If rates go up much more it won't make as much sense for originators to use a 20% LTV HELOC as a piggyback solution for a 100% LTV loan. I'm hearing this a lot lately from private mortgage insurance companies who have their fingers crossed that rates will rise a bit more and make MI a more attractive solution for borrowers who don't have large downpayments.
National Mortgage News reported in its Daily Briefing today that the average rate for five-year Treasury-indexed hybrid adjustable-rate mortgages was up from 6.23% to 6.32%, so maybe that day is coming.
In the meantime, lenders are pushing HELOCs hard, juggling terms and teaser rates to get borrowers' attention, whether or not the homeowner plans to use the financing option to buy a new home.
Over the past couple of years, we've seen a number of doc prep companies working to make HELOC documentation simpler for lenders to customize. In today's Compliance Wizard newsletter, Document Systems Inc. announced access to 8 generic HELOC programs through its DocMagic software. A wide range of terms and fees can be customized at no additional charge. Changes are generally made to DSI loan programs the same day.
The functionality is bound to be attractive to companies interested in easily making changes to HELOC programs for marketing purposes.
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