit is lower than credit card rates also.
A Home Equity Line Of Credit is often treated just like a credit card on your credit report. If you "max out" this revolving line your credit scores may drop depending upon your overall credit profile.
Most HELOC loan programs lend up to 95% to 100% of the value of the home. A few banks even lend up to 103%, provided certain conditions are met. As with other loan programs, borrowers must have perfect credit histories and sufficient incomes in order to borrow 100% of the home value.
A Home Equity Line of Credit is typically an adjustable rate product. Additionally, the index used for most HELOCs is the prime rate. Because the prime rate has seen numerous increases in the last half of 2005 and in early 2006, HELOCs seem to be losing much of their popularity.
One of the advantages of a Home Equity Line of Credit is that you do not pay interest on the money until you actually need and use it.
