Quote:
Originally Posted by Rob
This is insane, I just got an email from my bank I use for checking and this was their latest "offer" for a HELOC
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All HELOCs are variable rates, as the usage of the line is usually for ten years--it is impossible to charge a fixed rate under 10.000% to hedge against future draws on the line.
The interest rate they are marketing probably includes an initial teaser rate, at Prime Rate, or even below Prime, for the first year or two, and after that period the index will remain Prime, but the margin, the amount added to Prime to get the actual rate, will increase.
I see these daily, if you want a HELOC, a good rate would be Prime and no higher than Prime plus 1.00%.
Today, Prime is 6.250%, BUT remember, every HELOC I have seen in 30+ years has no annual rate increase limitations, it can go up 5.00% in a given year, AND most HELOCs are capped at 18.000% rate, seen very few lower than that.