HELOC Mortgage Loan Programs
A Home Equity Line of Credit (HELOC) mortgage loan is a type of loan that allows borrowers to access their home's equity as a line of credit.
HELOC Mortgage Loan Highlights
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Property types allowed: HELOC mortgage loan programs typically allow borrowers to use their primary residence as collateral. However, some programs may allow borrowers to use a second home or investment property as collateral as well.
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Maximum Loan-to-Value (LTV) ratio: HELOC mortgage loan programs typically have a maximum CLTV ratio of 80-95%, depending on the program guidelines. This means that borrowers can borrow up to 80-95% of the home's value, minus any outstanding mortgage balance.
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Interest rates: HELOC mortgage loan programs often have variable interest rates, which means that the interest rate can fluctuate over time. The interest rate is typically tied to a benchmark rate, such as the prime rate, plus a margin.
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Repayment terms: HELOC mortgage loan programs usually have a draw period, during which borrowers can access the line of credit and make interest-only payments, typically for the first 10 years of the loan. After the draw period ends, borrowers must start repaying the principal and interest on the loan, usually over a 10-20 year repayment period.
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Fees: HELOC mortgage loan programs may have fees, such as an application fee, origination fee, and annual fee. It's important for borrowers to understand the fees associated with the loan before applying.
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Credit score requirements: HELOC mortgage loan programs typically require a good credit score, but can go as low as 600 or higher. Underwriters will also look at the borrower's debt-to-income ratio and other factors to determine eligibility.
In summary, borrowers should understand the property types allowed, maximum LTV ratio, interest rates, repayment terms, fees, and credit score requirements before considering a HELOC mortgage loan program. It's important to shop around and compare offers from different lenders to find the best deal.
