How to get a good HELOC rate

with Inflation Still fresh concerns in the background and on Banking sector, many Americans find themselves needing new ways to make ends meet. Although traditional credit options are preferred Credit card And personal loan At first, homeowners have a wide range of options. It includes Cash-out refinancing, reverse mortgage, Home equity loan And Home Equity Lines of Credit (HELOCs). In short, if you’re a homeowner sitting on a significant amount of equity, your home may be the best low-interest credit option.

To get the most out of a HELOC, you’ll want to secure the lowest rate in the market. Fortunately, there are multiple ways homeowners can get a better HELOC rate, three of which we’ll explore in this article.

You can easily check your HELOC interest rates online today

How to get a good HELOC rate

Here are three strategies that can help you secure a better HELOC interest rate:

Shop around

It may seem obvious that when looking for a financial product or service, you should shop around to find the best option. But when it comes to HELOCs and home equity loans, many homeowners use their current lender first. However, you don’t automatically have to use the lender with whom you have an existing mortgage. Many banks and institutions will be happy to have your business and may be willing to pay an attractive interest rate to get it. So be sure to shop around to see what kind of rate you qualify for. A good baseline is to get interest rates from at least three institutions, although you may find that you can get a better idea by researching more than that.

Just make sure you do the right research so you can establish an apples-to-apples comparison. So, if you’re looking for a HELOC for $100,000 from one lender, make sure you get interest rates for that exact amount from a second and third lender as well. This way, you will know exactly who is giving you the best deal.

You can shop for HELOCs online right now

Improve your credit score

The best terms and rates will always go to applicants with the highest Credit score And the clearest credit history. HELOCs are no different. So, if you know you’re planning to take out a home equity line of credit, be sure to do so as soon as possible. Increase your credit score. This may mean paying off the debt (ideally, paying it off in full). But it may mean not adding to your existing debt. And don’t apply for additional loans or credit that could result in a difficult credit investigation and a subsequent drop in your credit score. Your credit history goes a long way in determining the final rate you get, so keep it in the best shape possible.

Look for fixed rate options

HELOCs, unlike home equity loans, typically come with variable interest rates. While this may be favorable if you start with a low rate, it can quickly become a burden as rates increase. And with the current unpredictability around interest rates and the broader economy, that may not be a risk worth taking. Instead, do your research and look for fixed rate options. They won’t be that much, but if you spend time and compare lenders and offers, you may be able to find one willing to pay you a low, fixed rate. This will ensure that payments are predictable (which is good for your overall budget) and protect you from any negative rate action that may occur in the future.

Bottom line

For many homeowners looking to pay for new expenses, a HELOC may be their best option. A HELOC typically comes with a lower interest rate than other credit options. To secure a good HELOC rate, homeowners should first shop around and compare rates from multiple lenders (not just those with their mortgage). They should do as much as possible to improve their credit score. And they should spend time looking for fixed-rate options, which can protect them if interest rates rise in the future.

Get started now by comparing your local HELOC options here!