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Wells Fargo Home Equity Loan

Wells Fargo Equity Loan – Part of the HELOC

You will not be surprised that Wells Fargo offers a lot of information and tools about Home Equity and HELOCs. Their website includes a Home Equity Calculator that helps you shop for their HELOC product.

The main difference between a HELOC and a regular Home Equity Loan is flexibility. Instead of taking one lump sum, a HELOC allows you to borrow smaller amounts of money and utilize your line of credit as you see fit. HELOCs are especially helpful when you need money over an extended period for home improvements or college expenses. You can use your line of credit for ten years and then make fixed monthly payments.

HELOCs are much more complicated than a Home Equity Loan. The HELOC comes with a lot of uncertainty. Since your loan amount and your interest rate are variable, you don’t know your monthly payments.

Loan Amount: Just like other home equity loan options, lenders calculate the amount you can borrow by using your home value, your mortgage balance, and Wells Fargo Combined Loan to Value Ratio Guidelines. Based on their calculator you can borrow up to 85% of the value of your home. For example, if your home value is $400,000 and you owe $300,000 the maximum amount of money you can borrow is $40,000.

Interest Rate: In general, similar to your credit card, a HELOC interest rate has a base rate (market rate) and a margin.

Fixed Rate Advances

Wells Fargo allows you to take all or part of your home equity line of credit as a fixed loan. Wells Fargo will enable you to take a HELOC and set part of it as a fixed rate, which allows you to set your monthly payments.

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One advantage of the Wells Fargo HELOC is that you can utilize the line of credit and then pay off part of that with a long-term fixed payment. Click here to see the Fine Print.

Choosing a fixed rate: Wells Fargo HELOC has a fixed rate option. You can take all of your initial draws as a fixed rate loan, similar to a Home Equity Loan. The repayment period is either five, ten or fifteen years. The initial rate is based on market rates and your LTV, credit score, and loan amount are crucial elements in setting the interest rate.

Here are some rates for a 15-year fixed rate payment on a HELOC fixed advanced draw, based on the Wells Fargo Home Equity Calculator on April 28, 2019:

Credit LTV Interest Rate
Excellent (760 and above) 85% 9.250%
80% 8.875%
70% 8.625%
Good (700-759) 85% 9.750%
80% 9.500%
70% 8.750%

 source: https://www.wellsfargo.com/mortgage/rates/calculator/ 

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