federal reserve

Cut your home equity rates

If you already have a home equity line of credit, or HELOC, it will be difficult to trim borrowing costs further. Most HELOC rates are tied to the prime rate, which in turn moves in lock step with the federal funds rate. Because the federal funds rate is near zero, HELOC rates are likely at or near their lows for the foreseeable future.

For many homeowners, HELOC borrowing expenses are tax-deductible, making them an even bigger bargain right now.

Most home equity loans have fixed rates, so there isn't much you can do to lower your rate on an existing loan.

If you are shopping for a HELOC or a home equity loan, the best way to cut your rate is to improve your credit score. Lenders typically offer the best rates to borrowers with top credit scores.

Falling property values have made it much tougher to find home equity products. Homeowners who can't find a willing home equity lender may want to consider shopping for a personal line of credit.

You can compare home equity rates using Bankrate's search tool.

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