Home Equity Line of Credit Rates - Current HELOC Rates
HELOC Loans and their uses
The Home Ewuity Line of credit, aka Heloc, is a type of equity release mortgage loan that provides you a flexible facility that operates much the same way as an overdraft or credit card does, but with much lower interest. Like other Equity Loans, Heloc's are usually taken out as an additional loan where a mortgage or home loan is already in place, though they don't necessarily need to be taken out with the same lender as the original mortgage. In fact in many cases a HELOC is taken out with a different lender. Home Equity Line of Credit rates are usually higher than traditional mortgage loan rates for two main reasons:
1. They are generally a second mortgage. Second mortgages attract a higher mortgage interest rate than first mortgages as they are higher risk to the lender. If the line of credit is taken out with a new lender for example, the lenders security is subject to the primary mortgage loan being satisfied in full. Mortgage refinance rates are generally lower than 2nd mortgages.
2. Flexible repayment terms. With a HELOC loan you only pay interest on the actual amount of money you draw down, just like a credit card or over draft facility. When you take out a home equity line of credit you are given a limit - this is the total amount you have available under the facility, BUT you are only charged interest on ehat you actually use.
Advantages and Disadvantages of HELOCs
As with all mortgage and refinance related products there are a number of factors that will affect whether or not a Home Equity Line of Credit is right for you or not. What works for one person may not for another and it's important to consider both the immediate and long term benefits and risks of a HELOC before going ahead with one. Below is a quick summary of some of the main factors to consider when looking at a line of credit instead of an equity loan or cash out refinance. As with all mortgage related products however it is always crucial to get the lowest mortgage rates possible as this will have a major bearing on your ability to repay the loan quickly - do a little reseach on current home equity line of credit rates ans HELOC rates can differ from other mortgage rates significantly.
Applying for a Home Equity Line of Credit
Applying for a HELOC is a relatively simple matter, you can even do so online in many cases. It's highly advisable to get quotes from at least two or three lenders and compare them as they will most likely have different rates, terms and lending criteria. As a HELOC requires you that have equity in the property, a current valuation may be required, as will many of the standard checks such as current earnings and your credit score. Given however that you will most likely already have a mortgage in place, the lender may have the benefit of knowing you solid repayment history, which can be beneficial in applying. The best plan is usually to get a couple of indicative quotes online through different lenders, then approach the lender who offers the best options for you based on your online quote. The value of online mortgage refinance and equity loan quotes is that you can get them anonymously, quickly and easily without having to invest much time or energy in the process then only persue the lenders which offer you the best terms.