heloc for down payment

Guest 0.10 Dollars($)

I want to use my heloc for down payment of another mortgage. Any advice?

blue · Posted: Fri Jan 20, 2006 12:34 pm Post subject:

Hi Rodrigs,

HELOC is an excellent option to make the payments required in a hurry for a short period of time. This is a high interest loan and should be used as a temporary financing source.

It is always advisable not to use HELOC as a long term financing source or as a down payment. You should be able to make the payment for the HELOC within a few months if you go for it.

If you are not able to pay the HELOC, there is every possibility for you to lose your home. I shall advise you for a conventional second mortgage instead.

Regards,
Blue

Guest 0.10 Dollars($)

You should consider a major disadvantage with HELOC while you go for it. It is quite exposed to risk interms of changes in interest rates.

HELOC has an instant impact with the changes in the market and is riskier than ARMs. HELOC may be extremely useful in payingoff credit cards, making home improvements or college tuitions.

Murphy

Guest 0.10 Dollars($)

Does it require the same guidelines to be followed as in mortgage while shopping for heloc?

blue · Posted: Fri Jan 20, 2006 1:04 pm Post subject:

Hi Alex,

It is always better to take careful measures while you deal on any money matters. Compared to other mortgages HELOC is much easier to shop for. The important features in HELOC do not vary from lender to lender.

The main thing where you should look for is the margin which is the amount added to the prime rate to find out the HELOC rate. This generally varies between lenders.

These two sections on use of HELOC and its difference with home equity loan may be useful topics for you to go through.

Regards,
Blue

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