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Helpful Questions to Ask When Inquiring About a Home Equity Advertisement
Often an advertisement for a Home Equity Loan or Line promotes an appealing low rate (APR). However, you should know that there are typically many conditions that must be met to get this rate. When calculating the APR, lenders may assume that the customer will set up automatic payments, have a checking or savings account with them, have a minimum loan amount, etc.
To help you figure out the "real" offer, we have put together the following list of questions. Use them as a guide when calling a lender to inquire about a home equity offer that appears in an advertisement.
- Do all customers qualify for this rate?
Lenders may advertise rates that only the highest FICO customers (those individuals with the very best credit history) would receive. The APR being advertised may not apply to you.
- Does this APR apply to all states?
Sometimes advertisements for specific rates only apply to specific areas - even within a state. Be sure to confirm that the offer applies to your zip code.
- Does this offer assume a discount for automatic payment?
Lenders prefer that customers have their loan payments automatically deducted from a checking or savings account. This discount is typically .25%. And, most lenders require that the payment come from an account with them.
- Does this offer assume a discount for existing customers?
Lenders also offer a discount (again typically .25%) for customers who already have an account (checking, savings, etc.) with them. Some lenders also may require a specific balance in this account.
- Is there an annual fee? Is there an annual fee after the first year?
Some lines of credit may be advertised as having no annual fee. Check to see if that means just the first year or for the life of the loan.
- Am I required to take out a minimum amount of money when I receive my Home Equity Line of Credit?
Some lenders require that you use (write a check for a portion of you line) a portion of your Line of Credit immediately. This is often referred to as a "minimum draw."
- Is there a required minimum loan or line amount?
Often the best rates are reserved for lines and loans of $100,000 or more. Lenders can advertise rates that only apply to loans or lines of a specified amount or higher. Be sure to confirm that this rate applies to the amount you are seeking.
