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home equity

How do I: Find the best home equity loan rate?

Topic: HOME EQUITY
Who is affected: HOMEOWNERSHIP
DEGREE OF DIFFICULTY: Easy
What you'll need: EQUITY IN HOME, CREDIT SCORE

What you need to know

Comparison shopping is crucial before you borrow via a home equity loan or home equity line of credit, or HELOC. Small differences in home equity product rates can translate into big differences in interest costs over the years you'll be paying it back.

Fortunately, finding the best rate on a home equity loan or HELOC is easier than you think. You can search Bankrate's massive database of home equity lenders to compare rates quickly and easily.

However, keep in mind that not all HELOCs and home equity loans are created equal. Be sure to get details on whether the loans you're comparing include potential deal breakers like balloon payments and harsh prepayment penalties.

Depending on your situation, a low rate that includes one of these two potential hazards may not be worth it.

Step-by-step
Find the best home equity loan rates in your area.
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Remember that HELOC rates are variable, meaning they can move up or down depending on the movement of a benchmark, usually the prime rate. Benchmarks can rise greatly over time, causing a sharp increase in your HELOC's rate. Before you sign up, know how much higher the rate could go, called the "ceiling."
By contrast, rates on home equity loans are fixed.

 

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Home Equity Averages
Product Rate +/- Last week
$30K HELOC
4.99% 4.99%
$30K home equity loan
6.19% 6.17%
$50K HELOC
4.55% 4.52%
$75K home equity loan
5.91% 5.93%
View rates in your area:
 

A little research could save you BIG on interest.

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Don Taylorhome equity
Is your home equity lender making unreasonable demands? It might be time to tip off regulators.
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