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Home Equity Lines of Credit

Getting a Home Equity Line of Credit (HELOC) is an option worth discussing.

There are a variety of HELOC mortgage products.  Most are 2nd mortgages that give the borrower a line of credit that they can utilize for a specific period of time (usually 10 to 15 years).  After the 10 or 15 year period, no more draws are available on the “line”, and the balance must be paid down (usually over an additional 15 years).

Here’s a different spin.  Most major lenders offer a first lien position HELOC (Home Equity Line of Credit) which may be utilized for as many years as the borrower wishes to have the line in place. 

Here’s a typical scenario: Mr. and Mrs. Borrower have a beautiful home worth 1.5 Million dollars.  Mr. and Mrs. Borrower owe $650,000 on a first mortgage on their beautiful home.  Mr. Borrower owns a business and sometimes the accounts payable are slow and Mr. Jones has to go to his own pocket to meet expenses.

Mr. and Mrs. Borrower decide to have a first lien position HELOC replace their old mortgage.  Mr. and Mrs. Borrower new HELOC is for $1,350,000. 

Now they have $700,000 cash available 24/7.  (Some lenders even re-evaluate the value of the property annualy and increase the line of credit porportinate to the value of the home). 

Information on Home Equity Lines of Credit will be responded to promptly.

By Jim Jump To Comments
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