Mortgage / Equity

Equity
Home Equity
Mortgage
Fixed Rate Home Equity Line of Credit

When you take out an equity line of credit on your home you’ll want a fixed rate home quity of line of credit.

The reason you’ll want this line of credit is that the interest rate on the line of credit will always stay the same. With a fixed rate home equity line of credit the lender can’t raise the interest rate and increase the amount of the payments at some point in the future. This means will be easier to pay off the line of credit and the costs won’t increase in the future.

Always ask for a fixed rate when you take out a line of equity of credit on your home. These lines of credit will cost less and be easier to pay off in the long run.

Fixed Rate vs. Adjustable Rate

The interest rate to avoid on a home equity line of credit is an adjustable rate. With an adjustable rate the lender has the right to raise the interest rate at some time. A raise in the interest rate can lead to higher payments.

Instead you’ll want a fixed rate in which the interest rate is locked in as long as you have the line of credit. That means you’ll pay the same interest rate regardless of what the market does. This means the lender can’t use rising interest rates as an excuse to raise your interest rate.

With adjustable rates the cost of a home equity line of credit can quickly become unmanageable. A fixed interest rate can help you keep costs under control.

How to Get a Fixed Rate Home Equity Line of Credit

The way to get a fixed rate home equity line of credit is to ask for one when you apply for a line of home equity credit. Many lenders will try to give you an adjustable interest rate on your line of credit because it is a much better deal for them. Ask for the fixed rate and make it clear that you’ll take your business to another lender if you don’t get what you want.

Some lenders will also try to talk you into getting an adjustable rate by promising you a really low interest rate to begin with. Don’t listen to them this is a sales pitch designed to get you to sign up for an adjustable rate product. In many cases the lender will raise the interest rate after a few months or years and increase your costs.

Always ask for a fixed rate on a home equity line of credit. Never let a lender talk you into getting a line of credit with an adjustable rate, even if it sounds like a good deal.

Shop Around for Home Equity Lines of Credit

The way to find a fixed rate home equity line of credit with a good interest rate is to shop around for it. Go online and type the words home equity lines of credit into a search engine. This should give you a list of lenders that offer such products.

Once you have a list of lenders visit each lender’s website and compare the products that they offer. You should look for a line of credit with the fixed interest rate possible. This is usually the cheapest home equity line of credit that you can get.