The Income Adjustable Home Equity Line of Credit or IA-HELOC provides consumers with the flexible credit they need during difficult financial times. The IA-HELOC works like this. For an additional fee that typically ranges between 1-2% of the loan, the lender makes the credit limit and interest rate adjustable based on your annual income. For example, if you qualify for a $100,000 line of credit based on your home equity and income of $100,000 per year, your IA-HELOC terms might be a $100,000 limit and interest rate of 5%. If your income rises to $125,000 the next year, your IA-HELOC automatically adjusts. In this case the credit limit drops to $75,000 and the interest rate drops to 4%. If your income falls in any given year, the opposite occurs. For example if you lost your job half way through the year and your annual income dropped to $50,000 the IA-HELOC adjusts to increase your line of credit to $150,000. This gives you access to extra cash when you truly need it. The only downside is that your interest rate will typically rise to around 6-7% under this scenario.
If you are interested in learning more about the Income Adjustable Home Equity Line of Credit please contact one of our loan representatives. Under new financial regulations the approval process and waiting period will be longer and more complicated than before. Customers applying for a IA-HELOC can expect to have their credit reviewed, will need a to have home inspection and appraisal from an independent and licensed real estate appraiser, and will need to provide three years’ worth of financial information including tax returns and bank statements. Once approved your Adjustable Home Equity Line of Credit lender will provide you with a check book and debit card that you can access for your credit needs. This loan is especially well-suited for self-employed and commissioned individuals.