Ali is right that one of the variables you want to look at is the prepayment penalty terms--but that is true with all mortgage loans. Incidentally, the prepayment penalty with the WFHEA is $500 if paid off within 3 years of opening it--not a terribly big deal, but something to keep in mind.
The Advantages
1) You can take interest only fixed rate advances which can help you hedge against future interest rate hikes.
2) As you pay down the balance, you have the option of drawing back against it should you need cash for an emergency. This is available for 10 years from the start of the account.
3)There are no fees to open a Wells Fargo Home Equity Account.
The Disadvantages
1)The account can be frozen if it is determined that your credit score has weakened or your home has lost value. This is very important in a market like we have today. I cannot tell you how many people I have calling me to help them because their home equity account has been frozen by the bank. If you are counting on being able to access the cash in the future, make sure Wells is CRYSTAL CLEAR with you on why they can freeze your line. Don't fall for the sales hype of "Oh, that will never happen to you"--find out and be aware.
2) The rates available may be higher than fixed rates out in the market place. I looked over Wells Fargo's site and cannot find a formula for how they fix in interest rates. I would be interested to see what the fixed rate would be for your loan compared to a traditional 30 year fixed rate or fixed interest only loan. Even with no fees, it may still be better to go with a traditional fixed rate loan depending on the term you expect to stay in the home, and the amount of fees. There will be a point at some time in the future when you will have recouped your closing costs and everything beyond that point will save you money.
It is important to thoroughly explore your mortgage options in the marketplace when you are looking to buy a home.
