There are a growing number of banks moving away from home-equity loans that are now offering a fixed-rate option on a home equity line of credit (HELOC). Some lenders are not providing the HELOC as an alternative to both a fixed-rate home equity loan and drawing funds against a line of credit while paying a variable interest rate. A HELOC would let borrowers reduce uncertainty by being able to tell their lender that they want all or part of the amount that they borrowed to be converted to a fixed-rate loan at the market’s current interest rate. The borrower would then pay back that amount over a set number of years and would be able to keep borrowing so long as they have funds remaining in their credit line. People should speak with a professional estate planner to find out if a HELOC fixed-rate option might be right for them.
See Amy Fontinelle, How a HELOC Fixed-Rate Option Works, Investopedia, November 11, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
