In this ever changing real estate market, I decided to have a look at a California HELOC (home equity line of credit). I had the tuition for my son’s college coming up next semester and I wanted a way to be able to take care of the tuition as it rolled around, without having to get a second mortgage. It was an eye opening experience as I researched everything I would need to be an informed California HELOC consumer.
The California HELOC was right for me
What I found is that a HELOC is the perfect loan vehicle for what I was trying to accomplish. If I had taken a second mortgage on my house, I would have received all of the funds in a lump sum! I would also have to start repaying the loan right away. Well, given how my boy’s interests seem to change with the wind, I was loathe to take out all thi money just to have it sitting around in a bank. Suppose after two years of college, he decided to go count grass beetles on some far away island? Yikes!
The HELOC is perfect because unlike other California home loans, I could take out the money from the credit line as I needed it during a ten year draw period. And, I only had to pay the interest on what I had actually borrowed!
Some things to know about a California HELOC
While the California HELOC I opted for was just right for my needs, there are some things to keep in mind if you are considering this type of loan. The interest is variable, so that means that my monthly payment rises and falls with the prime lending rate. If the prime rate goes through the roof then so do my payments. Something else to think about is that when the repayment period arrives you can always consider refinancing your California HELOC into a standard fixed rate second mortgage.