Home Equity Loan Lowest Rate

When looking for a home equity loan, it is important to look at the current housing market to find the lowest rate. In late 2009 the market took an even deeper dive and the average annual percentage rate on a home equity loan (or any mortgage for that matter) is between 3.95% and 6%. In the housing world this is a wide range so it pays to shop around for a home equity loan with the lowest rate. Things that add to this fluctuation are the loans duration, the amount borrowed, the borrowers’ credit history, credit report and score, closing costs and lending fees to name a few.

What are Home Equity Loans used for?
One of the most common uses for a home equity loan is to refinance at a lower rate. Being able to utilize the equity in your home is just an added bonus. The difference between a 30 year, $100,000 mortgage at 6% APR and one at 3.95% is $6,150 over the course of those 30 years. So, let’s say that you took out a mortgage on your new home 10 years ago when the interest rate was about 8.75% (or even higher), now would be a good time to refinance that mortgage and perhaps borrow from your homes equity for things like debt consolidation, college tuition or home improvements.

Shopping Around For the Lowest Rate
When we talk about a rate, we are referring to the Annual Percentage Rate (APR). The APR is the interest that a bank charges for providing a loan. These rates can vary from bank to bank, so shopping around and comparing rates and companies is a must, not only does it give you the best chance to find a good deal, but it’s the best way to let banks know you are willing to go somewhere else and you want them to compete for your business.

A good place to start shopping around is on the internet. There are many sites that offer comparisons from many banks and all you have to do is input some basic information. This is a good way to get a general idea of what you can get, but when you sit down with the loan officer the rate they offer may be a little different.

Choose the Right Options to get the Lowest Rate on your Home Equity Loan Make sure not to borrow more than you can afford as this might make your rate go up a bit. Keep your credit in good standing and if you do get into trouble, contact your creditors immediately. Adjust the length of your mortgage. A 15 year mortgage usually has a lower rate than a 30 year mortgage. Work with the lender on those refinancing costs. Application fees, loan origination fees and appraisal fees are among the costs that you can either pay for up front (which keep your APR lower) or you can roll them into the amount of the mortgage. Finally, never sign anything until you are sure that it gives you a home equity loan with the lowest rate.