|
|
| *Loan,banking and credit>>>credit line |
What is the difference between Prime and Home Equity :Line of Credit? |
What is the difference between Prime and Home Equity :Line of Credit? Prime refers to the prime rate, which Home Equity lines are based on. The current prime rate is 8.25%. If you see a "Prime Rate Home Equity Line", this simply means you are getting the equity line at the prime rate, with zero margin. Most Home Equity lines carry a margin that is added to the prime rate. This sum is your interest rate. So if you have a margin of 2.000, and prime is 8.25, your interest rate is 10.25%. Some banks even offer Prime minus 1% for the first few months of the loan term. This is called a teaser rate, as it's a low start rate that won't be around forever. Source(s): Educate yourself at http://www.thetruthaboutmortgage.com... Prime usually deals with the interest rate of a loan (lowest rate that bank offers). Home Equity is the difference between what your home is worth and what you owe against the house. A line of credit is a type of loan that allows you to use the equity in your home as collateral for the loan. Prime is the rate charged by banks to their preferred customers. A line of credit is an arrangement with a financial institution that allows the borrower to borrow and pay back funds using the equity of their home as collateral in the instance of non-payment. Typically, the rate is adjustable. As a mortgage lender I can try to guess what you are asking. Home Equity Lines (HELOC) have rates that are at, below or above prime rate (8.25% now) and adjust up or down (up, up, up for a couple years) whenever prime rate goes up. This loan is like a credit card. Use it, pay it down, use it, etc. Like credit cards, when you go over 50% or over 75% of the credit limit, your scores will drop. Your alternative is a Home Equity LOAN. The rate starts a little higher, but the rate is fixed. This loan is a single lump of money with fixed payments. Either loan will cause your scores to drop some--temporarily--when they hit your credit reports. you might like www.LearnAboutCredit.com |
| Tags |
| credit application credit bureau credit check credit counseling credit debt credit line credit repair credit report credit score credit card online bad credit loan |
SiteMap--Copyright/IP Policy--Contact Webmaster For personal non-commercial use only. |