HELOC

index Home Equity Line of Credit (HELOC) is a home mortgage loan that works much like credit cards. It allows you to borrow funds up to a certain established credit limit, usually on as needed basis. However unlike credit cards which are unsecured debts, HELOCs are collateralized against your home.

There are several benefits of a HELOC:

You pay interest only on drawn amount and not the credit limit.
Low annual fees – usually less than $100.
Can help you avoid paying private mortgage insurance (PMI).
Can help you keep the 1st mortgage under the conforming or conforming high balance limit.
Can increase your borrowing power.

Arcus Lending HELOC Program:We offer both simultaneous close and stand alone HELOCs.

Simultaneous close –We offer up to 89.9% CLTV loan on simultaneous close 2nds. Meaning, even if you have only 10% down payment (while buying a home) or only 10% equity (while refinancing), you can avoid private mortgage insurance (PMI) by taking two loans. A first mortgage for 80% and a second mortgage HELOC for 9.9%. Lets look at an example:

Purchase price – $450,000
Down Payment – $50,000

Without a simultaneous close HELOC, your only option is to get one loan for $400,000 and pay mortgage insurance since your downpayment is under 20%. But with our HELOC Loan, we can do the first loan for $360,000 and a HELOC for $40,000 thus avoiding mortgage insurance.

Such loan structure can also be used to get a lower interest rate by staying within the conforming loan limit. Lets look at another example:

Purchase Price- $900,000
Downpayment – 20% or $180,000
Loan Amount – $720,000

If you are in a county where conforming high balance limit is $625,500 you can avoid paying much higher interest rate for a jumbo loan, by getting 2 mortgages – First for $625,500 and the HELOC for $94,500.

Stand-alone HELOC – You can get a stand-alone HELOC either as a 1st mortgage (if your house is free and clear) or as a 2nd mortgage (if you have more than 10% equity in the house). You can use this money for remodeling, paying for child’s tuition fee, vacation, buying a new car, buying another home or anything else that’s important for you.