Low Rate Home Equity Loan

Low rate home equity loans are a desirable financial product available to homeowners who owe less than the value of their home. Home ownership has always been an excellent investment and nothing says peace of mind than having that home paid off. However, due to the extremely high prices on real estate, few people own their homes outright. Mortgages stretch out to 30 years in length, which makes home ownership possible and, at the same time, the increasing amount of equity in the home becomes an asset that can be leveraged when needed.

To get a low rate home equity loan, borrowers should have “good” to “excellent” credit scores and credit records with no adverse entries. FICO (Fair Isaac Corporation) scores are good when they fall between 660 and 749; they are excellent between 750 and 850. These creditworthy people will benefit from receiving the lowest interest rates for home equity loans.

If your credit scores are below 660, there are things you can do over a few months to bring your scores up higher. First and foremost, do not apply for any new credit or loans. Each inquiry by a lender will lower your score a few points. Wait until you are ready to make a final decision about which lender to use for your loan product.

Secondly, do not close any credit accounts. Pay them off or down to at least 30% of the available limit. If you can talk a creditor into giving you a higher amount, it may help. It also may require that they put in an inquiry to your credit history, which would be a negative. The goal is to have a low percentage of available credit used up. Do not close accounts that you have held for a long time because one factor in setting interest rates is the length of time the borrower has held credit accounts.

Find additional income to lower your debt to income ratio. Keep working in the same industry. If you need to make a job change, try to stay in the same career. The best equity home loan low rate will go to persons with stable employment. This generally means having the same job for at least two years.

Pay bills when you receive them to help lower interest charges monthly by a little bit. Since interest is usually charged for the length of time you have amounts outstanding, paying the bill right away will help reduce any balance you are charged interest on.

Do a bit of research for the best loan opportunities in the market. Check with credit unions; they are known to have lower rates. Ask about lower rates at your current lender or banking institution. Your banker should have good ideas for obtaining lower interest rates.

Using the equity value in your home will allow you to obtain a low rate home equity loan. It is an asset that can help you better manage your financial affairs. Good financial habits result in great opportunities.