Cheapest Rates for Home Equity Loans

Home equity loans allow homeowners to borrow money against the equity in their property. Although many homeowners are unaware of the fact that the equity in their home is tax-deductible and can be used as collateral in a loan, it is possible to obtain financing using nothing more than the available equity in your property. There are two main types of home equity loans – traditional loans (which provide a lump sum of money), and home equity lines of credit (which provide a set limit of funds per month based on the credit score of the applicant). Whether you’re in need of funds to pay off existing debts like student loans or credit cards, or you would like to invest in a home improvement project for your property, home equity loans can be a great way to obtain the financial assistance needed do so.

What Are Typically the Cheapest Rates for Home Equity Loans?
Although the APR (annual percentage rate) of each home equity loan will vary depending on the preferences of the lender and the credit history of the applicant, the cheapest rates for home equity loans are usually about 2 to 5% of the overall loan amount. While home equity loans can range in duration from 5 to 30 years, the lowest rates are usually offered on long-term loans, as these give the lender the greatest opportunity to earn more interest. Although the rates offered to applicants are usually based on their credit history, there are some lenders that are willing to provide the cheapest rates for home equity loans to individuals with poor credit or no credit at all. Nonetheless, subprime borrowers are usually approved for loans that are subject to unfair fees and exuberant penalty interest rates, so it is imperative to make monthly repayments on time if you are able to obtain the cheapest rates for home equity loans, as a single late payment could cause a penalty interest rate to be applied to the remainder of the loan.

How to Find the Cheapest Rates for Home Equity Loans
The easiest way to find the cheapest rates for home equity loans is to utilize one of the many loan rate comparison websites online, which provide user-friendly forms through which you can compare multiple rate quotes from various lenders within a centralized interface. If you would like to broaden your search you may want to visit the websites of independent lenders to request quotes separately, and consider contacting local lenders to see if they can provide a better deal. However, the cheapest rates for home equity loans are usually offered online, as the Internet creates a highly competitive marketplace in nearly every industry. Rather than simply comparing the interest rates offered on home equity loans, it is very important to review the loan terms and conditions to avoid unfair fees and penalty rates that could completely negate the advantages of the loan and increase your chances of loan default and subsequent credit score damage.

How Can You Increase Your Chances of Obtaining the Cheapest Rates?
While individuals with good or exceptional credit are most likely to be approved for the cheapest rates for home equity loans, there are some things that subprime borrowers can do to increase their chances of receiving lower rates. First, you’ll want to compare as many lenders as possible using the information in the above paragraph, and make a list of prospective quotes to simplify the process of narrowing down your choices. Second, you’ll want to simplify the job of the lender by providing all of the necessary requirements and exceeding their expectations during the loan approval process. You can do this by providing additional references from past employers, verified proof of employment, and by offering to provide some form of collateral in addition to your home equity during loan negotiations.