Home Equity Loan Lowest Rate

When a homeowner decides that they want to use the equity they have acquired in their property as collateral for a home loan, they naturally also want to locate the lowest home equity home loan rate. There are multiple resources to look at for home equity loans. Many lenders are now online and there still are the normal channels nearby at banks, credit unions and mortgage companies.

Before contacting any loan agent about loan rates, the homeowner should look on the Internet to find out what the current loan rates are for mortgages, refinance loans and home equity line of credit (HELOC) loans. Home equity loans are very popular financial tools. They are somewhat easier to get than unsecured loans because the value in the property is used as collateral for the loan. Should the borrower become unable to make their loan payments, a lien is placed on the house for that amount. If the home goes into foreclosure and is sold, the first mortgage is paid off first. Any second mortgages or home equity loans are repaid after the first, if there is enough money.

Because of those factors, the interest rates for HELCO loans are higher than rates for first mortgages, but not by much today. First mortgages can be found averaging around a low rate of 4.625%; HELOC loans come in around 4.5% to 8.5%. Obtaining the lowest home equity loan is important to the homeowner because they will be better able to make lower payments.

With good to excellent credit scores, the homeowner is in a good position to find the home equity loan lowest rate and get that loan. Credit unions are highly recommended as a choice for finding HELOC loans. They are membership and customer service oriented and may be a little more flexible in the approval process. Banks and mortgage companies are additional good resources to look at for low cost home equity loans.

If the homeowner is able to repay any loan in a short period of time, they may want to get an ARM (adjustable rate mortgage) home equity loan that has an even lower interest rate. Some ads offer 3.25% loans, but the buyer needs to beware and read all associated stipulations for those loans. Some low interest loans have extremely high application fees, monthly fees, late fees and high penalty fees that can wipe out any low interest advantages. Shorter term home equity loans do carry lower interest rates.

The problem with the ARM loans is that the interest rate is variable and bound to change over time. With such low rates today, those variables will result in increasing rates in the future. Some homeowners with home equity ARMs become unable to pay monthly mortgage payments after their variable interest rates rose dramatically. Payments were doubled or more for some people.

Use caution with borrowing against the equity value in your home. Each loan puts that home at risk of loss in the event that personal economic circumstances take a downturn. Use home equity credit wisely and accomoplish what you want to do with low interest home equity loan rates.