How Can I Get A Home Equity Line Of Credit In California?
Home Equity Line Of Credit In California:
Many California home buyers who purchased their California homes in 2010 and thereafter purchased their California homes at the bottom of the housing market in California. Many California home buyers who purchased their California homes with 3.5% down payment FHA Loans or 5% down payment Conventional Loans have seen their homes appreciate by more than 20% plus percent. Some areas of California have homes appreciated as much as 50% depending on the county. California homeowners who have equity in their California homes can qualify for a Home Equity Line of Credit, also known as HELOC.
How Does Home Equity Line Of Credit In California Work?
A home equity line of credit, HELOC, is a second mortgage loan against your home and works much like a secured credit card. A bank issues a home equity line of credit based on the loan to value of your home. You will need equity in your home in order to qualify for a Home Equity Line of Credit. A Home Equity Line of Credit will allow you to borrow up to a certain credit limit for whatever reason. You do not need permission from the bank to tap into your home equity line of credit. Your bank will normally issue checks that you can use to draw against your Home Equity Line of Credit.
Advantages Of Home Equity Line Of Credit In California
There are many benefits in having a home equity line of credit in California against your home. Here are some benefits:
- You only pay mortgage interest only on the dollar amount drawn and not the whole line of credit. So whatever dollar amount you do not draw on, you do not pay mortgage interest.
- Low annual fees to maintain the home equity line of credit account – Normally usually less than $200 depending on the bank.
- Home Equity Line of Credit can be used to avoid paying mortgage insurance on your home if you get a 80% loan to value first mortgage and use the rest with the home equity line of credit.
- You can utilize the home equity line of credit to have your first mortgage as a conforming loan instead of a jumbo mortgage by using it to finance the amount above the conforming loan limits.
- Home Equity Line of Credit can be used as potential reserve funds in the event of major repairs needed or in the event of a financial emergency.
How Do I Qualify For A Home Equity Line of Credit In California?
Most banks and credit unions offer Home Equity Line of Credit for homeowners with equity. Most banks require mortgage loan borrowers a credit score of at least 700 FICO. Banks underwrite home equity line of credit mortgage loans the same as they would a first mortgage home loan where they will need a mortgage application, run credit, review your credit history, payment history, debt to income ratios, and order an appraisal. Depending on the bank that issues the home equity line of credit, most banks will issue a home equity line of credit up to 90% loan to value. There are banks that will go higher.
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