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The rate fluctuates up and down with the prime rate (usually prime + 1%). The risks for the bank are the same risk with any type of loan. The difference here i
by brightball 7y ago
The rate fluctuates up and down with the prime rate (usually prime + 1%).
The risks for the bank are the same risk with any type of loan. The difference here is that it’s secured against the home. I believe the max limit on it is 80% of the equity that you have in the home. Applying for an increase is the same as applying for an entirely new loan.
Just think about how many things can happen over a 15-30 year mortgage.
- SilasX 7y agoRight, I get that lots can change over the course of a regular mortgage, but that's usually accounted for by the down payment/LTV. Plus, they have already committed all the capital for it and it's a known quantity. For a LOC, it's just the option to draw, and anything from 0 to 100% of those dollars could be exercised at any time, when it may be harder for them to raise capital. Plus, I've heard stories -- albeit from the UK -- of HELOC exercise being denied once their employment/income change.