Why get a HELOC?
HELOC, short for ‘Home Equity Line of Credit”, is gaining popularity. What are the advantages, who is getting them, why get one, and where do I get one? If you are in the market for a new home or thinking of refinancing, a HELOC may be for you. There are many advantages compared to a conventional mortgage loan: First, closing costs are either ‘zero’ or minimal, especially compared to a new mortgage. Second, the interest rates are equal or lower then a regular mortgage. Three, the time it takes to get approved and close is much quicker. Fourth, payment and repayment options let you control how much and when you pay. The main disadvantages is the interest rate may vary during the term of the loan and that the amount you borrow compared to the value of your property may be lower than with a conventional loan. More and more people are paying cash to close on their property, then going to the bank for a HELOC. This does take cash, but if you were planning on having a loan to buy your property this speeds up the closing process and gives you time to shop around. If you want to refinance and have some equity in your property, this saves you thousands of dollars in closing costs. HELOC’s are offered at most major banks and credit unions. Right now, both BB&T and SunTrust Bank offer these at 2.99% interest. Federal Truth in Lending Act applies, so make sure you receive a written estimate of all closing costs, terms and APR. This Act gives you 3 days to cancel once the account is opened.