Home Equity Loan

Is this home equity line of credit offer too good to be true?

The bank is offering a line of credit sale. I pay no fees, the bank is covering all closing costs, state taxes, appraisal fees and the first year annual fee. I can take out a line of credit on the equity of my house. The rate is prime minus 1/2. What is in it for them? Could there be a hidden downside for me? What do you think?

Public Comments

1. An obscene % rate after the teaser rate expires ? >
2. I got a similar offer a while ago, the hook was that you had to borrow $10,000. I didn't need the money and passed, but if you were going to borrow anyway, not a bad deal unless the rate adjusts later.
3. This sounds normal to me. They make their money on the interest and incidentally, you must have good credit becuase prime minus half is good. I don't think their costs incurred are all that much and half the time the appraiser doesn't even look inside the house. It's basically a good source of low cost credit for people with equity in their homes. (low risk for them.) I assume it's a reputable bank.
4. Yes it is too good to be true. Check with your local bank and you'll see what rates are doing these days. I work in the mortgage industry and from what I've seen lately is the market is holding somewhat steady, but prime - .50% is obscene......not gonna happen. Also, typically on a HELOC there are no appraisal fees. I've never heard of an annual fee on a HELOC either. Be careful.
5. I am sure it is a variable rate as most home equity loans are. They also have a second mortgage on your house once you take out said loan. Unless you really need the loan, I would recommend not doing it. If you were otherwise not planning on doing it, don't do it.