It is about HOME EQUITY LINE OF CREDIT.?

Question

Hello,

I plan to open an HOME EQUITY LINE OF CREDIT. One bank said " I can't have it like home mortgage: Fixed rate in 10 years, and monthly payment spread out over 120 months." The other bank said their bank can do that.

Does it depend on bank policy? Or one bank was not telling the truth to lure me doing business with them?

Thank you very much for your help.

Answer 1

One thing you need to ensure is for the bank providing you their disclosures on Home equity products.  I'm a banker and dealt with app on home equity on daily basis.

There are 2 different HE products.  One is HE line of credit where the rate fluctuates based on prime rate + margin.  Right now prime is low ranging 5% +.  IF you take out 50 k on line of credit, you can borrow all the funds or take out as little like 20k and leave the rest of the funds at later time.  The funds are not disburse all at once as to home equity loan, it's fixed rate and you get all the funds after 3 days or recission period.

It all depends on the banks guidelines regarding on Home equity prooducts.  It is like another mortgage and can make payments up to 15-20 years, the lien is placed on the home and the mortgage on home does not need to be paid to include on loan or line of credit.

Be very careful on applying, make sure that there are no hidden fees, u know how much the closing costs.