Home Equity Lines of Credit Explained | How a HELOC Works, Pros and Cons
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- Опубликовано: 30 май 2024
- Have any questions or want to talk about your situation? Let's chat!
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In this video:
00:00 - Introduction: what’s in this video?
00:27 - What is a HELOC?
01:09 - How is it different from a cash out refinance?
01:22 - Why a HELOC can be better
01:57 - What’s a blended interest rate?
02:29 - Why a blended rate is important
02:53 - A blended rate example
03:32 - Blended rate - not a one-time thing!
04:22 - How would I use a HELOC?
04:53 - HELOC as an emergency reserve
05:36 - Words of caution
06:52 - HELOC programs vary - why?
08:17 - How much can you borrow?
09:07 - Setting up a HELOC
09:49 - How does a line of credit work?
10:26 - Draw period
10:52 - Minimum monthly payment
12:06 - What happens when the draw period ends?
12:55 - Drawbacks to a HELOC
13:26 - What is the Prime Rate?
15:07 - Fixed rate Home Equity Loan vs HELOC
16:07 - How to shop for a HELOC
16:41 - 7 question HELOC shopping list
#HELOC #HELOCexplained #homeequitylineofcredit #helocvsrefinance
Julee Felsman, SVP of Mortgage Lending NMLS 120831
Guaranteed Rate, Inc.; NMLS #2611. Equal Housing Lender.
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All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
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I don't know why you don't have big ol' K after your subscriber amount. This was by far the best video on how helocs work out of the dozens I've watched. Def earned a sub here. Looking forward to watching the rest of your videos!
Thanks so much, Mike! I'm thrilled to hear you found the video helpful. 😁
As for that K... from your words to the algorithm's ears! 😆
I'm just going to keep sharing the best information I can... Hopefully more folks will find it helpful and subscribe. (But your note made my day... so thank you again!)
Guess what?! Got the K this weekend! 😁
This is the absolute best description of how HELOCs work. Thank you so much!
Yay! You're welcome!
Thanks for the nice comment, Joan! I'm so happy you found the video helpful!
Yeah I think this is the first time I've heard the terminology of blended rate too
Hey Julee, I completely agree with Mike below. You should have thousands of views. Best video explanation on topic I've seen. Well thought out, organized, and presented. Not to mention professional quality and pleasant delivery. Others mention the pros but leave out the cons and other important details that you covered. The "Questions to Ask" at the end is brilliant and greatly appreciated. I immediately subscribed and will spread the word regarding your site. It seems like a great vehicle to have liquidity and capital available to make your money/equity work for you rather than a bank. Thanks for this awesome video!!!
Wow, Joseph, thank you for the kind words! I couldn't be more pleased that you found the information helpful. If you choose to watch my videos, I want to respect your time and share organized information.😊
And thank you for subscribing and spreading the word and helping our channel grow! 🌱❤
I am so glad I found you! Your delivery is EXCEPTIONAL. So easy to listen to and wonderfully streamlined. Thank you for your commitment to educate!
You are so welcome! I am having fun putting videos together that I hope add value to the RUclips community and are helpful! 😊
THANKS. Just what I needed to watch. My wife and I got a 400k HELOC from our 780k primary home which we are still paying a mortgage for. I want to only use 200k for this new duplex down payment. I realized that the secret to making millions is making better investments and staying out of debt.
I'm grateful to GOD for the internet space, we were able to join the credit repair program, we payed up our debt and now we are back to being the administrators of our farming business and our own properties, as well as small pensions. I am almost 56, my wife is 52. We have started saving for retirement from the farm and maybe live off rental income, I would really appreciate it if you would do a video on how to earn using Airbnb and retire comfortably.
This is exactly how I wish to get my finances coordinated ahead of retirement.
You talked about a "credit repair program" how do I join? I took out a 200k heloc from my primary home 2 years ago which I'm still paying.....I find it challenging to invest elsewhere because I'm still paying the mortgage and I got bills. to pay.
"Laura Gilbert CFA " is the licensed fiduciary I use. She lead me to join the program, Just research the name you'd find necessary details to work with a correspondence to set up an appointment.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.
Why no one talked about this program when I was in debt 😢
Glad I found this channel
Thank you, Ayinde! I'm happy you found me too! 😁❤
Awesome info/presentations!!!!
Thanks Rey!!! Glad you enjoyed it! 😁
Thank you for this info. It was very informative. I just got my Heloc. It is fixed at 5.15 but payback is 100 per 10000 borrowed and you have to payback immediately as soon as you draw. Which I am fine with because I want to pay down debt of higher interest credit cards. My plan is keep my heloc balance as low as possible while still paying off my debt in chunks.
Sounds like you found a great program and you're putting it to good use. Congrats!
How did you process yours?
Did you use Maria Brisbane?
Great explanation here!!!
So glad it was helpful! 😊
So informative!!!!! Thank you!!!
You're welcome, Sherry!!! 😁
Thank you so much for breaking this down! Very helpful.
You're welcome, Marilyn! It is really nice to know I was able to help you!. (So thanks for commenting! 😁)
Very well explained. Thanks a lot!
You’re so welcome, Luis!
Very helpful information! Thank you Julee!
You're welcome! I'm happy you found the information helpful!
This is so comprehensive. Thanks so much! I learned ALOT!
You're so welcome, Phyllis! I'm glad you found it helpful. 😊
This was great! Thank you
You're so welcome! 😁
Thank you that was very very helpful very clear I subscribed to your channel
Thank you for subscribing! I'm pleased the video was helpful! Good luck on your search for a HELOC. 😊
Thank you for the educational information about HELOC 💐
You're welcome Tien!
Thank you for the flowers. 😍
@@workshopmortgage 👍😉
Thank you so much for the information. You were incredibly clear and thorough. Thank you!
Hi Yesi! You're welcome! I'm happy you found the video to be helpful! ☺
Awesome video! Thank you for breaking that down. This video is very helpful!
You are very welcome! It's great to hear the video was helpful to you!
Thank you so much, good and very informative.
You're welcome! I'm glad you found the information helpful!
This was an excellent video. Love your teaching style!
Thank you, so much!! I'm glad I could be helpful.
Very informed content thank you so much really helpful!!
You’re so very welcome!! 😁🙌
Thank you this is an amazing information. ❤
You're welcome, Lisa!!
You are excellent in explaining everything. Loved it.
Yay! 🎉 I'm happy you found the explanation clear. I hope it aids in your research!
This was a master class! I went back and took notes! So good!
So glad you found the video helpful! And thank you for the nice comment too! 😁
What a great explanation. You are awesome 🌟. Liked and subscribed.
Aw shucks! 😊So nice of you to say... thank you for the lovely positive feedback and for subscribing. 😁
Extremely thorough and clear explanation. THANK YOU!
You're very welcome! 😁👍
Great info!
Thank you!!! 😁
Awesome content….thanks for the portion about questions to ask when taking out a Heloc. Just subscribed!
You're welcome! I'm glad you found the "shopping list" helpful. Good luck in your HELOC search! 😁👍
Great video, thank you for sharing.
You’re welcome! I am happy you found it informative.
Great details , thanks
You're welcome!
you explain it the best of all of the videos I watched
Thank you! I'm glad you found the video helpful!
Wow! Explained very clear.
Thanks 😊 The best i heard.
You're welcome, Sharise! Glad you found it helpful!
Thank you for beautiful explanation
You’re welcome! 🥰
Thanks for explaining HELOC! Subscribed for more great information!
You're more than welcome, JP!!! I'm happy you found my channel and hope you get some more useful info from what I'm sharing. 😁
You explained it all well
Thanks for the compliment!
This was by far the best explanation of a HELOC I have viewed. You covered all of the key factors associated with a HELOC. Thank you for you clear and concise explanation.
Hi Ken! So happy you found the explanation helpful... and it was great talking with you!
This is an awesome video! You answered all my questions. Your teaching is easy to understand. Thank you!
Thank you, Martinique! That's so nice of you to say. And I'm thrilled I was able to answer all of your questions.
Good luck with your search for a great HELOC! 😁🔎
Best video on HELOCs. Thank you!
You're very welcome!!! 😁😁😁
Thank you so much! How helpful are you. It’s can be overwhelming talking to lenders.
Glad the video was helpful! 🥰 I hope you understand things better now and can make good choices as you search for the right option!
this was very helpful
Very happy I could assist in your research! 😁
Julee thank you awesome video God bless you 🙏🏻
Thank you, Ruben! You are more than welcome!
awesome explanation cheers
So pleased you found it helpful! 🍻
Absolute best video on this. Concise, organized, and EASY TO UNDERSTAND.
Thanks for the kind words, Earl! I'm really happy to know you found the video easy to follow. I hope it helps in you research. 😁
Thanks for sharing!
You’re welcome! My pleasure. 😁
Love your approach. There is a lot to take in regarding HELOC. Appreciate listed questions you provided at the end. Those are great. Thank you.
Thanks for the kind words! I'm happy you found the video and "shopping list" helpful!
Very well spoken and clearly explained. Thank you very much. Subscribe - clicked. On to watch more from your video library. Thanks a million!
Hi Kymberli! I'm so, so pleased you found the video helpful. I hope you found some of the other content useful too. 😄
BUT if you went looking for something you didn't find, let me know. I'm always looking for ideas!
hey there! Wonderful video! Super helpful! Keep doing what you’re doing! You’re far more trustworthy than a lot of these other YTers I’ve seen lately
Aw, thanks so much, Mitch! I'm happy to be part of the YT community and doing my best to offer good information! I'm happy you found this video helpful. 😊
Excellent Video! Crystal clear explanation 👌 😊. Thank you!
You're welcome! I'm glad you found it helpful! 😁👍
I am just watching your video on 5/1/24. Thank you for sooooo much for speaking plainly! Thank you also for presenting the pros and cons of each; the questions to ask are a bonus as well.
Glad it was helpful! And thanks for taking the time to offer such nice e feedback, too. 😊
I hope you can put the information to good use!
It's a good article👍
Thank you for the kind words. 😁 I’m happy you found it helpful!
Good stuff. Thank you
So happy to hear you found the information useful. You're welcome! 😁
My trusted financial gal got a Heloc arranged for me. Going to use it primarily for three remaining repairs for my condo. I'm lucky that I am able to knock out all repairs in "wall out" situations.
This info that you're sharing is invaluable. The fees such as an early termination fee are of particular concern.
I haven't signed anything yet, probably will today so I can wrap up the remaining work at the condo.
But not signing anything until I ask some pertinent questions! Thank you very much Julee Felsman!
Glad I was able to offer some helpful information, PJ! Good luck with the rest of the work on your condo!
Great video, thanks
You are ever so welcome! 😀
Wow!! This was incredibly informative and helpful! Thanks for using plain language and talking about other options, too!
Hi Stephen, You're more than welcome! I'm thrilled you found the information I shared helpful! Thank you for taking the time to comment and let me know, too. That really makes me happy! ❤😄
@julee! Great video and content. I had little to no understanding of what HELOC was. I am actually shopping around for Some Home Equity form of loan and I was undecided on whether to go for a Home Equity Loan or a HELOC. Watching your video definitely brought me clarity. Thanks, you definitely earned a new subscriber.
Awesome! it makes me really happy to know the video helped your decision-making process. 😁 And it was extra-nice of you to take a minute to write such a nice comment too!
Best of luck to you in your HELOC/HELoan shopping adventures!
Ill be definitely contacting you. Your very knowledgeable about this stuff. Great job 👏
Thank you so much! I'm happy to hear you enjoyed the video and always available as a resource. Call or message me any time: 503-799-3711 / juleef@rate.com
Excellent video straight to the point
I'm happy you found the video helpful and on point! 😁
I'm self employed and want to open up a line will I have problems with that I've heard something about a bank called figure have any advice
@workshopmortgage
@@swann5138 Figure's program is unusual in a few ways... some of which could be helpful for your circumstance. My company's HELOC program is actually based on the Figure platform. If you send me an email at juleef@rate.com, I'll reply with a few more notes!
@workshopmortgage I sent an email don't know if you had a chance to get to it
Great information
Nice to meet a fellow loan officer who cares! ❤☺
@workshopmortgage Indeed. we are needed .. keep up the great work.. Met some financial services guys tonight that want the heloc product to refer to clients thus me coming to this video to keep my knowledge in tact in reference this product.. Thanks again for what you represent to the industry..
@@loanofficerwhocares6951 Amen! hope the video was helpful. All the best to you!
Here's to doing right by and taking excellent care of all of our clients! 🤜🤛
Thanks so much. This is really helpful. I'm a novice in this area and your video is so enlightening.
You’re very welcome! I’m happy I was able to shed some light as you do your research. 😁
Thank you so much very informative 👍 😊
My pleasure! 😊
Your explanation about a “HELOC” loan is very informative and makes a lot of sense. Thank-you!…..I will be starting a HELOC real soon.😊
I'm happy you found the video helpful. Good luck with your HELOC process!
@@workshopmortgage is heloc loan and heloc credit line different.
@@Faji9r HELOC stands for "home equity line of credit"... if something is a line of credit then it works as a revolving loan, like a credit card. If it's a home equity loan (not line), then you'll have a fixed payment over a fixed term (no revolving features).
@@workshopmortgage would it be smart to get a heloc credit line to pay off my mortgage. I owe $ 129.000 and the house appraisal is $230.00
I agree 100% with the other comments here. You are FANTASTIC. Thanks for the knowledge, following and sharing! :)
Thanks so much for the positive feedback, Ada! I'm really happy the information was helpful. 😁
Best HELOC video out there. No one is even close!
Wow, thanks for the great feedback! I'm so happy you enjoyed the video, Jesus! 🙌😊
Thank you so very kindly, I feel much more confident now in how to approach and what to expect with my financial institution :>
Yay! I'm so glad you found the information helpful!
You are a very good teacher. This is the best explanation I have found so far.
Thank you so much, Ezekiel! I'm happy to hear the video was helpful to you!
This has been the most informative video so far, and I will be contacting you very very soon...Thanks
That's great to hear! I'm the video helped out and look forward to chatting if you have other questions. 😁
What a great video! Thank you for explaining everything so well. My husband and i are looking into a HELOC to help my daughter and this information helped tremendously.
I'm so happy you found the information helpful to your research!
Julee!! Thank you so much for taking the time to respond to my ask so fast! I did the calculator, is helpful. I’m just so in shocked 🤦🏻♀️ Have a Blessed day and may God and all his Angels prosper you to make a difference! 🙏💜
Aw, thanks so much Maria! 🥰
Good luck working that HELOC balance down!
I agree with all the others before me, your delivery is so clear to understand. I am a new subscriber and I don't subscribe to anyone. :-) You helped me make an important decision I was struggling with and taught me a lot. I will search out other videos you have made, maybe you can give advice on good ways to make your money work for you. You are fantastic, thank you!!
Thank you so much!!! That's a really nice compliment and I'm so, so happy that you got helpful information you could use when making your decisions. Best of luck with your HELOC adventures.
And if you ever have a question about mortgages, financing or real estate and can't find a satisfying answer, please let me know. I'm always looking for ideas for new videos. As you'll discover if you poke around my channel, I cover a lot of ground on a lot of related topics. I don't think that the YT algorithm quite knows what to do with me sometimes. 😂
Very helpful content! New subscriber here👍
You're welcome, Francisco! I'm happy you found the video was helpful. Thanks for subscribing! 😁
Very informative, I learned more from this video than 3 hours of research and talking to a banker
Great! That's awesome to hear. I'm happy I could help you make sense of things!
😁
Didn't know I might be able to write off the interest one HELOC used for home improvement. Thanks
Be sure and double-check that with a tax preparer... but I'm pretty confident they'll confirm that is the case! 😁
GREAT INFORMATION !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! GREAT VID !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Thank you so much! I'm so pleased you found the information helpful! 😀
New Sub and like others in the commentors brigade, ONE OF THE BEST and WELL Produced Videos I've seen on the subject. Thank YOU!!! My spouse and I have 2 homes that have increased in value. Her sister rents currently (no positive cash flow/mortgage only) and we reside in the other. Really looking to add some additional assets to bring in positive cashflow where I'm considering the use of the mentioned tool. Is it possible to get a singular for both properties or of the 2 secure the option that gives the most with the best offer? (also, love the Qs mentioned at the end as well)
Oh yay! So happy you found the video and got value from it. 😁 Thank you for all the kind words!!
HELOCs are all portfolio loans, so anything is possible. That said, I think it's unlikely you'll find one HELOC that can be secured to both properties, especially given that one is your home and the other is a rental.
But HELOCs are generally pretty inexpensive to set up, so the "extra" closing costs for having two, rather than one should be pretty minimal.
Sounds like maybe you're looking to use the HELOCs to buy more real estate. If so, I would love to be a sounding board and resource. I am an investor myself and really enjoy working with investor clients. My number is 503-799-3711. Feel free to text or call anytime!
thank you...just started collecting info...I'll be back
You're welcome! I will refrain from making a Terminator joke. 😂
Thanks for the knowledge. I am currently trying to help my parents remodel, and I wasn't sure which loan to go with. Also, I did not know about HELCO at all
So happy to hear I was able to help! Good luck to your folks on their remodeling adventures! 😊
Thanks for the video. You’re a great teacher and learn more this video than watching other people explain what the HELOC is. I live Southern California. Do you have any recommendations on? Where should I apply for HELOC? Appreciate the help.
You're welcome! Thank you for the nice comment. 😁
I would be happy to get you some recommendations. Text your email address to me at 503-799-3711. I have a couple of questions I want to ask you that'll help me point you in the right direction!
I really like this video thanks for the information . Ive got a question where is the best place to get a HELOC ?
Hi Hector! I am happy you found the information helpful! I would recommend starting with any credit unions to which you belong.
Before you call, figure out the "CLTV" you need. To do this, add the line amount you want to your current loan balance on your home and then divide by your home value.
Then use the questions in my video to get an understanding of their program.
Once you know what they offer you have a basis for comparison with any other banks you decide to call. Every program is different, so making a few calls to compare is the best way to find the best option.
This video was very comprehensive, which is what me and my spouse needed. Is a HELOC a good option to purchase land to build our forever home? I just hit the subscribed button.
Hi Tina! Hooray... I'm so pleased the video was what you two needed to better understand HELOCs.
And yes, if you're looking to buy land to build a forever home, a HELOC can be a low-cost way to purchase the land and hold it while you work on plans and lining up a contractor to build.
Your other option would be a land loan. Fewer lenders offer land loans and they are generally offered on shorter terms, with a full set of closing costs and require a 20-30% down payment. The rate on a land loan may be a little lower but if you plan to build in the somewhat near future, the lower closing costs to set up a HELOC will likely outweigh the the interest savings).
And of course the flexibility of an interest-minimum payment and the option to borrow the entire price (assuming you have sufficient equity), is really nice too.
Good luck with your land purchase and have fun building your dream home!
This is the best video I've seen on the subject. What happens if I were to get a HELOC in case I need to do work to my house, but then end up not needing it? Does it just sit there and I have no payments and after the draw period, does it just go away?
Hi Tyler! I'm so pleased you found the video informative. 😊
And your guess is spot-on -- if you set up a HELOC and don't use it, it will generally remain open with no balance, no payments and no interest cost through the draw term. If there is no balance on a line at the end of the draw term, it simply closes.
Many credit lines have an annual fee, so you may find yourself billed for the annual fee (typically as a charge directly to the line) one a year.
To protect your credit, I would recommend setting up an automatic payment for the minimum monthly payment on the line. It's easy to forget you have a line open if you're not using it. If you miss paying that annual fee, you could wind up with a late payment on your credit report.
Great video, what do you think of Consolidated Community Credit Union?
Hi Lisa! I don't bank with them, but I have friends who do and I've not heard anything negative about them. the only thing I've noticed about credit unions (in general) is that the minimum payment they require on a HELOC is often a percent of the line amount owing, versus interest only. I kind of like the flexibility of interest-only payments during the draw period.
@workshopmortgage I appreciate you very much. I wrote all your questions down that we should ask, and I'll do more research this weekend. Have a beautiful weekend, the weather is going to be great! 🌷🌞
@@lovelylisawarriorqueen7923 Nice! The questions are a great way to research different options. HELOCs really do vary a lot from one outlet to another.
Hope you enjoy your weekend too!
Wow thank you for this video! It was so well explained! My question is if I already have a home equity loan can I still apply for a Heloc? Thank you again.
You're welcome! 😊
You can apply for another HELOC! I don't know of any programs that will accept third lien position behind another HELOC, so you'll likely need to pay off your existing HELOC with a new one that is big enough to cover the balance you owe on the current loan plus the extra amount you hope to borrow.
Hope that makes sense, but let me know if you have any other questions!
I'm not sure what the current IRS ruling is but it was that a trailer or boat if it had sleeping, toilet and cooking facilities could qualify as a second home property and any loans would therefore be deductible. Something to check on. ~ Helpful thank you :)
I have heard the same thing! The sticking point for a HELOC is that the loan would be secured to your home, not the boat or trailer. I think that might make it trickier to claim the interest as a deduction.
But of course it’s important to check any tax related topics with a qualified professional!
Thank for the video , if two partners are named in property do we both have to apply for heloc??😊
You're welcome! 😊
And good question!
If you need both of your incomes to qualify for the HELOC then, of course, you'll both need to apply. I have seen instances where one co-owner of a home isn't needed for qualifying and prefers not to be included on the financing (or maybe something about their profile would be detrimental to the cause... poor credit, for example). In a case like this, it may be possible to have just one of you apply. The other one of you will need to sign a few papers to acknowledge that a new debt is being secured to the property you co-own (essentially give permission to use "their" home as collateral for "your" loan, if that makes sense).
But in the end, what's allowed is up to the lender. And as I mentioned in the video, these are portfolio products where each lender makes up the rules under which they are willing to lend. And state rules with regard to jointly owned property (and marital property if applicable) may play a role in the conversation as well.
That was a long winded way of saying, "maybe", wasn't it? 😆I do hope that helps a little though.
And thanks for watching and commenting!
My home was a gift paid with cash. I don’t owe anything on it. How can I get a HELOC to do improvements on my home?
Hi Bobby! Did you text me earlier? If so, I texted you back with some notes and ideas. If that wasn't you, you can email me at juleef@rate.com or text me at 503-799-3711 and I'll get back to you with ideas!
Subscribing here
Thank you for subscribing! ❤
I would love a interest rate alert monitoring please
Hi there! I can hook you up with that. Email me at juleef@rate.com and I'll get a little information from you and set up an alert that'll automatically trigger when the rate you want becomes available. 😁
Julee, thank you so much. I have a HELOC at 2.99 intro that ended this month. I paid $160 a month for one year. But I just looked and In May I have to pay $756 because rate is 9.25%🤦🏻♀️ how can I pay this off in 10 yrs?
Hi Maria! Sounds like you had an amazing deal for the first year. Your current rate is much more typical (Prime + .75%).
To stay on track to pay your loan off in 10 years, I would suggest using this website: bretwhissel.net/cgi-bin/amortize
Enter your current credit line balance in the "principal", leave "payments per year" as 12, enter your current rate (9.25%) in the "annualized interest rate" field. Change the "number of payments" to 120 (10 years). Leave "balloon payment" and "payment amount" blank. Hit "calculate".
Pay the payment you get. Redo the above any time your rate changes.
Hope that helps!
where can i find a heloc that provides 125% max cltv? is that for brokers or a credit union product?
Hi Alex! At the moment, I don't know of any HELOCs that allow more than 100% financing -- UNLESS you are applying the funds to improving your home and increasing the value. If the latter is true there are some credit union programs that allow you to finance more than your home is worth TODAY, so long as the after-improved value of your home is high enough.
Search for "renovation HELOC" and you should find some options.
Quick google search says bank can call the loan in full anytime?
HI Ivan, you should always read the documents you sign when you open a HELOC (or any other financial obligation), but from my experience, I believe most agreements will allow the creditor to close a line to draws at any point in time (as I warned in the video). However, you should still be able to continue paying on the amount you owe under the original agreement. It's just access to new money that would be hindered.
@@workshopmortgage thanks for clarifying
This was very clear and helpful info. Thanks for posting!
You're more than welcome, Christa! I'm glad you found it helpful. 😁
if we get an interest only payment, if we make extra payment on it. does it mean that he principal balance will be reduce cause we paid extra? Hope it make sense!! great video!!!
Hi Laura! Glad you found the video helpful!
And yes, if your credit line requires an interest-only minimum payment, the minimum payment will pay just interest (as you'd assume!). But if you pay anything extra, then your principal balance will be reduced.
And (better yet) because you reduced the principal balance , you also reduced the interest cost you'll pay going forward. And (as long as you're in the initial interest-only payment period) (which usually coincides with the "draw" period, your minimum payment will be reduced as well. (Lower principal balance = lower interest only payment)
Does that make sense?
@@workshopmortgage yes it make sense. Thank you for taking the time to repond.
@@laurahhobdy You're welcome... it's my pleasure!
How can I keep track of the index? Where do I find these?
Hi Janice! Check your loan documents, but your index is probably the Wall Street Journal Prime Rate. If so, you can track that here: www.wsj.com/market-data/bonds/moneyrates
Look under "International Rates" and the first rate listed is the U.S. Prime Rate.
I would love to know if using a HELOC to buy my dream vacation apartment in Italy is a good idea. I wouldn't rent it, so it's not an investment property, it's just something I have wanted for a long time. The property is less than $100,000. I have $500,000 in equity so I feel like even if the market falls or if something happens and I can't work, I could sell my current home and buy something way cheaper/smaller with cash and pay off my Italian home. I'm just nervous, but I really want my lil Italian home!
Gosh, sounds like you've got ample equity to realize your dream! And you're considering the risks. Using a HELOC means you wouldn't have to figure out Italian banking rules and get a loan there.
BUT figuring out if a purchase in Italy is a good idea, from a financial or investment standpoint, is above my pay grade!
Can you please send me options for HELOC - your recommendations?
Hi, Cynthia, sure thing! Please email me at juleef@rate.com and let me know the state in which the property you are looking to get a HELOC on is located. I’ll send back some suggestions for good places to check out.
When does a bank consider the HELOC terminated? Can I pay off the balance, and keep it at 0 until I need more $$? That is, can I keep the loan open for future use during the draw period even if I'm at a zero balance and don't use it for a while?
This is what the "draw period" is all about... you can keep a HELOC open with no balance on it and any time during the draw period (which is often, but not always, 10 years) you can draw funds any time you like. Think of your HELOC as a credit card gets cut off to new spending at a certain point in the future.
@@workshopmortgage Thanks for your quick reply! Am researching lending institutions today, so it was timely.
I needed this and still am up in the air about which way to go. My question is....if I take out 75k and only use 40k of it, what exactly do I pay back?
Hi Tito! Glad you found the information helpful.
If you set up a home equity line of credit for $75k and take a $40k draw, you would only have to make payments (and pay interest) on the $40k.
The other $35k would be available to you to draw from during the "draw period" that I talk about in the video.
Think of it like a credit card. If you have a $5k limit and you charge $2k, you only pay interest on the $2k. It's just like that... just bigger and secured to your house.
Does that help?
Can you still obtain a Heloc with a slightly low credit score or late payment charges
Possibly, but your options will be more limited and you can expect to pay a higher interest rate. Second liens are riskier for the lender, so they often apply tighter credit standards.
I would love to get that list from you of the banks/ credit unions... I will text you soon, but would love to see it.
Fabulous! You can text me at 503-799-3711. I'll keep an eye out for your message. 😁