HELOC: Home Equity Line of Credit in Southern California
Leverage the equity in your home with an Arbor home equity line of credit or better known as the HELOC. HELOC is often used for home improvements, consolidating high interest credit card debt, purchasing an investment property, tuition, a safety net or any reason without refinancing. The HELOC turns your equity into buying power with a flexible and efficient way to manage your finances.
How Does the HELOC Work
Accessing Funds
You can draw money from your HELOC using checks, debit card, or online transfers.
Paying Interest
You only pay interest on the amount you borrow, not the entire credit limit. The interest rate is typically variable. This means it can change over time up or down based on market conditions and an index rate.
Repaying The Loan
A HELOC has two phases. The draw period during which you can borrow and make interest only payments, and a repayment period, during which you must pay back the principal and interest. Typically, the draw period is 10 years, during which you can borrow and pay back. The remaining 20 years after the draw period ends is to pay back your principal and interest at a variable rate. As you repay, your credit replenishes and ready for future use.
Securing the loan
The HELOC is secured by the property. Lenders have different guidelines and options available. You can qualify using tax returns, W2’s, or in some cases bank statements. The combined loan to value (CLTV) can be as high as 90% based on credit and other compensating factors.
Qualifying
Lenders usually want a credit score greater than 620, a debt to income (DTI) ratio below 45% and equity of 10% or more. HELOC rates are indexed to a base rate called the “Prime Rate”, which is the lowest credit rate lenders are willing to offer their most attractive borrowers. Lenders will add a “Margin” based on the borrower’s credit profile to the prime rate and calculate an offer.
Example: If a lender applies a margin of 1.5% to the prime rate of 8.5% that borrower’s rate will be 10%. Lenders may add a negative margin as part of an introductory rate to attract borrowers before switching to a positive margin later in the life of the loan.
Proud Member of the following Associations
Arbor Home Loans
Arbor Home Loans offers the white glove experience,
personalized mortgage solutions, customizable quotes, great rates, fast and friendly service with integrity.
Follow Us
Copyright © Arbor Home Loans 2024. All Rights Reserved.
NMLS 1206543 & DRE 02128292
Arbor Financial Group. NMLS Entity ID #236669. DRE #01845041
Licensed In: CA, FL
Copyright © Arbor Home Loans 2024. All Rights Reserved.
NMLS 1206543 & DRE 02128292
Arbor Financial Group. NMLS Entity ID #236669. DRE #01845041
Licensed In: CA, FL