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Best Rates On Home Equity Loans Average 7.21% And HELOCs 4.98%

[Jul 2, 2010.]


According to the most recent information from the Informa Research Services' Interest Rate Review, the national average interest rate on a home equity loan or a home equity line of credit hit a new low this week. As credit card interest rates soar, secured home loans are becoming increasingly attractive.

  • Home equity loans averaged 7.21%
  • Home equity lines of credit (HELOC) averaged 4.98%

Build A Relationship With Your Home Loan Lender

In many cases, to get the best interest rate available, you need to have a previous relationship with your home loan lender. You can expect to get about 0.250% - 0.500% discount on your interest rate if you have one or more of the following in place with the lender funding your new home equity loan or home equity line of credit.

  • Existing first mortgage
  • Existing auto loan
  • Preferred checking or savings account
  • Premium credit card account
  • Minimum balance on deposit in a checking or savings account

Stable, Low Rates on Home Equity Loans Make Them More Attractive than Credit Cards

Due in part to the CARD Act of 2009, the national average interest rate on a credit card has recently exceeded 16%. The majority of credit cards have an adjustable interest rate. It is possible that interest rates on credit cards could continue to soar. If the credit card company decides to raise the interest rate on a particular card, it only has to send a notice in writing within 45 days of making the change. That is not true with most home loans.

Interest rates on home equity loans and home equity lines of credit are much lower and much more stable. Once your home loan lender agrees to the terms of your loan, you don't need to worry about receiving a notice in the mail telling you the terms have changed, as with a credit card. Typically, you sign a loan agreement that defines either a fixed rate or an adjustable rate based on a specified index and fixed margin. The fixed rate and the fixed margin do not change, making home loan interest rates more stable than credit card interest rates.


About Author:

Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.

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