Question:

What are the current interest rates on home equity loans?

Answer:

Interest rates on home equity loans are comparable to second mortgage loans rates. Since they are not tied to the prime rate, they are not affected by the interest rate cuts the Federal Reserve has been after for a while.

The rule of thumb that home equity loans are cheaper to get if you need a lump sum because they are tied to a fixed rate no longer holds.

While home equity loan rates are at 7.50% and higher, HELOCs are going below 6%.

If you need a low LTV HELOC and have a nice FICO of 700 and over, rates will drop below 5.50%.

HELOC holders may expect a decrease in their line of credit payments as most HELOCs are adjustable rate and are mainly tied to the prime rate. The same way, home equity loan interest rates are not tied to the prime and no great rate reductions are expected.

Many lenders stopped offering home equity loans.

Due to the growing number of foreclosures, lenders have greatly limited the availability of home equity loans. The reason is equity loans are often used to supplement for a 20% down payment. Many piggyback holders already defaulted and lenders cannot get their money back. Home equity loans are still offered at significantly high rates in California, Florida and several other states.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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