| Never a Better time for Home Equity Loans |
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At the same time, rates for most consumer loans are getting more expensive. As a
result, consumers are looking to fixed rate home equity loans as a way to save
money. The result is a win-win for those shopping for a home equity loan right
now.
Rates on home-equity lines of credit and other adjustable loans are
the highest they’ve been in the past five years. And they threaten to go higher,
as interest rates set by the Federal Reserve ratchet upward to stave off
inflation. Meanwhile, homeowners are looking for ways to battle their own
household budget inflation, by ditching adjustable rate loans and converting to
fixed rate home equity loans. Banks across the U.S. report a 10 percent increase
in the number of fixed rate home equity loans written since last year. It’s a
highly recommended strategy during this window of opportunity while fixed rates
remain near their historic lows.
Banking on the banks
Mortgage
companies are pushing home equity loans to bolster their business. This is great
for the consumer, because now you can get a home equity loan that includes some
new and attractive promotional perks.
One bank, for instance, tripled
the time that it requires for borrowers to pay back its home equity loans from
five years to 15 years. Now, instead of facing a big balloon payment in five
years, borrowers will have an extra decade to delay repayment.
Other
major lenders have rolled out a new feature that they created to offer their
customers the best of both worlds. This particular loan allows you to convert
some—or even all—of your home equity line of credit to a fixed rate. Other
lenders have initiated programs that give borrowers a progressively lower rate,
the longer that they hold on to their existing credit lines. The interest rate
on a borrower's credit line drops by half of a percentage point annually, until
it reaches prime minus 1 percent.
Home equity loans: A timely
alternative
Meanwhile, credit card rates average about 15 percent,
making home equity loans the wise and timely alternative for gaining access to
large sums of cash. With so many lenders offering wonderful, consumer-friendly
incentives, it’s a great time to be shopping |
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