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