Lowest Home Equity Loan

| January 2, 2012

Taking out a home equity loan is a great way to make use of the monetary value that you home has built up. This money can be used to send your child to college, take a dream vacation, or to remodel your home and make it even more valuable. Whatever the reason, obtaining the lowest home equity loan rates is key.

A home equity loan is a fixed rate loan. This rate will not fluctuate at all. This is great, if you can lock the loan in at a low rate. Be sure to shop around for the best rate, because once you sign on the dotted line, you are in it for the long haul.

There are two ways you can use your home equity. One is a loan, which is issued to you in one lump amount. The other is a home equity line of credit. This type of loan will give you the maximum total that you can borrow, and then you can withdraw money from this amount only when you need it.

Most banks will allow you to borrow up to eighty percent of what the value of your home is. Your current mortgage must be subtracted from this total before calculating the eighty percent. Some banks offer less than eighty percent, but this total is fairly standard across the board.

The process of applying for the lowest home equity loan is much easier than applying for a home loan. It is also a much faster approval process. If your credit score is good, chances are you will be approved immediately.

Before applying, you may want to pay off as many of your outstanding debts as possible. This will effectively raise your FICO score. A higher FICO score means a lower interest rate. Even a one point decrease in your interest rate will save you quite a lot of money over the period of the loan.

Another bonus to a home equity loan is the length of time you will have to re-pay it. You can choose to take as long as thirty years to repay the loan in full.

Obtaining the lowest home equity loan rate will allow you to maximize the use of your money, while not spending a fortune to do so. Some of the lowest rates in quite some time are currently available, and if you have been considering a home equity loan, the time to act is now.

Category: Home Loan

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