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A HELOC is a home equity line of credit.

This type of loan is basically a line of credit secured by a second mortgage on a property. You can borrow a much as you need as long as you do not exceed the maximum loan amount. You pay interest on the outstanding loan balance and not the entire line of credit.

A Home Equity Line of Credit is an open ended mortgage, meaning a homeowner can withdraw and repay as often as he likes, up to the available credit limit. A HELOC works much like a credit card account in that respect. It differs from a credit card account in that a credit card account is an unsecured loan, whereas a HELOC is secured by the homeowner’s property.

Usually, whenever you have a mortgage that is above 80% Loan TO Value, then the difference above 80% is usually a HELOC loan. For example, if you need 95% Loan To Value then your 1st mortgage will be at 80% Loan To Value and at a lower rate and the remaining 15% will be considered a 2nd mortgage and be a HELOC.

A HELOC (home equity line of credit) is an excellent financing tool, for some borrowers. A HELOC is essentially a line of credit secured by a mortgage or deed of trust on your home. You only pay interest on the amounts you borrow on the HELOC. If you don’t use any of the line of credit, then you don’t make any monthly payments. You can draw from the HELOC by writing checks issued to you by the lender. Usually a HELOC is considered a second lien on your property.

It’s important to be careful with HELOC’s. As any other type of credit they have a good use but one can end up spending too much with this line of credit. If you are paying off other debts such as credit cards ampersand autos it might make sense to get a standard fixed rate 2nd mortgage where you get the lump sum at closing to pay off all debts and then you pay on that mortgage along with your first until it’s paid off. You won’t have the ability to pull money whenever you think you need it. On the flip side of that, if you have income that comes in large quantities and is sporadic or not stable. This type of loan might be used as a cushion for the times in-between the checks.

A HELOC is a far superior debt device than using a credit card or financing a car/boat/ RV purchase. One of the many advantages to using a HELOC is that the interest expense is tax deductible. Essentially you are saving 25-35% on every interest dollar as it is deducted from your income when you do your year end tax preparations.

Many HELOCS today offer a credit card which can be used at your favorite stores and restaurants.

Usually the rate on the Heloc is the prime rate plus a margin.

A HELOC is traditionally based on the prime rate and a margin is added to reflect the true rate to be paid by the borrower. HELOC’s may offer a initial lower rate (Teaser rate) for a specific time period. When the defined time period has expired the rate will adjust to prime + margin.

HELOC(s) or Home Equity Line(s) of Credit are very popularly used as the “20″ in an “80-20″ or 80/20 piggyback mortgage strategy.

A Home Equity Line of Credit can also be used to purchase the property or as a first lien on the property. The HELOC can be used to payoff or consolidate debt, personal use, or just to have.

A home equity line is a revolving credit line tied to the equity in your home. Most home equity lines use the prime rate as a base for setting interest rates. For example, you hear lenders describe rates as prime + zero or prime + 1. This means the borrower will pay monthly interest according to the Prime Rate (lets use an example prime rate of 5.00%) plus a margin. In this case, prime + zero would equal an interest rate of 5.00%, or in the case of prime + one it would be 6.00%. Additionally, most home equity lines have interest only payments.

Unlimited cash out HELOC refinancing primary residence and second homes

HELOC stands for Home Equity Line of Credit.

Preferably a job where you can show W2’s and pay stubs.

Higher credit score individual’s can obtain “no-doc” HELOCS or fixed second mortgages.

Many times you can take advantage of a “no cost” HELOC or Fixed rate second. Ask your Loan Officer if this option is available to you.

If you need to borrow money, home equity lines may be one useful source of credit. Initially at least, they may provide you with large amounts of cash at relatively low interest rates. And they may provide you with certain tax advantages unavailable with other kinds of loans. (Check with your tax adviser for details.) At the same time, home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly payments. Those loans with a large final (balloon) payment may lead you to borrow more money to pay off this debt, or they may put your home in jeopardy if you cannot qualify for refinancing. And, if you sell your home, most plans require you to pay off your credit line at that time. In addition, because home equity loans give you relatively easy access to cash, you might find you borrow money more freely. Remember too, there are other ways to borrow money from a lending institution. For example, you may want to explore second mortgage installment loans. Although these plans also place an additional mortgage on your home, second mortgage money usually is loaned in a lump sum, rather than in a series of advances made available by writing checks on an account. Also, second mortgages usually have fixed interest rates and fixed payment amounts

Ask about our special low monthly payment programs for unlimited cash out and debt consolidation refinance. Pay off those high interest bills.

You still need to have a job to qualify.

Is there anything else I can do to help? I understand a cash-out refinance is a difficult decision and I want to thank you for reading the information above. If you would like to continue this conversation than please contact me so you and I can discuss your financial situation. Please read more valuable information and when you feel comfortable I would like you to contact me.

Unlimited cash out’s may also be available as a reduced or no documentation type of program.

Editors Note: Due to the mortgage and credit crunch, many loan programs have been eliminated. If you’re in need of a Denver mortgage contact us to discuss your mortgage options.

There are a wide variety of loan programs available.

One of the most popular loan options in the market today is the Pay Option adjustable rate mortgage, which is often called a flex or borrower’s choice loan. Available in 30 and 40 year amortized varieties, many of our customers who value having cash in their pockets each month have taken advantage of this innovative financing program.

For example, you have fixed rate mortgages, adjustable rate mortgages, VA mortgages, FHA loans, Reverse Mortgages, Interest-Only loans, Option Arm loans, Stated-income loans, No Ratio loans, HELOC’s, 30 year loans due in 15 years, etc. The list goes on and on. You should ask your mortgage professional which loans apply to your situation, whether you qualify, and what will save you the most money.

Adjustable (or Variable) Rate Mortgage (ARM) is a mortgage in which the Note rate can change throughout the life of the loan. The interest rate of an ARM is calculated by adding a predetermined margin to an interest market index. Some of the more common indices chosen as the underlying index are the 1-year Treasury Bill, London Interbank Offered Rate, and the 11th District Cost of Funds. Because the underlying index constantly changes to reflect market conditions, any ARM that base the their interest rates on that index would move in tandem.

Interest only options can be used on many of the other types of programs. It can be used on the fixed rate or adjustable rate programs. With the interest only option the borrower is paying only the interest and not the principle. There is usually a small fee charged to the interest rate for adding this option.

NINA loans are loans that don’t require income and assets to be disclosed or verified.

A HELOC is a home equity line-of-credit.

The traditional fixed rate mortgage is the most common type of loan programs, where monthly principal and interest payments never change during the life of the loan.

With a 15 year fixed loan, you will pay off your principle faster than with a 30 year fixed loan, even if you were only to stay in the loan for a few years.

The option arm loan is a loan that provides four payment options each month:-minimum payment-interest only-30 year amortization-15 year amortization This loan has a variable interest rate. However, the minimum payment is very low - much lower than the interest payment. The unpaid interest for each month is added to the total loan amount. This is referred to as “negative amortization”, because the amount you owe on the house will go up in time, not down. This loan can be good for short terms, such as for investors who will soon sell the property. It is also good for people whose income may change from month-to-month, and they need some flexibility.

Your home provides many tax benefits. Here are some of the benefits of being a home owner.

1. All yearly interest is tax deductible. Including any points paid for financing.
2. You can deduct the total amount of your yearly property tax bill.
3. In addition to paid interests and real estate tax being tax deductible, most of the settlement costs are also deductible. For purchase transactions, settlement charges are deductible in the year the transactions occur. For refinances, closing costs are deductible throughout the life of the loans. As always, consult a certified tax accountant before taking any such deductions.
4. Home values have sustained growth through the years. Historically there has been no better financial investment than home ownership. It is the best hedge against inflation because real estate is the world’s only commodity in absolutely limited supply. Population growth steadily increases demand, thus the increasing value of real estate over time has been constant.
5. You can also use your homes equity to your advantage by consolidating debt, purchasing big ticket items with a 2nd mortgage or HELOC at comparable interest rates, lower payments and you are able to deduct the interest from these mortgages as long as the loans do not exceed 100% of your homes value.
6. Please keep in mind though, because of the complexity of tax laws, you must always consult your individual tax advisor for the precise tax advantages of your home and it’s mortgage. Mortgage professionals can give you general guidelines but things can vary from homeowner to homeowner.
7. The tax advantages of renting - NONE! Don’t pay someone else’s mortgage payment for them every month. Contact your trusted local mortgage consultant and get pre-qualified for a home loan today.
8. In addition to tax advantages you can greatly benefit from your home’s appreciation. A general rule of thumb is about 4 - 5% per year on average. If you bought a home that is worth $100,000 then at the end of one year’s time it could be worth:1st year = $105,0002nd year = $110,2503rd year = $115,762and so on…

Editors Note: Due to the mortgage and credit crunch, many down payment programs are no longer be available. If you’re in need of a Denver mortgage contact us to discuss your mortgage options.

There are many acceptable ways to obtain some additional funds for a down payment and closing costs. First time home buyers and investors are more recently applying for 100% financing. If you have funds for a down payment and/or closing costs, this can help to reduce your interest rate.

A Secured Line of Credit such as a Home Equity Line of Credit (HELOC) can be used as a source of funds.

If down payment money is hard to raise for you and your family, talk to us about 100% financing and seller’s concessions.

If you are relocating at the request of your employer, find out if your company offers programs to assist in paying for part of the down payment and closing costs. Many large corporations have such programs as employee benefits. Even if you work for a small company that does not have such programs in place, you may still be able to negotiate for some relocation assistance.

The Genesis and Enterprise are two other programs that will help with down payment assistance. Some of the down payment programs are set up where they put a lien on your property for a certain period of time such as 5 years. As long as you own the property for this amount of time the lien will be released.

Each type of mortgage and lender has different guidelines for what are allowable sources for down payments. Consult with your mortgage broker as to what is the best place to start and how to track the funds for approval.

There are also programs available through non-profit and/or your local, state or federal government called Down Payment Assistance (DPA) programs.

Honesty is the best policy when getting a mortgage. Watch out for anyone who asks you to withhold information from the lender. Some home buyers might be tempted, for example, to fudge the facts about the source of their down-payment money. A lender will assume that the down payment comes from savings. If the money comes as a gift or a grant, that fact has to be disclosed — even if it means the borrower has to pay a higher interest rate or shell out for mortgage insurance.

Family is a great place to start. Talk to your immediate family, parents, brothers, sisters, grandparents, etc. they may be able to help you out with a Gift of funds. This Gift is not a loan, and they will often have to fill out a Gift Letter stating where the funds are coming from and how they are related to you. In some cases a bank statement from them may be required to source the funds.

Many states and cities have bond programs that provide down payments for homebuyers.

A good source for a down payment is money that people with 401k’s have already saved. Using money in a 401k for a down payment on a home, if done wisely can be just a good of an investment in their future. Real Estate normally is a low risk investment when compared to other types of investments. Homes usually appreciate over time under normal conditions. This appreciation over time can often outpace the gains made in a retirement account.

Another source for down payment assistance are grant assistance programs such as the Nehemiah program that you do not have to pay back! You can get as much as 6% down of the final contract sale towards down payment or closing costs.

A mortgage that has rights subordinate to a first mortgage or in second position.

Many current homeowners use a 2nd mortgage to pay off credit card balances. Interest rates on second mortgages are often lower than that of high interest bearing credit card accounts. Interests paid on second mortgages may also be tax deductible for some homeowners. As always, check with a Certified Public Accountant before taking such deductions.

Unfortunately, some borrowers interpret a payment-reduction consolidation second mortgage as a license to take on more non-mortgage debt. A few years later, they look to consolidate again. If their house has appreciated enough, they may be able to, but sooner or later they run out of equity.

A Second Mortgage uses your home as collateral. Your home equity is the part of your home that you actually own and this is the guarantee for your loan.

Some second mortgage loans may extend for as long as 15 or 20 years; others may require repayment in one year. You will need to discuss the repayment terms with the individual mortgage company and select one that offers terms that best suit your needs. For example, if you need to borrow $20,000 to make repairs on your home, you may not want a loan that requires you to repay the entire amount in one or two years because the monthly payments may be too high

Sometimes referred to as a Junior Loan, Second mortgages in all their varieties can be powerful tools to consolidate debts, make home improvements, or avoid paying mortgage insurance. For more information, contact one of our mortgage professionals today.

Be sure to ask if a no closing cost second mortgage is available to you!

When a borrower cannot qualify for 100% financing with their current credit score, they may be able to qualify using an 80/20 combo. The borrower actually gets two loans, one for 80% of the sales price, and the second mortgage for 20%. This allows the borrower to get into the home at 100% financing with a lower credit score than what is required for 100% one loan.

A 2nd loan, on the same property, that is in a junior lien or subordinate position.

Sometimes a second mortgage is helpful in that it allows a borrower to maximize the cash out available without having to pay private mortgage insurance on one loan with a loan amount over 80% of the home’s value.

If you would like to discuss the advantages and disadvantages of any 80/20 versus a 100% loan, please feel free to contact me. I will be more than happy to run through both scenarios for you, to see which option will benefit you the most.

Usually the 20% loan will have a higher interest rate than the 80% loan. However with the first loan only being 80% loan to value it will generally carry a better interest rate than a 100% loan. If you qualify for a 100% loan and an 80/20 chances are that the 80/20 will have a lower combined monthly payment.

Speak to your mortgage professional to see how getting a second mortgage can save you money every month on your bills.

Second Mortgages are generally available in two varieties, a Fixed Rate Second or a Home Equity Line of Credit or HELOC. A fixed rate second mortgage generally have much higher rates and are for a shorter term 15 to 25 years. A HELOC is also a shorter term but has lower rates that are adjustable and usually tied to PRIME. A HELOC works similarly to other lines of credit or credit cards. You have a total available balance and make payments on the amount of balance you owe. The repayment of a HELOC is also split into two time periods, a draw time, and a repayment time. During the draw period you can use the available equity and pay it back at will and an interest only monthly payment is due on the balance. During the repayment period the remaining balance is fully amortized and a principal and interest payment is made.

To really understand the benefits of these scenarios you will want to contact a mortgage professional and let them evaluate your current situation. You will need to express to them what your goals are for the near and long term future. These are important factors in determining what loan program is right for you.

Its important to know what’s deductible. In most cases, homeowners are able to deduct the amount of mortgage interest paid in the tax year from their income. They are also able to deduct the amount of real estate taxes paid on the property.

The advantages of both renting and buying are quite compelling and depend largely on lifestyle. Renting a home allows the occupant to move quite easily without much complication. The renter also is not responsible for property taxes, repairs on the home and hazard insurance. The renter can choose to negotiate a month to month arrangement or a lease of a set term. On the other hand, many people view home ownership the most rewarding investment they can make. The homeowner builds equity in the property in several ways. By appreciation on the property due to market conditions. By years of paying down the lien on the property. Another way is making additions and/or improvements to the home. As well as being a long term investment, the homeowner may very well also live at the residence -eliminating the need to rent a living space. Or , the residence may be a ‘rental’ property where the renter ends up paying a large portion or all of the costs associated with home ownership for the owner.

With the different varieties in today’s mortgage market, many renters are finding out that it is more financially feasible to buy. With 40-year mortgages, Interest-Only loans, and Option ARM mortgages being offered by more and more banks, and with tax laws favoring homeowners, many renters find that it costs little to no more to own a house than to rent.

The old adage is that the money you pay in rent is just making your landlord a millionaire. In the final analysis of the rent vs. buy argument, it is very hard to argue for rent in all but the most transient of circumstances. Even if you are not going to be somewhere too long, think about purchasing the property and determine whether you could rent it out at a later date for enough to cover the mortgage payment. In most cities, rents only go up over the long term, so a low rate fixed mortgage or alternatively a deferred interest product like an option ARM should keep you well ahead of the rental curve. Just remember, longer term is generally better when planning a property for rental. Also ask about balloon options.

If you are unsure of your ability to qualify to purchase a home, please contact me to discuss your unique situation.

Owning a home is and probably will always be the quintessence of the “American Dream”. Home ownership not only provides a great sense of pride and accomplishment, but can provide significant tax savings and even reduction in monthly payments depending on your interest rate and loan type. When you are deciding on whether to rent or own your home, one of the first decisions you need to make is whether buying instead of renting is the right financial decision for you. And to be fair, sometimes renting is better for some people in some circumstances. However, in most cases, for most people, owning a home, as opposed to renting, is clearly the most prudent decision.

Second mortgages and Home Equity Line of Credit’s (HELOC) are also tax deductible up to 100% of your homes value. With the HELOC you may also purchase big ticket items, use it for home improvement ampersand even consolidate your debt.

Refinancing you lower your monthly payments is the number one reason why people refinance.

When most people think of refinancing they are thinking in terms of lowering their rate of interest or their monthly payments. Even as interest rates are rising, refinancing often makes sense for many American households. Even if you have to slightly raise the rate of interest that you are paying, if you can refinance to pay off other high interest debt you will likely see a huge improvement in your monthly cash flow. It is often more beneficial to lower your overall monthly expenses, not just your mortgage payment.

Remember that the interest you pay on your mortgage is tax deductible, where as the interest on your credit cards is not. That is why a slightly higher mortgage interest rate, is not as bad as most consumers may think.

You can lower your monthly expenses by refinancing into an interest only loan. This will help you to save a good amount of money from your monthly mortgage payment alone. If you were to consolidate debt in your refinance and switch to an interest only loan this would save you a lot of money per month and truly maximize your monthly cash flow.

When analyzing the benefits of a refinance you should look at both the short term and long term financial benefits. You should consider the length of time you plan on staying in your current property, how much you will save over time, and how much you will save monthly. A good way to figure how beneficial a refinance can be if you are paying off debt is to figure how long and at what cost it will take to pay off you current debts at the payment levels you are currently making.

Revolving debt interest rates are generally much higher than mortgage rates. In today’s market many credit card companies are raising the minimum payments considerably. This causes hardship in many households. Often times refinancing and paying this type of debt off through the loan can be very beneficial.

Make sure you are certain that the end result will benefit you financially. Instead of refinancing your whole mortgage you may want to take out a second mortgage or HELOC to reduce debt payment amounts.

The Prime Rate is the interest rate charged by banks for short-term loans to their most creditworthy customers. It is also used by lenders as an index for equity lines of credit (ELOCs) in addition to other floating rate loans. Each bank sets their own Prime Rate as they see fit. The Wall Street Journal publishes the Prime Rate that is the base rate on corporate loans posted by at least 75% of the nations largest banks.

Over the last 10 years, the prime rate has averaged approximately 7%.

If Alan Greenspan and the Federal Reserve raise the short term interest rates by 25%, you will see a 25% increase in the Prime Rate.

The Prime Rate is affected by the Federal Reserve Boards actions to control inflation. The board will raise or lower what is called the discount rate which directly affects the prime rate. The discount rate is raised when their is a threat of inflation and is lowered when there is a fear of recession.

Prime Rate is not directly correlated with mortgage rates but most compensating factors are. So when there is movement in the Prime Rate you will most likely see movement in current mortgage rates.

While the Prime Rate affects Home Equity Loans and short term money, the 30 year fixed mortgage is based off of the mortgage backed security.

A rate index which is the prevailing rate that banks charge to lend money to corporations.

Unlike the Fed Funds Rate and the Discount Rate, the Federal Reserve does not set a target for the Prime Rate. Nonetheless, when the Fed raises or lowers the target for these two short term rates, Prime Rate almost always follows suit because of the change in the cost of money.

Prime rate is the interest rate which banks will charge to their best customers. Any adjustments to the prime rate are publicized in the news and are what moves the indexes in most adjustable rate mortgages, especially HELOC’s. Adjustments in the prime rate do not usually affect other types of mortgages, but the same factors that influence the prime rate also affect the interest rates of mortgage loans.

The Federal Reserve Board also know as the FED is controlled by Board of Governors which consist of seven elected officials. These individuals use many factors when determining whether to lower are raise the rates. In fact if you want to get real technical the FED doesn’t actually raise or lower rates. They control the monetary policy which in turn affects the interest rate movement up or down.

Consumers who have just been paying minimum credit card payments should prepare for an increase. The new regulations for the minimum payments are starting to be felt by many consumers. If you are having trouble making your payments you may want to consider consolidating those debts by refinancing your home.

Credit card payments have been typically between 1.5 - 2% of the balance of the credit card and now the payments are upwards to 4% of the balance of the credit card.

With the minimum payments adjusting how they are its even more reason to consolidate your debt.

Keep in mind the new bankruptcy laws that went into effect October 2005. It will be much harder to just file bankruptcy and eliminate credit card debt. Your best alternative to high credit card payments would be to consolidate them into your mortgage.

You should see a significant change in your credit score for the positive when you pay your credit cards down with a mortgage refinance.

The increase in the credit card minimum payment is generally bad news for consumers who don’t own their own homes, however for homeowners this is an excellent reason to take advantage of the power of their home’s equity and finally consolidate those high interest rate credit cards and car loans and roll them into a 30 or 40 year mortgage, spreading out the payments at a very low rate of interest by comparison, and reducing the total monthly spend for your family in the process. And you’ll be even happier when you speak to your tax professional about how much money this will allow you to potentially deduct on your tax returns!

The new regulations on the minimum credit card payments will have a dramatic affect on many credit card users. People who typically have a payment of around $150, can now expect that payment to be as high as $350.

Under the pressure of federal regulators, banks are starting to announce that they are increasing minimum monthly payments on credit card balances. Obtaining a 2nd mortgage(HELOC, 2nd Trust Deed) can be a valid option to consolidate credit card debt and comes with the added benefit of deducting mortgage interest expenses.

Credit card debts just got harder to deal with. Since the new change in minimum monthly payments went into effect consumers across the board are feeling the pinch. This is one more reason to consolidate and reduce your monthly outgo. Stop paying such high interest rates and free up your cash.

The federal government had nothing but the best of intentions in mind when requiring these new credit card minimum monthly payments. Under the old minimum payment structure, many consumer credit cards with high balances would take 25 years or more to pay off by just making the minimum payment. The amount of interest that the card holder would pay in such a scenario would be astronomical. The one thing the government didn’t fully consider is that making such larger monthly payments will prove very difficult, cash flow wise, for many Americans. If you find that making these higher credit card payments is creating cash flow difficulties for your household, speak with me to see if a debt consolidation refinance might make sense for you situation. What you want to avoid at all costs is falling behind on the credit card payments because once behind it becomes very difficult to get current. This will also lower your credit score making refinancing more difficult and expensive. You can see that it is always better to act before the situation gets out of control.

The average American household with one or more credit cards carries a balance of approx. $9500 dollars. An increase to the minimum monthly payment can impact one’s budget severely. It is wise to seek advice from a mortgage professional if this is the case.

The way things stand now aren’t a whole lot different then before. If you charge your credit card and make the minimum payments its just like taking a 20 year loan.

Interest rates on mortgages are much lower than those on credit cards. The interest on mortgages is also tax deductible which means you save even more when comparing to the interest on credit cards.

Also if you choose to consolidate your bills you typically will have a savings each month and sometimes you can save hundreds of dollars. Now if you take this amount or even a portion of the savings and apply it to the principle of your new loan you can pay that loan down much faster. One extra payment per year can shave almost 10 years off of a 30 year mortgage.

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