Current Home Equity Loan Rates and HELOC Rates

APR. Annual Percentage Rate, or APR, is a figure that reflects both the interest rate and lender costs for a loan.  You can use the APR to more easily compare loan terms for a home equity loan and HELOC. When you are evaluating a HELOC it is important to use the after introductory period ARP because this figure is most comparable to the APR for a home equity loan.

Minimum Initial Draw.  This loan term applies to HELOCs and is the minimum loan you are required to have outstanding at closing.  If you want financing flexibility in the future but do not need a significant amount of proceeds in the near term then you should look for a HELOC with a lower minimum initial draw. Please note that because the interest rate for a HELOC increases after the introductory period, you should be prepared to make a monthly payment based on your initial draw amount and the higher rate.

Introductory Period Rate.  While most home equity loans have a fixed rate that applies for the entire loan term, HELOCs usually have an introductory rate that is good for one month to a year.  This rate is also known as a teaser rate because it is significantly lower than the rate you pay when the introductory period expires. Your HELOC loan payment is usually lowest during the introductory period but increases when you are required to pay the higher rate, depending on your outstanding loan balance.

After Introductory Period Rate.  For a HELOC, the after introductory period rate is the interest rate you pay when the introductory period ends, so this is the rate you pay for most of the line.  This interest rate may be fixed or adjustable but either way, it is higher than your introductory rate. If you have a HELOC with an adjustable rate then your interest rate and payment are subject to change and potentially increase over the course of the loan.  Although you can manage your payment by paying down your HELOC, this is an important factor to keep in mind.

Loan Length. The length of your loan is another input to consider.  Home equity loans and HELOCs usually range from ten to thirty years with most being ten or twenty years. Loan length impacts your interest rates, monthly payment and other loan terms as shorter-term loans usually have lower rates.

Ask About Discounts. Some lenders offer discounts on home equity loans and HELOC rates or fees if you open up a bank account or set up automatic payments with the lender. When you are shopping for a home equity loan or HELOC be sure to inquire about potential discounts as this can save you money on your loan.