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Home Equity Line of Credit Interest Rate

The way to reduce the costs of borrowing money is to get the lowest home equity line of credit interest rate that you can find.

A home equity line of credit or HELOC is one of the cheapest sources of financing available to the average person and one of the easiest to get. A line of credit is an agreement between a lender and a borrower to make a certain amount of credit available for the borrower’s use. A home equity line of credit is secured by the equity or excess value in a home.

The reason HELOCs are a good deal is the home equity line of credit interest rate is one of the lowest interest rates you’ll pay. This combined with the fact that you only borrow the amount of money you need when you get a HELOC. Unlike a loan, an equity line of credit gives you the flexibility to take out the money you want.

Another advantage to HELOC is that it remains available as long as you want it. This means that it’s there in the future for repairs and other unplanned expenses.

Locking the Best Home Equity Line of Credit Interest Rate

The way to lock in the best home equity line of credit interest rate is to wait until interest rates are low and get a HELOC with a fixed interest rate. A fixed interest rate stays the same as long as you have the line of credit. This means that you will be able to borrow money at the same rate against your home for years to come.

Getting a low interest HELOC with a fixed rate can save you thousands of dollars in interest on future borrowing. It will also keep the lender from raising your interest rate in the future when interest rates go up.

Those homeowners who lock in the best interest rates will save money. They will also be able to use their home as a source of credit in the future.

How Home Equity Line of Credit Rates are Determined

Your home equity line of credit interest rate is based upon three factors: the amount you want to borrower, your credit rating and your geographic location. The credit rating is by far the most import of these three factors.

Most lenders will base the interest rate on your credit score. Those with a good or excellent credit rating will pay a lower interest rate. Those with a bad or poor credit score will pay a higher interest rate.

This means that you should try to raise your credit score before you apply for a HELOC with a fixed interest rate. Adding just a few points to your credit score can save you money on your interest rate and let you borrow more.

Get the Best Home Equity Line of Credit Rate

The way to get the best home equity line of credit rate is to shop around for one. There are many websites that let you compare home equity line of credit rates including Lending Tree and Bankrate.com

Going to these websites and using the calculator features located there can help you save hundreds or thousands of dollars on HELOC interest. Paying close attention to the home equity line of credit offers will enable you to save money.