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Home Equity Financing for Buying Additional Property

Did you know you may use the available equity in your current home toward a down payment, or for a cash purchase of a second home or investment property? A home equity line of credit from Wells Fargo makes it possible.

Features

With home equity financing you can:
  • Pay interest only on the funds you access.
  • Access your variable-rate line of credit for a draw period of 10 years plus one month, without reapplying.2
  • Make additional principal payments to pay down your line of credit balance at any time without penalty, as long as your account remains open.
  • Use your Enhanced Access® Visa® credit card, access checks, Wells Fargo Online® Banking, or your ATM card to access funds.3

Benefits

  • Flexible payment options: You can decide whether to stay with a variable-interest rate or convert to a fixed-interest rate without refinancing.1,2
  • Payment choice: Select a fixed-rate advance option with payment terms from 1 to 20 years or choose the variable-rate option.1
  • Closing cost options: Choose the closing cost option that meets your needs.
  • Potential tax benefits: Unlike personal loans or credit cards, the interest on your home equity financing may be tax deductible.4
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Payments on a home equity account may be lower than you think.

 

Considerations

  • If you choose a variable interest rate for your line of credit balance, your monthly payments may increase or decrease as interest rates fluctuate. You can convert any or all of your outstanding variable-rate line of credit balance to a fixed-rate advance with a term of 1 to 20 years.1,2
  • At the end of the fixed-rate advance (FRA) term, any unpaid FRA balance is converted to a line of credit and charged the variable rate in effect on the home equity line of credit at that time. Unless you’ve reduced your balance, the variable interest rate may significantly change your monthly payment.
  • The home equity account is linked to your current home instead of the home you are buying.
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Closing Cost Option

 
Most home equity financing offers two options:
Have us pay your closing costs:
  • You pay a higher interest rate to cover all required third party costs
  • This option is not available for lot loans or financing greater than $500,000

Pay your closing costs:
  • You pay a lower interest rate
  • Pay with your loan proceeds, line of credit, or a check

For details, please call 1-888-421-4672
 
 
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Amortized Payments

 
Gradual elimination of a debt, such as a mortgage, in regular payments of principal and interest, over a specified period of time.
 
 
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Variable Interest Rate

 
An interest rate that may fluctuate or change periodically, often in relation to an index, such as the prime rate or other criteria. Payments may increase or decrease accordingly.
 
 
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Principal and Interest (P&I)

 
These are two of the main components of your monthly payment on a mortgage or home equity loan. The principal portion of your payment reduces your loan amount. The interest portion is your cost for the use of the principal for that month. If your mortgage loan payments also include property taxes and homeowner's insurance (and mortgage insurance, if applicable), the monthly payment amount is referred to as PITI.
 
 
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Principal Balance

 
The amount borrowed or remaining unpaid.
 
 
 
1 There is no limit on the maximum amount of a fixed rate advance taken at origination (up to your credit limit). The minimum fixed rate advance amount is $10,000. After account opening, additional fixed rate advances may not exceed $250,000 of the aggregate principal balance, or your credit limit, whichever is less. You may request up to 2 fixed rate advances each year with up to 3 fixed rate advances at one time. Fixed rate advances have a term of 1 to 20 years, depending on the amount advanced; except that for Texas homestead secured accounts, the term is 1 to10 years.
2
The home equity line of credit Annual Percentage Rate (APR) is variable and is based on the highest Prime Rate published each day in The Wall Street Journal Money Rates Table (the "Index"), plus a margin. The index as of the last change date of December 17, 2008, is 3.25%. As of April 11, 2014, current margins for lines of credit from $20,000; maximum $500,000 secured by owner-occupied properties with 70% combined loan-to-value range from 3.750% to 0.375% resulting in corresponding variable APRs ranging from 7.000% to 3.625%. For larger loan amounts, please contact us. Minimum APR is 1.00%; maximum APR is 18%. APR does not include costs. Your APR will be based on the specific characteristics of your credit transaction, including evaluation of credit history, CLTV, property type, amount of credit, term and geographic location. There is a $75 annual fee which is waived for the first year. If provided for in your original contract, the fee will be waived thereafter if you maintain a minimum average daily balance of $20,000 or more for twelve consecutive months previous to the annual fee assessment date. The prepayment penalty fee will be $400 for lines of credit $20,000 or greater. Opening fees may be paid to Wells Fargo, its affiliates or third parties and range from $19 to $9,000 depending on the property type, the state in which the property is located and the amount of credit extended and include applicable state or local mortgage taxes. This Account has a Draw Period of 10 years plus 1 month, after which you will be required to repay any amounts within a 15- or 20-year term, depending upon your account balance. Hazard and, if applicable, flood insurance required.
3 Access checks not available in Texas. ATM card access and the Enhanced Access Visa credit card are not available in Connecticut, New York, or Texas.
4 Consult your tax advisor regarding deductibility of interest.
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