How to Get the Best Home Equity Loan Rates?

A home equity loan is a second mortgage that you borrow from a lender that is secured against the equity in your home. With more equity, you will be able to borrow more. It is noteworthy that home equity loan rates are higher in comparison to first mortgage rates. With a home equity loan, you can borrow up to 85% of your home's value, less the mortgage amount you still owe.

Here are some tips that will help you in getting the best current home equity loan rates without any hassle.

Why are you borrowing?
Just because you can use home equity is not enough reason to actually borrow it. You put up your house as collateral and when you extract its value as cash, you put yourself at risk of losing your home when you can’t repay the first or second loan. So, it is important that you use your home equity for the right reasons. For example, consider getting a home equity loan if you want to make home improvements to increase the value of your home.

Boost your credit score
Most lenders look at two things when deciding to lend you money: your existing debt and your credit score. Before you apply for a home equity loan, check your credit reports. Look for things that might be dragging your score down. If you have a credit card balance to pay or overdue bills, pay them before you apply for the loan. If you can improve your credit score, you can be sure that you will be able to save big on your second mortgage.

First, ask your current lender and then, move further
When you are going to apply for home equity loans, make sure that you first ask your current lender. Whether it’s a bank or credit union, ask them for the home equity products. Many financial institutions offer a rate discount when you have multiple accounts or lines of credit with them. Moreover, it will be easier for you to work with a familiar lender. After you have learned the rates of your current lender, you can move further and ask for the quotes from at least lenders. Make sure that you compare to get the best loan rate for you.

Calculate your LTV
As already discussed, if you have more equity, you can borrow more money. But if you want to get the best loan rate, aim for a loan-to-value ratio (LTV) that’s 80% or less. You can use online tools to determine your home’s current value.

There are many online comparison platforms that let you compare and apply for the best current home equity loan rates online. Find the most suitable option for you and apply for the same.

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Created on Jul 18th 2019 04:37. Viewed 418 times.

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