Testimonials

"When I needed to Refinance and pull cash out of Historical Victorian 3 unit in San Francisco, I couldn't find a Bank or Lender that would help, that is when a family member recommended 800775LOAN.com. Your staff helped walk me through the whole process, from application to funding. Now I have a great new loan and I was able to pull out even more cash than I needed!"

- Cindy C
Satisfied Customer

* * * * *

More Testimonials

 

 

 

Search in Your Area

Search Mortgage Lenders

Search Mortgage Rates

 
 

Waiting for the Right Rate?

Get mortgage rates delivered to your inbox.
No Spam Guaranteed

 

Mortgage Info Center

HELOC or Home Equity Line Of Credit

HELOC or Home Equity Line Of Credit

A home equity line of credit, HELOC, equity line, or equity account, is a type of loan that allows a home owner to tap into the equity of their home to obtain cash for other uses. Home equity lines of credit are usually, but not always, second mortgages. A second mortgage or loan is a mortgage that a homeowner takes out on their home above and beyond their first mortgage. Most home equity lines allow an individual to borrow up to 85% of the appraised value of their home minus the amount they still owe on their first mortgage.

A HELOC works similar to a revolving line of credit or credit card. It is set up for a maximum credit amount. A borrower does not typically have to take out any money up front. They can use the available credit to make purchases on an as-needed basis.

Home equity lines of credit can be in a first, second, and even subsequent lien position.

When a consumer opens a home equity account, they have three days to cancel the transaction, for any reason. They must cancel the account in writing.

HELOC Interest Rates

HELOCs usually have variable interest rates which are typically tied to the prime interest rate. The interest due on a HELOC is calculated on a daily basis based on the outstanding balance. HELOCs do not have interest rate adjustment caps, so if the prime interest rate were to go very high, the interest rate on a HELOC would also be high. The maximum interest rate that may be charged on a HELOC is 18%, except in North Carolina where it is 16%. Some home equity lines of credit do allow conversion to a fixed-rate loan.

HELOC Term

Home equity lines typically have a draw period of five to ten years, followed by a repayment period of 10 to 20 years. There are many variations on this theme.

HELOC Fees

Upfront costs for obtaining a home equity line of credit are typically low. Many lenders charge no fees to set up a HELOC. Some lenders charge continuing annual fees or access fees.

Uses for a Second Mortgage

The most common uses for a home equity line of credit is to obtain equity from a borrower's home for some other purpose. Typical uses for the money obtained from a HELOC may include:

  • Obtaining cash for home additions, remodeling, repairs, or renovations
  • Obtaining cash for other significant purchases
  • Obtaining cash to pay off or consolidate other debt (such as credit card debt, car loans, or student loans

Related Content

Refinance Interest Savings Calculator
Refinance Interest Savings Calculator

Use this calculator to see how much interest you can save by refinancing your mortgage!

Second Mortgage - Features and Benefits
Second Mortgage - Features and Benefits

Learn about the specifics of second mortgages.

Obtaining Equity from Your Home
Obtaining Equity from Your Home
Tapping into the equity in a home to obtain cash is very popular and very common.

Get a Fast, Free, No Obligation Mortgage Rate Quote

?
Purchase Price
?
Loan Amount
?
?
?
Get Rates  

256-bit secure data connection. We value your security. Read our privacy policy.

 

 

Over $1.5 Billion Funded

BBB Rating A Secured
 

 

 

Mortgage Rates by State

Please select your state to view our lowest available Current Mortgage Rates.

 
 

Ask a Question

Leave this field empty
 
 

Join CraterTeam.com

Are you a Real Estate professional or Lender? Get yourself listed on CraterTeam.com for FREE.

Join Now
 
 

We Care

We Support Charities A portion of all proceeds earned by CraterTeam.com will be donated to charitable organizations.

View List of Charities Supported

 
Private and SecureBBBBBB A+ RatingEqual Housing OpportunityCMPSFHA