When Should I Refinance My Home Equity Line of Credit?
by admin ~ May 14th, 2010.Dear Smart Home Equity: We currently have home equity credit line with an interest rate prime plus 1.5 %. The equity line payment is small because it’s interest only, but I’m concerned that the rate will start rising and I might not qualify for an equity loan refinance, because I’m self-employed. I may be doing some home remodeling. Do you recommend another home equity line? What do you anticipate home equity rates will go up to and can I still get a stated income home equity loan if I wanted to refinance the HELOC now?
– Michael Sanchez
Thanks for your interest Michael in Smart Home Equity
As reported in the Wall Street Journal, the prime interest rate is at 3% above the targeted federal funds rate. Currently the targeted federal funds rate between 0 and 0.25% the prime rate is 3.25%. We know the prime rate for home equity credit lines are not going to drop any more. Most mortgage insiders believe that the Federal Reserve is in no hurry to raise the targeted federal funds rate. If you are planning some home improvement projects, Ask your lender if they offer a No Cost Home Equity Credit Lines
You are wise to watch the home equity rates, because your credit line has an adjustable interest rates that will only get higher. As far as qualifying for a no income documentation home equity loan that might be a problem. There is nothing wrong with being self-employed, but most lenders will want you to document your income. To my knowledge, the stated income and no income home equity loans have not been available since last year when the “credit crunch” devoured the financial markets last year. You might have more luck qualifying for a mortgage refinance that pays off your home equity loan. There are still a few limited documentation refinance loans from a few lenders. Your credit scores will need to be good and you need to be below 95% loan to value to qualify. –Smart Home Equity
