HOME EQUITY LINE OF CREDIT. WHAT YOU NEED TO KNOW

Home equity line of credit. The good the bad and the ugly. So home equity line of credit is exactly what it states. It’s a line of credit against the equity in your home. The good is that for 10 years you have that money at your disposal whenever you need, so why not have that option available just incase for the rainy days. So for those ten years you get to pay back and or pull out if you need just like a credit card but at a lower interest rate than that of a credit card.  The bad- you get a line of credit that's way more than most credit cards have available and some people use more than they need, for instance if you have a HELOC for 500k to get better initial rate, usually called a teaser rate you get let's say about 100k initial draw (which is the mandatory amount that you would have to initially take out) you use it. Then you think to yourself i have another 400k at my dispose so the kids need a new toy, the wife needs a new car and a couple of vacations later you're at 250k. The ugly- now what happens when the 10 years comes to an end? Well it goes to an adjustable rate 2nd mortgage. Now since rates are increasing and you have so much in equity this might come to a shock for some that went a little overboard. What to do if you went a little overboard? Well you have a few choices but all at a cost. You can ride out the adjustable and hopefully you didn't accrue that much debt to pay if off and do it quickly. Second if you can refinance but you'll need to be strategic in your refinance. Look into all options like 5/1 arms 7/1 arms or 10/1 arms. Now you might be asking yourself why is this guy telling me to do the same thing that got me into this headache to begin with? Well the reason is that you already gotten into a bad spot so put some stability on your mortgage for a bit a hope (and this is a big hope) that rates go down so you can refinance one more time to get yourself and keep yourself into a more stable financial position. As a lender and real estate company our responsibility is to always make sure everyone does not get in over there head because the last option is the worst and i hate this one. Short sale and foreclosures!!!!! Sometimes it gets to this and short selling your house is way better option than foreclosing. Now we specialize in all these categories and have programs to try and help save your house and if we can't then at least salvage your credit. Please note that we will always recommend talking to an attorney for any legal help since we are only a lending and real estate company and cannot give any legal advice. ​