Home equity loan interest rate
Home equity loans are quite popular in countries like United States where people fulfill their different types of requirements like home improvements, marriage expenses, educational expenses, vacation enjoying expenses etc by using equity they have in their homes. Home equity loans are provided against home equity. Finding home equity loan is not a difficult task as there are many traditional and specializing institutions that provide these loans. Most important factor that should be looked while getting home equity loan is interest rate, which is called as home equity loan interest rate. These rates vary greatly from one lender to another. Home equity loan interest rate depends upon many factors. Let us discuss these next.
Factors on which Home equity loan interest rate depend
First factor that determines the home equity loan interest rate to a great extent is the credit history or credit rating of a person. Credit ratings are provided by bureaus like Experian, Equifax etc. If a person has bad credit rating, higher home equity loan interest rates are applied. Similarly, people with excellent and good credit rating can get lowest home equity loan interest rate. Sometimes, loans are even provided at PLR or prime lending rate of institution. Second factor on which home equity loan interest rate depends is the LTV or Loan to Value. A person getting higher LTV loans is expected to pay interest at higher rates. Property types also affect home equity loan interest rate. Lowest rates are attached with owned homes. Other factor that affects the interest rate is the repayment term. If a person has taken a loan for longer repayment period like 25 years, home equity loan interest rate applied is lower. High interest rates are applied when a person takes home equity loans for smaller periods like 5-10 years. There are also some restrictions applied by lending institutions over home equity loans, which vary from one lender to another.
As said above also, LTV also affects the home equity loan interest rate. A person can utilize the full amount of equity by taking 100% home equity loan or can fulfill his exact requirements by taking 25% LTV loans. There are also some lenders that provide 125% home equity loans, that is, loans where amount provided is 125% of home equity. Such loans of course attract higher interest rates. As the LTV goes higher, home equity loan interest rate also goes higher.
Home equity loan interest rate can also be adjusted by taking ARM or adjustable rate mortgages. Unlike fixed interest rate loans, ARM allow a person to repay the loan at low interest rates for initial period. After the initial period is over, interest is applied at higher interest rates. Thus, for all those people who are assured of their monthly income going upwards in months to come should avail the benefits of ARM. In fixed rate home equity loans, interest is applied at fixed rate throughout the tenure of loan. Fixed interest rate loans are best for locking home equity loan interest rates for full amortizing period.
One of best ways of getting low or best home equity loan interest rate is to obtain free online home equity loan quotes from all the lenders in a particular area. Interest rates of all can be compared and lender with lowest rate be chosen for getting maximum benefits. Almost all the home equity loan lenders provide online quotes at no-obligation basis. So, a person is not forced to obtain loan from a particular lender.
Current home equity loan interest rates
There are many web sites that provide current home equity loan interest rates of various lending institutions. Some also provide national averages. For example, Bank Rate is one web site that provides current home equity loan interest rates. At present, home equity loan for a sum of $30000 is provided at a rate of 7.9% whereas loan for $50000 is provided at a rate of 7.8%. Similarly, home equity loan for $75000 is provided at a rate of 7.78%. All the interest rates mentioned above are national fixed interest rates averages and thus, actual interest rate charged by any lender can vary. For example, Bank of Hawaii is one of various home equity loan lenders in United States. Interest rate attached with home equity loans lower than $50000 and where LTV does not exceed 80% is 7.5%. This interest rate is same for all amortizing periods from 5 years to 15 years.
Countrywide is another renowned financial institution in United States that provides home equity loans. Interest is applied at different rates on different types of home equity loans. For example, a person can get a conforming 30-year fixed rate home equity loan at interest rate that starts from 5.875%. For getting more information, a person can easily call at 1-800-825-4549.
Similarly, Quicken Loans is another institution in United States that provide home equity loans. Home equity loan interest rates applied are one of best. For example, a person can get a 30-year fixed rate home equity loan of $200000 at 6.5%. In APR terms, this rate is 6.556%.
While comparing current home equity loan interest rates, a person should also consider various types of charges and fees charged by the lending institution. For example, Bank of Hawaii charges a mortgage documentation fee of $125. If property is held in any type of trust, trust view field is applied at the rate of $75. Similarly, in cases of leasehold properties, lease review fee is applied at a rate of $75. Other fees applied include title insurance fee and appraisal report. Thus, it is better is a person compare lenders with respect to APR or Annual Percentage Rate.
Since home equity loan interest rate depends greatly on credit rating, it is advised here that a person should obtain free annual copy of credit report for ensuring that it does not contain any errors that might lower the rating.
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