Every month, HSH collects the latest information on home equity line-of-credit (HELOC) products from lenders in over 70 metropolitan areas around the US. (We also survey for home equity loan "second mortgage" products.)
What's the difference? Both types of loans allow you to tap the equity in your home. The home equity loan is the traditional second mortgage: a loan in effect for a specific term, usually (but not always!) fixed rate. You're approved for X dollars, the lender gives you the check, and you get a repayment schedule.
But the HELOC works like a credit line -- its operation resembles a charge card, like Visa or MasterCard. Commonly, most lines feature an "open" or "advance" period where you can borrow money, followed by a "repayment" period where your access is closed off, and any money you still owe must be repaid. However, there are some which are truly open-ended, and like charge cards, they don't have a fixed term, but can last for as long as you own your home. And HELOCs are almost always variable-rate, tied to the Prime Rate plus some margin, with at least a lifetime `cap` on rate movements. Our listings note whether the HELOC has an "introductory" rate, and if so how long it lasts.
Ready to Order?For everything you need to know when shopping for your Home Equity Line of Credit or Home Equity Loan, order "A Homeowner's Guide to Home Equity Loans and Lines of Credit" for only $4. If you prefer, you can send a money order (no checks, please) to to HSH Associates, Dept HEQ, 237 West Parkway, Pompton Plains NJ 07444. |
The single-market sampling listed below lists just a few of the loans in one of the markets we cover. HSH typically surveys over 1,000 lenders in a given month!
Homeowners looking for a line of credit should see our Home Equity Showcase, where lenders advertise some of their most competitive home equity loans & and lines of credit.
If you're a Lender, you should also consider advertising in our Home Equity Showcases. If you need competitive retail market data, HSH's local or national Home Equity surveys are available on a one-time or a subscription basis and are typically marketed to lending institutions and other finance professionals. You can see a sample of the data contained in our competitive market report for HELOCs here. HSH also conducts a similar survey for other types of consumer loans -- including new and used auto loans.
EquityNews:
Did you know? Rates on many Home Equity Lines of Credit are now well above the rates for 30-year fixed rate first mortgages? If you don't need the flexibility a line allows, and if today's rates fit you, you might consider refinancing both your first mortgage and old HELOC into a new first mortgage.
Driven by competition and high levels of first mortgage refinancing, and despite rising interest rates, this is still a very good time to take out a Home Equity Line of Credit (HELOC). If you are considering doing so, it's more important than ever to shop around for your new line of credit.
This is especially true since it's becoming somewhat more expensive to jump from HELOC to HELOC, as most lenders now have "early termination fees" if you should close out your line of credit earlier than they prefer. Normally, it costs the borrower very little (if anything) to get into a Home Equity Line of Credit. Lenders may attempt to draw you in with a low introductory rate, may have offers of no-out-of-pocket-costs or even some form of premium. In such an arrangement, the lender absorbs the cost of originating the line, expecting that he'll recoup those costs over time as a result of the interest you'll pay. This can mean that a deal which was initially attractive to you may not turn out to be the best possible deal you could have found with just a little more digging.
However, once you've got a Home Equity Line of Credit, it's a pretty safe bet that you'll start to see or receive offers from other lenders, and you might be tempted to jump to another deal and pay off (and close) your current credit line for another one offering "better" terms.
Not so fast!
Early Termination Fees (sometimes called "prepayment penalties") may make it less attractive for you to jump ship. Out latest survey found the majority of lenders now 'catch you at the exit' with a fee which can easily be $250 or more, and is typically imposed if you should close the line completely within three years. Some lenders will charge you whatever the actual closing costs were for your line, a number that they can't easily disclose before your application has been processed.
As well, these fees may also be imposed if you should sell your home during that time, certainly a consideration if you plan on moving in the near future. As you shop around, and before you sign on the dotted line, make sure you ask about any fees if you should need or want to get out of your line early.
About the HSH survey data below:
The Lines and Loans listed below are for borrowers with excellent credit. While the lines shown are among the best offered in the market listed, there is no one 'best' line that fits every borrower. We strongly recommend that you shop the offerings in your local market, as the actual best deals for Home Equity Lines are frequently made at smaller, local institutions.
Home Equity Lines of Credit are best used for financing on-going credit needs, like college tuition, recurring medical expenses, or continuing home improvements.
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Markets shown below will change on a regular basis.
Source: HSH Associates, Financial Publishers, 237 West Parkway, Pompton Plains NJ 07444. Other cities are available. Metro Area: The region in which the lender offers the terms shown. Lender: The institution. If a credit union, you'll need to contact them for membership information and details. Phone: The lender's contact number. CLTV: Combined-Loan-to-Value ratio. The sum of the first and second mortgages against the property, expressed as a percentage of the home's value. For example, a home is worth $100,000; the first mortgage is $60,000 (60% LTV) plus a $20,000 second mortgage (20% LTV); the sum of the first mortgage plus the second mortgage is $80,000 (80% CLTV). Minimum Loan $: The minimum loan amount for the rate and term shown. Maximum Loan $: The maximum loan amount for the rate and term shown. Introductory Rate: A discounted interest rate offered to attract borrowers. A blank indicates no introductory rate for the shown line. Introductory Period: The period the discounted interest rate is in effect. A blank indicates no introductory period. Interest Rate: The interest rate being charged on the line if there is no introductory interest rate offered. Calculated as a point of reference for lines which have an introductory interest rate. Index: The name of the index used to govern rate changes. Margin: The amount added to the index value to arrive at the line's interest rate. Margins may be positive (i.e. Prime _plus_ 1%, Full Rate Today equals 9.25%) or negative (i.e. Prime _minus_ 1%, Full Rate Today = 7.25%). Max Rate %: The highest interest rate which can be charged on the line of credit. Points: A fee, expressed as a percentage of the loan amount. One point is equal to a 1% fee; a 1% fee on $20,000 would be a $200 fee. Fees: If any, costs which the borrower must pay to obtain the loan. Annual Fee: Some lenders will charge you an annually-recurring fee for making the line available. Fees can be 'conditional', changed only if you don't some or all the line over the course of the year. Advance Period: The 'advance' or 'open' period of the line is the period (expressed in years) when you can borrow and repay money as you need to. At the end of the Advance period, if any outstanding balance remains, you will enter a repayment period, where no new borrowing can take place. Some lines will need to be renewed, renegotiated or may feature a 'balloon' payment, where all the remaining balance becomes due and payable at once. Repayment Period: The repayment period, expressed in years, begins after the 'advance' period has ended. Usually, you will be required to make payments of principle and interest in order to retire the line of credit in the term listed. Early Termination (prepay) Fee: A fee levied by the lender if the loan is closed (paid off) before the term has been reached. Fees may be expressed in dollars or percentage points of the remaining outstanding balance. CLS indicates that the lender will charge all costs incurred in making the loan, including appraisals, inspections, taxes and any others which occur. Early Termination Period: The early termination fee listed will only be levied is the loan is closed during the period show. In the event of a closure after the show time, no termination fee is levied. All rate listings are Copyright © 2008 by HSH Associates. They may not be copied and/or distributed. If you are interested in displaying this feature, please contact us. Lenders:
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