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Things to Consider When Shopping for a Low Rate HELOC
When shopping for a home equity credit Lines, Nationwide Mortgage Loans offers good advice to consider when evaluating HELOCs and second mortgages. The Federal Reserve strongly suggests that you read the credit agreement carefully, and examine the terms and conditions of various plans, including the annual percentage rate (APR) and the costs of establishing the plan. The APR for a home equity line, like other adjustable rate mortgages (ARMs), is based on the interest rate alone and will not reflect the closing costs and other fees and charges, so you'll need to compare these costs, as well as the APRs, among lenders. Unlike home equity installment loans are usually fixed rate 2nd mortgages and home equity credit lines are generally variable-rate loans based on a publicly available index (such as the prime rate published in the Wall Street Journal or a U.S. Treasury bill rate). In addition to this, you'll also pay a fixed-rate, lender-specified margin that is typically expressed as a percentage (e.g., 2%). Interest rates for HELOC's change, mirroring fluctuations in the value of the index. So, it is also important to find out which index is used, how often the value of the index changes, and how high it has risen in the past as well as the amount of the margin.
Comparing Credit Lines
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ARM vs. Fixed Rate Calculator
How does a fixed rate 1st or 2nd mortgage compare to an adjustable rate mortgage or home equity line of credit?
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