Home Equity and Line of Credit- Compare current home equity interest rates for home loans
"The line is blurring between the fixed-rate home equity loan and the variable-rate home equity line of credit.
When you borrow against your home's equity, you generally have to choose either the equity loan, which you pay off with equal monthly payments over a specified period, or the equity line of credit, which has a revolving balance like a credit card and minimum monthly payments that cover only the interest.
The last few years have seen the introduction of hybrids that carry elements of equity loans and of equity lines of credit. One of the more unusual of these is Wells Fargo's SmartFit Home Equity Account.
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SmartFit starts out as a fixed-rate home equity loan, then morphs into a variable-rate line of credit. The borrower can choose to fix the initial rate for three, five or seven years. During the fixed- rate period, the minimum monthly payments cover only the interest, although the borrower has the option of paying back some of the principal.
At the end of the fixed-rate period, the remaining balance automatically becomes a home equity line of credit, or HELOC, unless the borrower pays it off in full or converts the balance into another fixed-rate loan. The HELOC's rate adjusts whenever the prime rate changes.
If you are familiar with adjustable-rate mortgages, or ARMs, you can see that SmartFit is similar to a hybrid ARM.
A hybrid ARM has an initial fixed rate that lasts for a set number of years (usually three, five, seven or 10), then adjusts annually thereafter. A traditional ARM typically has its first rate adjustment after one year.
There's another similarity between hybrid ARMs and SmartFit: the rate structure. The initial interes"
Get the latest home equity information and quotes at MortgageSort.com.
When you borrow against your home's equity, you generally have to choose either the equity loan, which you pay off with equal monthly payments over a specified period, or the equity line of credit, which has a revolving balance like a credit card and minimum monthly payments that cover only the interest.
The last few years have seen the introduction of hybrids that carry elements of equity loans and of equity lines of credit. One of the more unusual of these is Wells Fargo's SmartFit Home Equity Account.
Site Sponsor
SmartFit starts out as a fixed-rate home equity loan, then morphs into a variable-rate line of credit. The borrower can choose to fix the initial rate for three, five or seven years. During the fixed- rate period, the minimum monthly payments cover only the interest, although the borrower has the option of paying back some of the principal.
At the end of the fixed-rate period, the remaining balance automatically becomes a home equity line of credit, or HELOC, unless the borrower pays it off in full or converts the balance into another fixed-rate loan. The HELOC's rate adjusts whenever the prime rate changes.
If you are familiar with adjustable-rate mortgages, or ARMs, you can see that SmartFit is similar to a hybrid ARM.
A hybrid ARM has an initial fixed rate that lasts for a set number of years (usually three, five, seven or 10), then adjusts annually thereafter. A traditional ARM typically has its first rate adjustment after one year.
There's another similarity between hybrid ARMs and SmartFit: the rate structure. The initial interes"
Get the latest home equity information and quotes at MortgageSort.com.
posted by Kirby P at 12:18 PM
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