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How To Manage Your HELOC Loan With Rising Rates?

Most HELOC loans (home equity line of credit) are indexed to the bank prime loan rate. When the prime rate changes, the rate on your HELOC will change also.

When prime increases 100 basis points (one full percent) the home equity line of credit borrower pays more in interest costs.

If you make monthly payments according to a fixed schedule, the rise in rates also means less of each payment goes towards reducing principal. So it will take longer to pay off the loan balance.

How to manage your HELOC loan?

One possibility is 0% Balance Transfer Offers. If you have good credit and are careful, transferring some or all of your HELOC debt to a 0% credit card can be a workable strategy.

You can ride the 0% offer until it expires. You can pay off the balance with a HELOC check (effectively transferring the balance back to the HELOC). However, there are limitations.

Be careful with this. It can be complicated. We recommend that you consult with a qualified Realtor or tax specialist in your area or jurisdiction.

Posted by Harrison K. Long, Explore Properties Group, May 21, 2008

Labels: Home Mortgage Rates, Lending, Mortgage financing

Posted by Harrison K. Long - Realtor & Broker on 05/22/2008 12:58 AM

Comments (1)

home loans, lending, mortgage financing

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1 Comments on How To Manage Your HELOC Loan With Rising Rates?

Good advice for the creditworthy, and maybe even those that are perhaps not so creditworthy but seek, or must have, alternative forms of financing to abate the extremeties of the prime rate. Unsecured debt can also become a contemporary tragedy for some if they aren't apprised of the choices to render a sound application of the mathematical advantages. The 0% interest card might have applicable, essential advantages in other areas and once that advantage is exhausted other resources are sought to remedy and manage debt appropriately. In the US, the prime rate runs approximately 300 basis points or 3 percentage points above the federal funds rate.

05/22/2008 01:16 AM

by David Saks - Real Estate Broker (The Real Estate Mart of Tennessee, Inc.)

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