How to Find the Best Rate on a Home Equity Line of Credit
Dealing with large, expensive and unexpected repairs is part of homeownership. So is the desire to remodel your home in an effort to improve its appearance, functionality or value. Finding the money to make repairs or begin remodeling projects isn’t always easy, however. In cases such as these, one of the best choices you can make is a home equity line of credit (HELOC).
A HELOC allows you to use the equity of your home to finance a revolving line of credit that you can use to fund projects and purchases or pay off debt. As you make payments, the amount of credit you have available is replenished.
While a HELOC is often the best option for homeowners with sufficient equity to qualify, it’s important to be able to find the best rate possible. Doing so will save you money that can be spent to improve your home or make other important purchases, rather than simply servicing debt. With that in mind, let’s review how to identify the most competitive rates for your home equity line of credit.
There are a few important variables that will help determine what kind of rate you’ll qualify for when searching for a HELOC. First, it’s important to consider your credit score. Your credit history plays a large role in determining the rates you’ll be offered
The amount of equity you have available in your home will also influence both the amount you can borrow and the rate offered. As a general rule, your mortgage and your HELOC combined should not exceed more than 75-85 percent of your home’s total value.
Choosing the right lender plays a critical role in securing attractive terms for a HELOC. In many cases, the best rates will be offered by a credit union rather than a bank. Credit unions are not-for-profit organizations and, subsequently, have lower fees and costs. Over the course of a mortgage or a HELOC, these savings can add up significantly.
If you’re in the market for a HELOC, pay close attention to the terms of the loan. Is it a fixed rate or variable? Is your rate capped? Are there fees or penalties attached? Once you can answer these questions, you’ll be able to make an informed decision
A HELOC is an excellent way to pay for much-needed expenses, but it’s important to ensure that you get the best possible deal. Once you’ve considered all the factors outlined above, you’ll be in excellent position to secure a great rate on your HELOC. Fortunately, County Federal has HELOC options to suit your needs. Contact us today to get started.