Applicable Federal Rate/Line Of Credit
Let's say I offer a line of credit for $1000. I extend $500 credit now, and $500 more in 6 months. Must each advance meet the AFR in effect at the time of the advance (effectively requiring the credit line to be variable rate), or am I ok with a rate fixed at the time the line was created?
I read your post twice, but I am still trying to understand what you are saying. I think this is what you are saying. You have a home equity line for $1000. You initially drew $500, and six months later you drew additional $500. I don't know the term of your equity line, but equity line is usually adjustable based on the prime rate. It usually at prime or prime plus someting (ie prime + 1.00%). It all depends on your credit score and CLTV. It works a kind of like credit card. It does not matter when you draw the money, all they look at is balance and your current interest rate. Naturally, if the prime rate goes up, your interest goes up, and vice versa. Hope this helps.