How to Get a Low Interest Rate on a HELOC

How to Get a Low Interest Rate on a HELOC

October 17th, 2018 | Interest Rates, Home Equity

The amount of available home equity has recently hit all-time highs, meaning now is a great time to tap into your home’s value with a home equity line of credit (HELOC). These are revolving accounts that allow you to draw out money for anything from home improvement to college tuition to debt consolidation. Of course, just like with your primary mortgage, finding the best rate on a HELOC is essential. Here are some tips for scoring a great interest rate:

  • Check Your Equity
    The more equity you have in your home, the better your odds are of being approved and offered a good rate. Your equity is the difference between the current value of your home and the amount you still owe on your mortgage. HELOCS will not let you pull out more than 80% of the value of your home and you will have to prove your ability to repay the loan, but generally lenders look favorable on borrowers with a sizeable amount of equity.
  • Pump Up Your Credit
    Credit scores are very important in the lending world. They demonstrate your ability to make payments on time and your determination to repay debts. You can check your credit score with any of the three credit reporting agencies: Equifax, Experian and TransUnion. If your credit score is not great, consider waiting to apply for a HELOC until you can give it a boost. The best way to do this is to start making all your payments on time and by paying off debts. It takes time, but it can pay off handsomely when it comes to your rate.
  • Compare Offers
    There are plenty of different programs and HELOC offers out there. Checking around and comparing rates is a great way to make sure you are getting the best deal.
  • Understand Introductory Rates
    Most HELOC loans are adjustable rate mortgages that start off with a lower initial fixed rate. Be sure you understand how the rate works on your loan and that you can afford to make your payments after the teaser rate period expires. Check to see if there is a rate cap and how high your rate can possible rise.
  • Add Up the Fees
    Interest rates are not the only cost involved with a HELOC. There are usually lender fees, appraisals, and application fees that are paid up front and annual fees. Some HELOCs also include inactivity fees if you do not draw on your funds often enough. There may also be prepayment penalties that could negate any interest rates savings if you decide to repay your loan quickly. All these costs need to be factored into the interest rate. Talk to your lender about waiving some of these fees.

If you do your homework, you should be in prime position to win the best rate on a HELOC that can help you accomplish your financial goals.

Call us today at 630-519-5955 to discuss your goals and we at PRIME 1 BANCORP, LTD help you understand the best options available for you.


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Prime 1 Bancorp, Ltd is not affiliated with any government organization or bank nor do we act on behalf of the FHA or VA. This material is not from HUD or FHA and has not been approved by HUD or a government agency. We are not a Federally chartered or State Chartered Bank. We are an we are an Illinois Residential Mortgage Licensee by the Office of Banks and Real Estate License #MB.6761138, a Colorado Registered Mortgage Brokerage by Division of Real Estate, a Florida Residential Mortgage Brokerage Licensed by the Office of Financial Regulation License #MBR1930 dba Prime 1 Mortgage Inc, a California CFL Licensed Mortgage Brokerage by Department of Business Oversights 60DB055973 and a Texas SML Licensed Mortgage Brokerage by the Texas Department of Savings and Mortgage Lending. Prime 1 Bancorp, LTD Corporate Office is located at 2720 S. River Rd Suite 50, Des Plaines, IL 60018 our Toll Free Number is 888-205-3737. NMLS: 1434638

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