Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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Expand Loan Limits with Private HELOC

HELOC Lifts Loan Limits

HELOC Lifts Loan Limits

Orange County, CA – With conventional loan limits set to decrease in January, one private lender is offering a solution. We now have an investor offering a HELOC (home equity line of credit) with an extraordinary $1,250,000 limit. Since this is a 2nd loan there’s no private mortgage insurance required.

What makes this different from a home equity loan? Pretty simple: a home equity loan gives you a lump sum and demands that you take care of the money. You pay predetermined monthly payments that are always the same, and you pay interest on the whole amount.

 A HELOC essentially acts like a credit card — you take out the money as you need it, you accrue interest and make payments monthly. Any money you don’t take out doesn’t accrue interest, and you don’t have to worry about it. You pay on what you borrow. The line can remain open and available for when you need additional capital.

In both cases, the interest rate is going to be higher than it would be for a first mortgage. But it’s significantly less than you’d get for an unsecured line of credit like your average credit card.

Here’s what you need:

  1.  A credit rating of 720 or better
  2. The line of credit can only be worth 85% of the home’s total value. So you must put down at least 15% on purchases or have 15% equity on refinances.
  3. A debt-to-income ratio of 38% on the line of credit alone and 45% across all of your monthly debts.
  4. No foreclosures or bankruptcy over the last 10 years
  5. And you must occup the property. This is not available on investment properties.

What Can You Do With a HELOC?

With hme values expanding, it might take a larger loan to secrue the home you desire. Conversely, conventional loan limits will decline at the beginning of 2014. This HELOC can fill the gap between the cap on the 1st loan and the amount you actually need. How else do HELOC’s help those who are buying or refinancing? Click here to read this article.

What’s the Downside?

The downside to a HELOC is simple: if you don’t pay, your home equity becomes collateral, and the bank will put a lien on your home for the value of the unpaid debt. So essentially, as long as you’re prudent with your money, it’s less dangerous than your typical credit card. A HELOC is adjustable. It is not a fixed rate. It is tied to the Prime rate so the payment will increase and decrease alongside it.

If you’re looking to expand your loan amount without paying PMI, call us and ask us about our new high-limit HELOCs. We’d love to help!

Scott Storace

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