A loan officer should answer these questions for you. It all depends on your loan/equity ratio and your FICO score. I’ve not heard of a balloon HELOC.
HELOCs are higher now than first mortgages, so the trend in the last months has been for people to refinance, instead of taking out HELOCs, according to Frank Nothaft from Freddie Mac. They do this even though the new mortgage rate was higher than the previous rate for more than half the borrowers. I think the HELOC rate is around 9-11%. Maybe someone on this forum has one, and can tell you.
Even a reverse mortgage must be over 7%. How could you invest for more than 7% return, guaranteed?
Also be careful about borrowing against your home, which is losing value, to buy something which could also lose value. Margin loans are making a comeback, which is by some considered a sign of a top. UBS AG’s Wealth Management said that 75% of its $10 billion in securities-based loan are used for non-securities purchases such as real estate, cars, and paying taxes. Once again, people are borrowing against their equities. As stocks plummet, margin calls will hurt some investors. The big rise in hedge funds causes news and price changes to settle within hours instead of months. So when the market turns down, I think it will set off a wave of selling.
