Tom Davis (pictured top), chief sales officer at Deephaven Mortgage, said the first reason brokers should pitch HELOCs is the speed at which they can be closed.
“What’s nice about the HELOC is speed,” Davis told Mortgage Professional America. “If it’s a W-2 borrower, it’s very simple. You could get things closed pretty quickly. Bank statement borrowers are going to take a little bit longer, because you have to look at the bank statement to calculate the income. At a local bank or credit union, some of those guys are taking 45 to 60 days for people to get access to capital.”
Protecting low-rate mortgages
Everybody in the mortgage world has been waiting for a surge in refinances. While it’s possible that rates could drop enough later in the year for that to happen, Davis believes that rates are going to have to drop significantly to get that started, and he doesn’t see that in the immediate future.
“I don’t see rates coming down materially,” Davis said. “I think rates will potentially come down marginally. I think this will be an area where you’ll see major HELOC growth over the next year. I think there are still many originators who haven’t embraced it because they’ve never sold an equity loan in the last 10 years.
“This is a generational opportunity, because 85% of Americans have rates under 5%. It would be financial suicide to refinance if someone had a $400,000 mortgage at 3% and needed $50,000 to consolidate or put on a new roof. If they call their accountant or CPA, they would tell them to protect that 3% $400,000 mortgage. Don’t pay it off.”
