Home Equity Lines of Credit and Second Mortgages
Current State Availability
Connecticut only at this time.
Current Prime Rate
7.750%
Summary
Residential Finance Network offers the most competitively priced home equity line programs available for borrowers with good credit and at least 20% equity in their homes. We also offer home equity lines for borrowers needing to take cash out of their homes using up to 100% of the equity in their homes. Home equity lines can also be used in conjunction with first mortgage purchases and refinances to eliminate the need for mortgage insurance. Finally, programs are available for borrowers with credit difficulties from our B/C Credit Center.
Premier Home Equity Line Products
The premier home equity line products require credit scores of at least 640 to borrower up to 80% of the value of your home and at least 660 to borrow up to 90% of the value of your home. The better a borrower's credit score, the higher the loan amount that a borrower will be permitted to borrow. These programs are available for owner occupied one- and two- family homes up to 90% of the value of the house and for second homes and 3-4 family homes up to 80% of the value of the house.
There are no points, no fees, no closing costs and no pre-payment penalties on our premier home equity line products. Borrowers simply complete an application, obtain an approval, then attend a closing where they receive a check book to start using their home equity line. All premier home equity line products are adjustable rate loans based on the prime rate. All programs provide for interest only payments over the first ten years with any balance after 10 years converting to a 20 year fully amortizing loan.
Loan amounts can be as low as $7,500 and as high as $500,000. For borrowers who take out $40,000 or more at closing (with a credit line of $40,000 or more), the interest rate will be set a prime for life. For borrowers not taking out $40,000 at closing the following rates apply:
Line Amount Intro Period Intro Rate Thereafter $7,500 thru $25,000 NA NA Prime + 1.95% $25,001 thru $74,999 6 month Prime - 2.50% Prime + 1.00% $75,000 thru $500,000 6 month Prime - 2.50% Prime + 0.95% As is evident from the chart, borrowers should consider requesting a higher credit line (if they have sufficient equity and income) to take advantage of lower rates even if they are not planning on using the total.
Finally, for borrowers taking out a home equity line of credit simultaneously with a first mortgage from certain institutions, the lifetime rate can actually be reduced to prime + 0.75%. This would be the rate for borrowers utilizing an 80-10-10 program to eliminate the need for mortgage insurance.
High Loan-to-Value Loan Products
Borrowers can now take out up to 100% of the value of their home as a home equity line. For example, a borrower with a home worth $100,000 and a first mortgage of $70,000 can take out up to $30,000 on their home. While there are some products that allow borrowers to take out up to 125% of the value of their homes, we do not offer that product at this time and highly recommend anyone considering this product move carefully with that type of program.
The primary drawback to borrowing over 90% of the value of your home is that the interest rates are higher. Depending on a borrower's credit score and whether or not closing costs are financed or not, the fully indexed rate on these loans ranges from 11.00% to 13.00%. As a result, these programs make sense for borrowers paying off higher rate credit cards because they can decrease their rate and probably make the interest tax deductible.
For a review of your particular situation, complete a short application and request a pre-approval for a home equity line, or contact us with the details of what you are trying to accomplish. We can then suggest the best option for your needs.
Second Mortgages
Residential Finance Network also offers straight second mortgages that carry a fixed rate and are for a specific loan amount. We have found, however, that these programs are not nearly as popular as the home equity lines because most of these programs carry short repayment terms of 2 to 15 years and do not offer the flexibility of home equity lines. Contact us for a quote if you do have an interest in this type of product.
Second Mortgages for Borrowers with Credit Problems
Second mortgages are available to borrowers with credit problems, but these loans carry higher interest rates, come with closing costs and usually do not allow borrowers to use as much equity in their home as the A credit products. Borrowers can almost always borrow up to 80% of the value of their homes with these products and sometimes can go up to 85% or 90%. We recommend these products only when there is an urgent need for cash or to consolidate debt and it does not make financial sense to refinance the first mortgage at the same time (for example, if a borrower has a very low rate first mortgage).
For further details on these products, visit our B/C Credit Center.
Apply Today
If you have a need for a home equity line or second mortgage, complete a loan application today. We look forward to meeting your home financing needs.
