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HELOC -  Home equity line of credit
A HELOC (Home Equity Line of Credit) is a type of second mortgage, secured by the home's value. It is a more flexible form of financing than a fixed-term home equity loan because the homeowner can borrow up to the line of credit, pay the balance down and borrow the money again over the term of the loan agreement. In contrast, a standard home equity loan is for a defined amount and is repaid in equal payments over the loan term.
HELOCs are convenient for funding intermittent needs, such as paying off credit cards, making home improvements, or paying for college tuition. You draw and pay interest only on what you need, and upfront costs are relatively low. One way to draw on your HELOC line includes writing a check.
One important consideration is that HELOCs are subject to interest rate increases. Home equity loans have a fixed interest rate. HELOCs are variable-rate loans, where the interest rate fluctuates with changes in the interest rate of the index that the loan is based upon. For example, the interest rate on many HELOCs is based on the prime lending rate. Changes in the prime rate will trigger changes in the HELOC's interest rate, and this can happen very quickly.
If you need to borrow money to pay off debts, make a major purchase, make a down payment on a second home or investment property, meet some small business expenses, make home improvements, pay for educational or medical costs, fund a life event as a wedding or new baby expenses, consolidate bills and high rate credit cards, then 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.
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 of our HELOC products with the ability to choose any lender that have the better rates in any given time, basically are with NO COST to you, the borrower ! You will not pay for appraisal, some of my lenders are paying for this expense as well.
Most HELOCs have a fixed period (5, 10, even 20 years) 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. However, the interest you pay is usually tax deductible. At the end of your "draw period," you will be required to pay off the loan, making monthly payments on the principal and interest.
An Advice:
You have a minimum payment to pay every month on your HELOC account...
If you deposit any daily cash into this account, or some of your payroll check, it will
act as a payment!
It will effectively reduce your monthly cash flow.
Any income level should do it. It makes sense for those who makes money and even better for those who are short on money...thats the way to be ahead of this "game".
Eli@MortgageTrustLG.com
www.RefinanceFloridaHomes.com .
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