Home Equity Line Of Credit Rates - Limbo Land
The golden rule to home equity financing is that the rates will be higher than for purchase mortgage or refinancing. These lenders are taking on greater risk because they know you have that huge housing debt, and the resulting debt to income ratio demands higher rates. The exception to the rule are home equity line of credit rates, and you'll be amazed at how low they can go.
The amazingly low home equity line of credit rates!
How low are we talking about? Well, the introductory home equity line of credit rate for a $50K HELOC was about 5.5% for the first quarter of 2006, and slightly higher for $30K options. Thats almost a full percentage point below fixed rate purchase mortgages, and even less than most ARM's! Its not that lenders offering a home equity line of credit want to make less money, its just that the way a HELOC is setup demands low initial rates followed by severe rate increases.
- All home equity line of credit rates are adjustable - a fixed rate would be silly considering the amount you're taking out isn't fixed.
- ON top of that, the initial terms are interest-only, meaning you don't have to pay a dime toward the principle you withdrew until that interest only term is over.
- Wait, that sounds a whole lot like bad credit mortgage opportunities!
Indeed - the HELOC is surprisingly reminiscent of bad credit financing,m but with one key difference - you decide how much money you want to take out. This makes home equity line of credit rates not just volatile, but profitable.
Don't worry about low rates
So know that your home equity line of credit rates are going to be incredibly low. Its a consequence of the loan specifics, not of lender competition and not of government intervention. You have a lot at stake when taking out a HELOC, and a lot of the success is on your shoulders - and those
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