Posted on: 12th Mar, 2009 09:57 am
I am told that the rate of interest on my line of credit goes up as the national rate goes down and vice versa, that if the national rate goes up high enough that the lump sum in my line-of-credit could dip beneath the original amount. Therefore I should invest in an annuity.
Home equity lines of credit carry a variable interest rate which operates like a credit card. Similar to a credit card, the interest rate can adjusts periodically depending upon the stability of the index to which it is linked.
Thank you for your reply to my originally inaccurate question. The question really is: when my index goes up, does my line of credit rate go proportionally up or down?--this line of credit is tied to a reverse mortgage.
Hi Helen,
Reverse mortgages come with variable rate interest. So if the index goes up, then your line of credit will also go up. It is strange that your lender told you that your line of credit goes up as the national rate goes down and vice versa. If you haven't applied for the reverse mortgage, I would suggest you to speak to some other lenders and then take the decision of getting the loan.
Reverse mortgages come with variable rate interest. So if the index goes up, then your line of credit will also go up. It is strange that your lender told you that your line of credit goes up as the national rate goes down and vice versa. If you haven't applied for the reverse mortgage, I would suggest you to speak to some other lenders and then take the decision of getting the loan.