One of the more common and easiest methods for accessing the equity of your home is
a home equity line of credit. A HELOC is a credit line with a maximum loan
amount based on the value of the home. It has advantages over other types of
mortgage programs; one of them is a no-closing-cost option. In addition,
borrowers need pay only on what they actually borrow against the line of credit,
either an interest-only payment or fully amortized, if desired.On completion of the draw period (10 to 15 years), whatever
principal balance is owed then gets paid off on a fully amortized basis. A HELOC
typically has an interest rate based on the prime-lending rate. The rate is not
fixed; it will adjust up or down with the prime rate. If that is a concern, you
should investigate the alternatives of a fixed-rate equity loan or a
conventional fixed-rate mortgage program. If using these last two types of mortgages, the borrower pays
on the full initial loan amount and, particularly in the case of a conventional
mortgage, pays closing costs. Whatever approach you take, some sort of seasonal
rental of the residence could defray the loan and upkeep costs. Mike Gross, vice president, Centennial Mortgage, Kingston,
N.Y.
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