Wells
Fargo offers a revolving credit line for homeowners called Home Equity Lines of
Credit, or HELOCs. This line of credit is an open-ended, revolving loan that
allows future advances up to the approved credit limit. You can use the money
for home improvements, debt consolidation, medical expenses, investment
opportunities, starting a business, education, a new car or boat, or any other
major expense. Since Wells Fargo's Home Equity Lines of Credit are revolving
loans, you can use only the money you need when you need it, much like credit
cards.
This
credit is available at any time during your draw period with convenient access
through your Wells Fargo credit card, checking account, ATM, online banking, or
local bank. The draw period of a Home Equity Line of Credit is the amount of
time the line of credit is open, usually ten years, after which the line of
credit is closed and repayment starts. Advances taken out during this draw
period may have small monthly payments in which only minimal amounts are paid
toward the principle with the rest of the payment going to accrued interest, or
interest only payments may be made. Wells Fargo offers plans that allow
repayment of the Home Equity Line of Credit loan over a fixed period of time
after the draw period has ended. Some of these plans allow up to thirty years
repayment time.
Interest
of Wells Fargo Home Equity Lines of Credit is variable and tied to the Prime
Lending Rate, the rate in which most major banks charge their largest and most
credit worthy customers. This variable rate usually has a cap to limit how high
of an interest rate can be charged and some have limits as to how low the
interest rate can get. Variable rates are subject to quarterly adjustment though
some plans offer a fixed interest rate. The interest paid on Wells Fargo Home
Equity Lines of Credit is only paid on the funds that are used and is usually
tax deductible.
Like
Home Equity Loans, Home Equity Lines of Credit have fees that may be charged
for taking out the loan. Some plans call for one-time; up front fees while
others have annual fees. Plans that offer low monthly payments during the draw
period may require a balloon payment at the end of the loan period requiring
the entire remaining balance to be paid. Other fees can also apply such as
appraisal fee, credit check fee, and closing costs. The Federal Truth in
Lending Act protects the borrower by requiring the lender to inform the
borrower of all costs and terms when the application is given.
