Unlike the Annual Percentage Rate (APR) calculation for closed-end transactions, the APR for HELOCs "does not include costs other than interest." Accordingly, the HELOC APR does not include finance charges that would typically be included in the APR calculation for closed-end transactions.
For fixed-rate HELOCs, the APR is a set value and the initial disclosures must show a recent rate imposed under the plan. For variable-rate HELOCs, the disclosures must state how the APR is determined. Commonly, the APR is equal to an index that is adjusted at a regular interval plus a margin.
In DocMagic's Generic HELOC packages, the index is based on the Prime Rate as published in the Wall Street Journal, and the APR change date occurs on the first day of the billing cycle. The margin may be a custom value that is entered by the user. The APR equals the index plus the margin. Also, it is possible to have initial discounted rates. For additional information about DocMagic's generic HELOC plans, go
here.
Reg. Z 226.5b(d)(6) and (d)(12)-ii
Reg. Z 226.5b(d)(6)
Reg. Z 226.5b(d)(12)-iv
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