Current Home Equity Loan Rates

Home equity loan rates are currently at an all time low. For homeowners that makes this a good time to consider taking out a home equity loan or line of credit. Borrowing money at the current rates saves homeowners money over the term of the loan, and it gives them much needed cash for other projects.

Home equity loan basics

A home equity loan is very similar to a mortgage; it is often borrowed at a fixed rate for a specified term of years. With a home equity loan, however, the money is borrowed against a property that is already owned. Homeowners frequently use home equity loans to make expensive home repairs or to make upgrades; these repairs and improvements often increase the value of the home. When interest rates are low, home equity loans allow homeowners to borrow money rather cheaply to make large purchases, to invest in a business, to consolidate debt or to make home repairs.

Home equity lines of credit

As an alternative to a home equity loan, homeowners can opt to take out a home equity line of credit. Unlike a home equity loans, the rate on a home equity credit line is variable. Although rates are currently low, the rate on a line of credit can increase over the years. The bank typically sets up a line of credit equal to or less than the value of the home, and the homeowner can borrow up to that amount as needed. These lines of credit are great for home improvements projects where homeowners are somewhat unsure of the total cost, but they do not want to borrow more than is necessary for the project. Just like a mortgage, the bank can place a lien or foreclose on property in which the loan is not repaid.

The current economy and home equity loan rates

Home equity rates are determined by the same factors used to set mortgages rates. Fortunately, in the current economy, equity loan rates are at an all time low. Lower rates mean the interest paid for money borrowed now is lower than ever before. This is good news for people taking out home equity loans. It is often possible to get an lower rate with a lender based on a credit score and history; furthermore, banks often give lower rates to customers willing to opt for direct withdrawal for the loan payments.

Home equity loans and home equity lines of credit are good ways for a homeowner to borrow money. Because this loan is secured against an existing property, these loans are relatively easy to obtain. Shop around to various lenders to compare rates, and ask many questions as there are often ways to get even lower rates than what are advertised.