Question:

What is a 100% home equity line of credit (HELOC)?

Answer:

A 100% home equity line of credit (HELOC) is a home equity loan that allows you to borrow 100% of the market value of your house if you are a borrower with good credit. Generally, in case your home has a first mortgage on it, you could borrow 100% of your home's value minus the first mortgage. Nevertheless, there are lenders doing over-equity loans that can go to, say, 125% of real estate value. Some states, such as Texas, will not allow an equity loan exceeding 80% of property value. HELOCs are often referred to as second mortgages and most often amortize within shorter period compared to first mortgages.

Closed-End and Open-End Home Equity Line of Credit (HELOC)

A 100% home equity line of credit can be taken as closed-end or open-end loan.

With a closed-end HELOC you will receive one big lump sum of money, get fixed rates and amortization period of, say, 15 years. A HELOC can be structured to a shorter term (and even a balloon payment), as well.

An open-end 100% HELOC will be a revolving credit of 100% of property value, with fluctuating rate, usually expected to amortize in 30 years. Interest-only monthly payment is possible with that type of HELOC.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
Link:
Why: Because FHA loans are insured by the US Federal Government they have very competitive interest rates and are easier to qualify.
Link:
Why: Know and protect your credit report and score.
Link: See All 3 National Credit Scores & 3 Reports Instantly, Online & Free
Why: Find your next home and save money.
Link: Search thousands of foreclosures. Free 7-day trial.
Link this QnA Print del.icio.us Digg
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
 Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA:

Common misspellings: mortage and morgage