| Interest rates have been steadily increasing over the | | | | November 2005, it was possible to avail of HELOC at |
| last twelve months. This reflects the upward trend of | | | | about 7 percent, up from around 5 percent a year |
| the prime rate, which is expected to go up further. The | | | | back, and that of a 30 year Fixed Rate Home Equity |
| impact of this is that people who went in for Home | | | | Loan at about 6.3 percent. The rate could also vary |
| Equity Line of Credit (HELOC) are now paying much | | | | from state to state. In the given situation, Fixed Rate |
| higher interest. They can now opt to convert to a fixed | | | | Home Equity Loan appears to be more attractive. But |
| rate Home Equity Loan on the speculation that the | | | | if you use HELOC only to meet essential requirements, |
| interest rate is likely to increase further. In fact it | | | | the amount drawn is likely to be small and the quantum |
| appears that there has been a spurt in the demand for | | | | of interest that you have to actually pay will be low. |
| this type of loan in 2005. The interest rates of | | | | This is because the un-drawn portion of HELCO |
| short-term loans are rising faster than that of long-term | | | | normally does not attract interest burden. Therefore |
| loans. The pay off period of fixed rate Home Equity | | | | the conversion from HELOC to Fixed Rate Home |
| Loans is normally 15 or 30 years. | | | | Equity Loan is likely to be more beneficial if done when |
| The advantage of converting HELOC to Fixed Rate is | | | | you are in need of large amounts.Take advantage of |
| that you liquidate the existing debt, reduce your | | | | the competition among lenders. Study different offers |
| monthly interest burden, and normally have extra cash | | | | before you decide. |
| on hand. According to reports, in the first week of | | | | |