Basics Behind HELOC Loans
HELOC loans - this is the acronym for home equity line of credit. HELOC loans are popular due their flexibility and ease of use. Once a home owner has a standard home mortgage loan with a bank or other lender, it is typically very easy to acquire a second mortgage or home equity line of credit. This type of loan is essentially a second mortgage that acts very similarly to a credit card -- the only difference with a HELOC loan is that it issecured against the value of your home and has a specified time in which a borrower must pay it back.
More On HELOC Loans
Many borrowers take out HELOC loans that are interest only, meaning that your monthly payment is the interest portion of the loan. This keeps your HELOC loan payment low, but does not work to help a borrower pay down the interest on the loan payments are interest only, this serves to purposes. It is a good idea to talk with your lender about the specifics of a home equity loan and whether this loan program is right for you.
California HELOC Loan Programs
Nearly all major banks and lending institutions offer California HELOC programs. The HELOC loan rate will depend on the lending institution and the strength of the borrower's financials.
California HELOC Loan Rates
Loan rates on a California HELOC loan will vary based on current interest rates. As well, the bank will determine an interest rate based on your credit worthiness and how stable your financial past.
With a qualifying credit grade it's possible to receive an equity line up to 100% of the value of your home. Like most of our other loan program you may qualify without proving income (otherwise known as stated) or with less then average credit scores. Most HELOC's are variable loans based on the prime rate, (6.75% as of October 2005), this rate is adjusted and set by the Federal Reserve. Most loans have additions or deductions to the rate based on credit grade, loan to value, and documentation. For example, if you have an excellent FICO score you may qualify for the loan at the prime rate of 6.75%. If you have to qualify by "stating" your income there lender may a margin added to the prime rate making your total rate 7.75%. In this scenario we added a 1% margin to the prime rate this is just a estimating add-on based on average programs. All home equity line rate adjustments vary from lender to lender. Please complete a quick quote form to find out if you qualify.
A home equity line of credit is also useful when purchasing a home. It can be used as secondary financing for borrowers with little capital for a down payment on the home. The equity line may be a better option when using 80/20 financing then a fixed 2nd mortgage. The rate is usually lower the payment is interest only, and in mot cases has no prepayment penalty. Together with a first mortgage you may qualify for extremely low 100% financing on your new home purchase.