Home Equity Loan Rates
A home equity loan is a loan that is based on the difference between the assessed value of your home and what you currently owe on it. Banks will usually recommend a home equity loan for people looking to consolidate high interest loans or credit cards as the interest rates offered for home equity loans are traditionally lower than those high interest rate products. Another reason people get a home equity loan is to pay for large purchases or pay large bills. If you are thinking of doing some major remodeling to your home then you may want to consider financing it with a home equity loan. If you are trying to figure out how to pay for your child’s college education then a home equity loan may be the way to go for financing your child’s future. When it comes to the interest rate on a home equity loan you can usually choose from two different kinds of loans. Home equity loans usually come as either a fixed rate loan or a variable rate loan.
A fixed rate home equity loan operates the same way that a fixed rate mortgage does. The borrower is offered a fixed interest rate by the bank and if the borrower signs on for that rate then the interest rate will never change for the life of the loan. In some cases the borrower has the option of purchasing points at closing which means they can pay extra money to make their fixed interest rate even lower. In times when interest rates are low it is usually common for people to choose the fixed interest rate. Many people do not like to have their monthly payments fluctuate so they choose to lock in their interest rate and have the same monthly payments.
Variable rate loans are the other end of the loan risk spectrum and many people that have the option choose to avoid them. With a variable rate loan your interest rate is evaluated on a regular basis, for terms outlined in the loan contract, and then your interest rate is adjusted based on the going rate or the bank’s current variable rate. The variable interest rate loan is one of the things that got so many people in trouble in this recent housing crisis as variable mortgage rates continued to rise well into the double digits causing many peoples’ mortgage payments to skyrocket out of control. The reason variable rate loans are available is because they are primarily used for people with less than desirable credit. If the bank does not feel that you are a borrower worthy of a fixed rate loan then they will only offer you a variable rate loan.
You would always like to be able to choose the home equity loan rate that is best for you but, depending on your situation, you may have to take what they offer you if you want to use the equity you have spent years building up in your home.
Derek Farley
http://www.articlesbase.com/loans-articles/home-equity-loan-rates-678718.html
Do fixed low rates exist for a home equity loan?
Although I can lock in later on during the life of the loan, I am only being offered a variable interest rate home equity loan. Are fixed low rates being offered when you are accepted for a home equity loan?
Run and run away fast from variable rates.
Demand a fixed rate on that loan.
They have them – they are just treating you as subprime – they think you are dumb.
Banks took advantage of people without knowlege – and they must still be doing it before new regulations take effect to make understanding loans easier.
Interest rates could easily double in just 3 years.
Easily !!!
That variable rate will jump to the highest possible making your payment almost double.
Demand fixed rate – and demand it now.
Don’t let these banks treat you like you are incapable of thinking – like they did to so many others.
Wish you would have given the name of the bank.
I would write them a letter and tell them to stop abusing people that have little knowledge of loans.
In conclusion:
Find another bank that you can trust and will have your financial best interest at heart. Try a credit union. You are not dealing with an online loan company are you?
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The mortgage broker WORKS FOR YOU. And not the other way around. Tell him/her that you want a fixed rate loan, or you will look for another broker!!!
If your credit is good, there are good fixed rate loans out there. I closed on a home 1 mo. ago. Got 4.9% for 30 yrs. With rates at historic lows, go for a fixed rate. Don’t let this guy/gal bs you.
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