Do you know the current rate of your Home Equity Line of Credit and what is your blended rate?

Newsletter article:

Since many home equity lines of credit (HELOCs) are based upon the Wall Street Journal Prime Rate which can change at any time, homeowners should periodically check the impact of Prime Rate changes on their overall mortgage payment. You can use our blended mortgage rate calculator to examine the true rate you are paying at this time, factoring in both your first and second mortgages.

Should you consider refinancing to a fixed-rate second mortgage?

HELOCs, most of which are adjustable rate products, have several benefits. The biggest advantage is that you typically only pay interest on the outstanding balance. This may be a great strategy if you only need to borrow money "as you go" and you plan on paying down the balance on a regular basis. If you are good at handling short-term credit card debt, then managing a home equity line of credit should not be such a daunting task.

With a fixed-rate second mortgage, borrowers finance a set amount of money which is then payable in set increments over a pre-determined period of time. When the Prime Rate was floating around 4.00%, HELOCs seemed like a steal. Today, borrowers may be able to find a fixed-rate second mortgage with a lower rate than the Prime Rate. Thus, you can get a better rate with the added security of a fixed-rate product.

Also, if your property has increased enough in value, you might be able to consolidate both mortgages into a new first mortgage and lock in on one low rate!

For more information on mortgage rates and programs contact lenders and brokers serving your area using the button below:

Note: Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We can not and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.