Do you have a home equity line of credit, otherwise known as a HELOC? Last week some of the big five changed their lending guidelines on how we calculate the payments on these when applying for a mortgage.
The best way is to show you what changed is with an example:
HELOC balance $10,000, limit of $200,000
Actual payment $37/mo (balance at interest only, prime + 0.50%)
Old qualifying payment $60/mo (balance at benchmark rate 5.34% over 25 years)
NEW qualifying payment $1,202/mo (LIMIT at benchmark rate 5.34% over 25 years)
Yes, that is TWENTY times higher than the old qualifying payment.
If you have an existing HELOC and have applied for a new mortgage where this may impact you contact your mortgage broker right away. Not all the lenders have changed their lending guidelines and some may not. If you are not already working with a mortgage broker, I highly recommend you do because you need choice of lenders when these things happen overnight and you see your mortgage approval decrease by hundreds of thousands of dollars.
If you have any questions, want your existing pre-approval reviewed or the wording of what to ask your bank email or call me today! Refer yourself or one person you know for the chance to win $2,500 in cash, more details here.