This information is valid only for lines of credit applications submitted to Personal Bankers at Wells Fargo Bank branches, by phone or online. Rates subject to change and vary by Wells Fargo Bank market area. $165 interest-only monthly payment is based on 6.615% variable Annual Percentage Rate (APR) as of January 6, 2010, for a credit amount of $30,000, 70% maximum combined loan-to-value and secured by an owner-occupied residence in California, assumes excellent borrower credit history, and includes a 0.375% discount for a Wells Fargo® PMA® Package and a 0.125% limited-time bonus relationship APR discount, which is valid on applications submitted between January 2, 2010, and March 19, 2010. . Automatic payment required for relationship discount(s) and limited-time bonus relationship discount.
Interest only loans/lines provide for the payment of interest for a set period of time and payments of principal and interest for the remainder of the loan term. During the interest only period, principal is not reduced. At the end of this period, your monthly payment will increase, possibly substantially, even if you have a fixed interest rate because you will be required to pay down the outstanding principal. Always consider paying more than the minimum payment to pay down the principal. Because these product features do not require you to make principal payments during the interest only period, you may have a higher Annual Percentage Rate or interest rate than a traditional mortgage product, depending on the specific loan details.
2 The Annual Percentage Rate (APR) is variable and based on the highest Prime Rate published each day in The Wall Street Journal Money Rates Table (the "Index"), plus a margin. The Index as of December 17, 2008 is 3.25%. As of January 6, 2010 current margins for lines of credit of $10,000 to $30,000 ($500,000 maximum amount) secured by owner-occupied properties with 70% combined loan-to-value range from 7.115% to 3.365% resulting in corresponding variable APRs ranging from 10.365% to 6.615%. Minimum APR is 4.24%; maximum APR is 18%. APR does not include costs. Your APR will be based on the specific characteristics of your credit transaction, including evaluation of credit history, CLTV, property type, amount of credit, term and geographic location. Accounts are subject to a $75 annual fee which is waived for the first year and thereafter with an average daily balance of $20,000 or greater for twelve consecutive months previous to the annual fee assessment date and a $500 prepayment fee may apply if account is closed within three years from account opening. There is no annual fee or prepayment fee for accounts secured by Texas homestead properties. Opening fees may be paid to Wells Fargo, its affiliates or third parties and range from $19 to $9,000 depending on the property type, the state in which the property is located and the amount of credit extended and include applicable state or local mortgage taxes. This Account has a Draw Period of 10 years plus 1 month, after which you will be required to repay any amounts borrowed within a 15- or 30-year term, depending upon your account balance.
Approval subject to credit underwriting guidelines. Home equity loan and lines of credit are available through Wells Fargo Home Equity Group, a division of Wells Fargo Bank N.A. Deposit and loan products, including PMA Prime Checking account, offered by Wells Fargo Bank, N.A. Member FDIC
22 Ocak 2010 Cuma
Home Equity Conversion Mortgages
The FHA's home equity conversion mortgage program (HECM) is designed to let older homeowners convert equity into cash without selling their homes. HECM loans are a type of reverse mortgage, and are made by banks, credit unions, and other typical mortgage lenders.
A home equity conversion loan (HECM) allows homeowners to convert a portion of their home equity into cash that's paid back to them by the mortgage company. As long as they live in the home, they don't have to repay the conversion mortgage. As a result, the HECM offers the opportunity to spend equity without selling or moving.
To be eligible for the HECM, a homeowner must be at least 62 years old and agree to receive free mortgage counseling from a HUD-approved agency. Conversion mortgage borrowers also have to either own their home free and clear, or have a low outstanding mortgage balance that can be paid off from funds provided by the home equity conversion.
Receiving home equity funds:
Homeowners can elect to receive home equity conversion payments several different ways:
* Regular monthly cash advances for a specific number of years
* Regular monthly cash advances for life
* A line of credit withdrawn in increments, or in lump sum payments until the credit is exhausted
* A combination of the various payment plans outlined above
HECM withdrawals against equity are calculated by the owner's age, the current rate of interest, and the value of the home. The older an owner is, the more valuable his property. As a result, the interest rate will be lower, and he'll generally receive more money in exchange for his home equity conversion. Eligible properties must be a principal residence that meets FHA standards. If the home needs repairs to come up to those guidelines, the repairs can be financed by the home equity conversion mortgage.
Repayment of a conversion loan
A home equity conversion mortgage need not be repaid until the borrower moves, sells, or dies. But the borrower retains ownership of the home, and has the right to sell it and move if he wants to. In the event that he sells, he's entitled to keep any sales proceeds that exceed the outstanding mortgage balance. At the same time, a borrower can't be forced to sell his home to pay off the mortgage, even if the balance is more than the value of the property.
HECMs and insurance
A mortgage insurance premium paid by the borrower helps protect lenders from losses; therefore, they can make HECM loans with less risk and at more affordable rates. Both lender and borrower enjoy special protections. FHA insurance will cover any balance that's owed; in the event that a lender fails to pay what's promised to the homeowner, the FHA will step in and pay. The conversion mortgage insurance premium, as well as other closing costs, can be paid with proceeds from the HECM loan, so the borrower won't incur significant out-of-pocket expenses.
A home equity conversion loan (HECM) allows homeowners to convert a portion of their home equity into cash that's paid back to them by the mortgage company. As long as they live in the home, they don't have to repay the conversion mortgage. As a result, the HECM offers the opportunity to spend equity without selling or moving.
To be eligible for the HECM, a homeowner must be at least 62 years old and agree to receive free mortgage counseling from a HUD-approved agency. Conversion mortgage borrowers also have to either own their home free and clear, or have a low outstanding mortgage balance that can be paid off from funds provided by the home equity conversion.
Receiving home equity funds:
Homeowners can elect to receive home equity conversion payments several different ways:
* Regular monthly cash advances for a specific number of years
* Regular monthly cash advances for life
* A line of credit withdrawn in increments, or in lump sum payments until the credit is exhausted
* A combination of the various payment plans outlined above
HECM withdrawals against equity are calculated by the owner's age, the current rate of interest, and the value of the home. The older an owner is, the more valuable his property. As a result, the interest rate will be lower, and he'll generally receive more money in exchange for his home equity conversion. Eligible properties must be a principal residence that meets FHA standards. If the home needs repairs to come up to those guidelines, the repairs can be financed by the home equity conversion mortgage.
Repayment of a conversion loan
A home equity conversion mortgage need not be repaid until the borrower moves, sells, or dies. But the borrower retains ownership of the home, and has the right to sell it and move if he wants to. In the event that he sells, he's entitled to keep any sales proceeds that exceed the outstanding mortgage balance. At the same time, a borrower can't be forced to sell his home to pay off the mortgage, even if the balance is more than the value of the property.
HECMs and insurance
A mortgage insurance premium paid by the borrower helps protect lenders from losses; therefore, they can make HECM loans with less risk and at more affordable rates. Both lender and borrower enjoy special protections. FHA insurance will cover any balance that's owed; in the event that a lender fails to pay what's promised to the homeowner, the FHA will step in and pay. The conversion mortgage insurance premium, as well as other closing costs, can be paid with proceeds from the HECM loan, so the borrower won't incur significant out-of-pocket expenses.
Home Equity Loans
A home equity loan allows you as a homeowner to get a loan by using the equity in your home as collateral. The equity consists of whatever funds you have invested in your property in order to own it or improve it.
Since it is a debt against your own property, which you are in actual possession of, a home equity loan is a secured debt. The property can be required to be sold if the creditor wants the money back that you have borrowed.
A home equity loan can be obtained in a lump sum or used as a revolving home equity line of credit.
A home equity loan can be either of the following:
* A fixed rate mortgage
* An adjustable rate mortgage
A homeowner who requires more money in large amounts usually applies for a home equity loan. Some expenses that make a home equity loan useful are:
* Debt consolidation
* Home repairs
* Medical bills
* College tuition for family members
Is home equity loan tax deductable?
In most cases, the answer is yes, but before trying this it's good practice to always consult a tax advisor whilst being aware of the fact, tax deduction is not an unlimited feature.
Tax benefits of home equity loans
Since it is a debt against your own property, which you are in actual possession of, a home equity loan is a secured debt. The property can be required to be sold if the creditor wants the money back that you have borrowed.
A home equity loan can be obtained in a lump sum or used as a revolving home equity line of credit.
A home equity loan can be either of the following:
* A fixed rate mortgage
* An adjustable rate mortgage
A homeowner who requires more money in large amounts usually applies for a home equity loan. Some expenses that make a home equity loan useful are:
* Debt consolidation
* Home repairs
* Medical bills
* College tuition for family members
Is home equity loan tax deductable?
In most cases, the answer is yes, but before trying this it's good practice to always consult a tax advisor whilst being aware of the fact, tax deduction is not an unlimited feature.
Tax benefits of home equity loans
Should You Tap the Equity in Your Home?
Food, clothing and shelter are life's basic necessities, but only shelter can be leveraged for cash. Despite the risk involved, it is easy to be tempted into using home equity to splurge on expensive luxuries. To avoid the pitfalls of reloading, conduct a careful review of your financial situation before you borrow against your home. Make sure that you understand the terms of the loan and have the means to make the payments without compromising other bills and comfortably repay the debt on or before its due date.
Recognizing Pitfalls
The main pitfall associated with home-equity loans is that they sometimes seem to be an easy solution for a borrower who may have fallen into a perpetual cycle of spending, borrowing, spending and sinking deeper into debt. Unfortunately, this scenario is so common the lenders have a term for it: reloading, which is basically the habit of taking a loan in order to pay off existing debt and free up additional credit, which the borrower then uses to make additional purchases.
Reloading leads to a spiraling cycle of debt that often convinces borrowers to turn to home-equity loans offering an amount worth 125% of the equity in the borrower's house. This type of loan often comes with higher fees because, as the borrower has taken out more money than the house is worth, the loan is not secured by collateral. Furthermore, the interest paid on the portion of the loan that is above the value of the home is not tax deductible.
If you are contemplating a loan that is worth more than your home, it might be time for a reality check. Were you unable to live within your means when you owed only 100% of the value of your home? If so, it will likely be unrealistic to expect that you'll be better off when you increase your debt by 25%, plus interest and fees. This could become a slippery slope to bankruptcy.
Another pitfall may arise when homeowners take out a home-equity loan to finance home improvements. While remodeling the kitchen or bathroom generally adds value to a house, improvements such as a swimming pool may be worth more in the eyes of the homeowner than the market determining the resale value. If you're going into debt to make cosmetic changes to your house, try to determine whether the changes add enough value to cover their costs.
Paying for a child's college education is another popular reason for taking out home-equity loans. If, however, the borrowers are nearing retirement, they do need to determine how the loan may affect their ability to accomplish their goals. It may be wise for near-retirement borrowers to seek out other options with their children.
Reloading leads to a spiraling cycle of debt that often convinces borrowers to turn to home-equity loans offering an amount worth 125% of the equity in the borrower's house. This type of loan often comes with higher fees because, as the borrower has taken out more money than the house is worth, the loan is not secured by collateral. Furthermore, the interest paid on the portion of the loan that is above the value of the home is not tax deductible.
If you are contemplating a loan that is worth more than your home, it might be time for a reality check. Were you unable to live within your means when you owed only 100% of the value of your home? If so, it will likely be unrealistic to expect that you'll be better off when you increase your debt by 25%, plus interest and fees. This could become a slippery slope to bankruptcy.
Another pitfall may arise when homeowners take out a home-equity loan to finance home improvements. While remodeling the kitchen or bathroom generally adds value to a house, improvements such as a swimming pool may be worth more in the eyes of the homeowner than the market determining the resale value. If you're going into debt to make cosmetic changes to your house, try to determine whether the changes add enough value to cover their costs.
Paying for a child's college education is another popular reason for taking out home-equity loans. If, however, the borrowers are nearing retirement, they do need to determine how the loan may affect their ability to accomplish their goals. It may be wise for near-retirement borrowers to seek out other options with their children.
The Right Way to Use a Home-Equity Loan
Home-equity loans can be valuable tools for responsible borrowers. If you have a steady, reliable source of income and know that you will be able to repay the loan, its low interest rate and tax deductibility of paid interest makes it a sensible alternative. Fixed-rate home-equity loans can help cover the cost of a single, large purchase, such a new roof on your home or an unexpected medical bill. And the HELOC provides a convenient way to cover short-term, recurring costs, such as the quarterly tuition for a four-year degree at a college.
Benefits for Lenders
Home-equity loans are a dream come true for a lender, who, after earning interest and fees on the borrower's initial mortgage, earns even more interest and fees. If the borrower defaults, the lender gets to keep all the money earned on the initial mortgage and all the money earned on the home-equity loan; plus the lender gets to repossess the property, sell it again and restart the cycle with the next borrower. From a business-model perspective, it's tough to think of a more attractive arrangement.
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