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


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.

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