Current Home Equity Loan Rates and HELOC Rates
Review current home equity loan rates and HELOC rates for December 11, 2018. The lender table below enables you to shop home equity loan and HELOC interest rates and fees for leading lenders in your area. The table enables you to compare both financing options side-by-side so you can understand the difference in pricing for home equity loans and HELOCs.
Home equity loans usually have a fixed interest rate for a certain number of years while HELOCs usually have a low starting interest rate that increases after six months or a year. The loan amount for a home equity loan is fixed while you can drawdown and repay a HELOC an unlimited number of times.
The table enables you to compare the monthly payment for home equity loans and HELOCs and review important loan terms such as the length of any introductory period, the interest rate after the introductory period and the required draw for a HELOC. We recommend that you use the refine your search menu to review updated interest rates, monthly payments and terms based on your loan amount, combined loan-to-value ratio and other factors.
You can also compare financing options by loan type and length. You should contact multiple lenders to find the best home equity loan or HELOC terms including the lowest interest rates and fees.
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Why Select a Home Equity Loan or HELOC
Only Access the Amount of Money You Need.
A home equity loan or HELOC enables you to access the specific amount of money you need as compared to a full refinance of your mortgage. A smaller loan amount means that your monthly payment and total interest expense over the life of the loan are lower with a home equity loan or HELOC.
Flexible Financing Option.
Most lenders impose relatively few limits on how borrowers use the proceeds from a home equity loan or HELOC. You can use the money from a home equity loan or HELOC for any number of reasons including to pay-off expensive credit card debt, for home improvements or even school tuition. Although most lenders want to understand how you plan on using your loan proceeds, a home equity loan or HELOC provides you significant flexibility on how you use the equity in your home.
Less Expensive and More Efficient than a Refinance.
A home equity loan or HELOC is less costly and time-consuming compared to alternate ways of tapping the equity in your home including a cash-out refinance. Transaction expenses and fees for a home equity loan or HELOC are typically less than the closing costs to refinance your mortgage because the loan amount is smaller. Additionally, the application and closing process for a home equity loan or HELOC are shorter than the time frame for a refinance. Please note that home equity loan rates and HELOC rates are typically higher than first mortgage rates but the loan amount is smaller so your total interest expense is lower.
Flexible Qualification Guidelines.
Lenders typically apply a higher borrower debt-to-income ratio for a home equity loan or HELOC than for a mortgage, which potentially enables you to borrower more money. For example, depending on multiple factors, the maximum debt-to-income ratio for a mortgage is typically 45% to 50% while the maximum debt-to-income ratio for a home equity loan or HELOC is usually 55% or possibly higher under certain circumstances. Using a higher debt-to-income ratio enables you to borrow more money.
Increased Borrowing Capacity.
With a home equity loan or HELOC, to determine what size loan you qualify for lenders primarily focus on the value of your home and the combined loan-to-value (CLTV) ratio of your first mortgage plus your home equity loan or HELOC. CLTV is the ratio of all mortgages against a property divided by the current fair market value of the property. In some cases the maximum CLTV ratio for a home equity loan or HELOC may be higher than the LTV ratio for a refinance. Applying a higher CLTV ratio enables you to access more equity in your home even though the loan amount for a home equity loan or HELOC is smaller. For example, if your home is valued at $100,000 and the lender uses a CLTV ratio of 85% for a home equity loan as compared to 80% for a mortgage refinance, you can tap $5,000 more of your equity with the home equity loan.
Use Your Home as a Bank.
In short, a home equity loan and especially a HELOC, are cost-effective ways to borrow money so they effectively enable you to use your property as a bank. If your property value has increased then you may be able to borrow a significant amount of proceeds. Additionally, because home equity loans and HELOCs are secured by your home, your interest rate is usually lower than other financing options such as personal loans or credit cards, which saves you money.
Why Borrowers Compare Home Equity Loan Rates and HELOC Rates on FREEandCLEAR
Comparing home equity loan rates and HELOC rates can save you thousands. Use our rate tables to find the lender offering the lowest rates and fees
Our rate tables put you in control. You can compare lenders anonymously plus you never need to provide your social security number
Review home equity loan rates and HELOC from leading lenders. Our lenders offer highly competitive terms to win your mortgage business
More FREEandCLEAR Mortgage Resources
Understand how a home equity loan works including interest rate, qualification requirements and other key loan terms
Review our comprehensive overview of of how a HELOC works including loan-to-value ratio limits, types of HELOC and other guidelines
Review our detailed comparison of a home equity loan and a HELOC to determine the financing option that is right for you
Review an informative explanation of the trade-offs between a home equity loan and a mortgage refinance
Home Equity Loan Information: https://www.consumerfinance.gov/ask-cfpb/category-mortgages/home-equity-loans/