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Home Equity Line of Credit (HELOC) Explained – Terms

Home Equity Lines of Credit (H.E.L.O.C.s) are popular once again b/c borrowers now have more equity in their homes and b/c HELOCs are the “10” in our “80/10/10” financing. 80/10/10 financing allows borrowers to only put 10% down and avoid PMI with an 80% first mortgage, and a 10% HELOC/2nd mortgage.

Our HELOCs have the following terms in most cases:

Combined Loan to Value Ratio: 89.99%

Rate: Prime + 1.99%, or 5.24% (Prime is currently at 3.25%)

Payment: Interest Only for 10 years

Draw Period: 10 Years (borrowers use the HELOC like a credit card)

Repay Period: 20 Years (HELOCs must be repaid over 20 years after the 10 year draw period)

Life Cap: 18%

Fees: Minimal (call us for details)

Housing payments with 80/10/10 financing are much lower than housing payments with 90% LTV financing and PMI, in most cases. HELOC rates are not fixed, however. They are tied to Prime Rate and can climb significantly.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646