Do you know the current rate of your Home Equity
Line of Credit and what is your blended rate?
Newsletter article: April 2006:
Don’t look now but the Prime Rate has jumped
from 4% all the way up to 7.5% (in the last 24 months).
Since the majority of home equity lines of credit
(HELOCs) are based upon the Wall Street Journal Prime
Rate, homeowners may have noticed a sharp increase
in their monthly payments. 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 is 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!
Please feel free to contact us toll free at 877-RATE-LOW
(877-728-3569) to discuss your scenario. We will be
able to listen to your needs and provide feedback
that will help you make an informed decision.
