Getting Good Deals On Equity Loan Rates

Not all equity loan products are created equal. Judging by the varying equity loan rates alone, choosing a good home equity loan already proves to be a big challenge for homeowners seeking an alternative source of funding. The key to getting the best equity loan rates for your real estate properties is to get the most amount at the lowest interest rates and at the most borrower-friendly terms possible.

Alas, if only we live in an ideal world! The reality however is that there will always be a quid pro quo scenario for every deal – even more so when it comes to home equity loans. Some lenders may offer lowered interest rates for a limited period but subject to adjustable equity loan rates for the remainder of the term. Others offer low "interest only" monthly payments but at higher than usual interest rates.

There are many other ways by which lending companies will pitch their home equity loan products. The bottom-line is that borrowers need to be meticulous when it comes to availing equity loans. Homeowners must make a thorough home equity loan rate comparison before finally signing up for such a loan.

About equity loan rates

Since equity loans are by definition secure loans, you can expect that lending companies will allow a bit more leeway when it comes to interest rates compared to other loan products. In most cases, standard home equity loans (HEL) are offered as fixed rate equity loans while home equity line of credit (HELOC) are usually marketed as flexible rate or variable rate instruments.

The standard practice for variable interest rates on HELOC is deriving it based on prime rates plus a certain margin. While HELOC rates are initially comparatively lower than a fixed rate equity loan, however, as primary indices rise so will the adjusted rate for the home equity line of credit.

Home equity loan or home equity line of credit

The choice between a fixed rate home equity loan and a variable rate home equity line of credit will depend primarily on the purpose for the loan. Many financial advisers will point to a fixed rate equity loan for large single-purchases like a cash payment on a car or for some emergency expense. Home equity line of credit products on the other hand are more suitable for medium to long-term installments; for example, a second home or college tuition payments.

After ensuring that you have the right equity loan product, make a side-by-side comparison of offers for applicable fees and terms vis-à-vis your financial projections. Remember: It is not enough to simply jump at the lowest equity loan rates available. You must get the right home equity loan product for your specific needs.