As mortgage rates soar and home equity remains at an all-time high, Bay Area homeowners seek home equity lines of credit
— Garrick Werdmuller, President and CEO Fresh Home Loan
ALAMEDA, CALIFORNIA, USA, June 29, 2022 /EINPresswire.com/ — With mortgage rates nearly doubling in the past two months and home equity at an all-time high, it’s no wonder many homeowners are turning to home equity lines of credit or HELOC‘s. “We saw a definite need for these lines of credit in early 2022, even when rates were in the mid-3s.” says Garrick Werdmuller, President and CEO of New home loan Inc., at Alameda Ca. “We also didn’t have a reliable source to refer our customers to, so we took it upon ourselves to offer this product.” Since then, Fresh Home Loan has been endorsed by multiple home equity lenders to ensure they can offer a variety of options to their customers. You can inquire here: https://freshhomeloan.com/heloc/ . That’s the advantage of a mortgage broker, over a mortgage bank or a big lender, the ability to pivot quickly for the consumer.
“Imagine a homeowner with a 2.75% fixed rate for 30 years on a $900,000 first mortgage that was refinanced in 2020. The homeowner wants $70,000 to remodel a kitchen. To refinance the first mortgage, their rate will most likely be twice as high in this market. This is madness!” Werdmuller exclaims “However, one can open a capital line for minimal cost and only withdraw what one wants to use. For this example I just mentioned, a client got a $200,000 equity line, but only used $70,000 to renovate his kitchen. They now have $130,000 that they can access at any time, but they don’t pay interest until they don’t,” says Werdmuller.
Here are some home equity margin basics:
what is a Home equity line of credit used for?
• Home improvement
• Debt consolidation
• Emergency fund
• Bridging funds for the purchase of a house
• Buy financing to avoid mortgage insurance
What is a home equity line of credit?
A home equity line of credit, or HELOC, is a second mortgage that provides access to cash based on the value of your home. They can tap into a home equity line of credit and pay off all or part of it monthly, much like a credit card.
With a HELOC, one can borrow against their equity, which is the value of the home minus the amount they owe on the primary mortgage. They can also get a HELOC if they own their home, in which case the HELOC is the primary mortgage rather than a second.
How does a HELOC work…
Much like a credit card that allows you to borrow against your spending limit as often as needed, a HELOC provides the ability to borrow against your home’s equity, pay it down, and repeat it. HELOCs are linked to the PRIME rate index and therefore have adjustable interest rates. This means that when the federal funds rate rises or falls, the interest rate on the HELOC will also adjust. To set the rate, the lender will start with an indexed rate and then add a mark-up based on many factors, including credit profile, loan-to-value ratio, and type of transaction. This markup is called the margin, and you should ask to see the amount before signing on the HELOC.
Is getting a HELOC a good idea?
Whether or not a home equity line of credit is a good idea really depends on your goals and financial situation. A HELOC is often used for home repairs and renovations, which can increase the value of a home. In general, a HELOC has a much lower interest rate than a credit card.
Some use home equity lines of credit to pay for their education, but you can get better rates using federal student loans. Financial advisors generally do not recommend using a HELOC to pay for vacations and cars, as these expenses do not create wealth.
Home Equity Line of Credit Basics…
The rate is tied to the prime rate, with a margin of 0.5 to 2+% (depending on credit, loan to value, line amount, etc.). The line amounts range from $50,000 to $500,000. An automated assessment can be used instead of a full assessment. We find out AFTER submission. There is a minimum financing drawdown of $50,000 required. Closing is 30 days in general.
Program highlights include:
o Purchase and autonomous seconds.
o 89.99% loan to value
o Main and secondary residences
o Minimum Fico 680
o Line amounts up to $500,000
o Interest only payments available
For more information here: https://freshhomeloan.com/heloc/
To apply go to:
Do you have a question about mortgage rates specific to your needs?
All loan approvals are conditional and unsecured and subject to the lender’s review of all information. The loan is conditionally approved when the lender has given written approval, but until all conditions are met, the loan cannot be funded. Specified rates and [products may not be available to all borrowers. Rates subject to change according to market conditions and agreed upon lock times set by borrower. Fresh Home Loan Inc. is an Equal Opportunity Mortgage Broker in California. This licensee is performing acts for which a real estate license is required. Fresh Reverse is a dba of Fresh Home Loan Inc. Fresh Home Loan, Inc. is licensed by the California Department of Real Estate #02137513 NMLS # 2124104
What is HELOC or Home Equity Line of Credit and What Can You Use them for?