Best Fixed Home Equity Loan Rate
If you are in need for the best fixed home equity loan rate, be prepared to spend some time looking for the right lender. Usually people want to use the equity they build up on their homes to pay off debts or to pay for home improvements. However, the money that you get against the equity can also be used to pay for college tuition or for starting a new business venture.
Most lenders calculate interest rate based on the indices that are used to calculate the price of deposits and loans. In the US, the Wall Street Journal prime rate is the deciding rate for interest rates. Hence, interest on home equity loans is connected to prime rate and can fluctuate. When the prime rate goes up, interest rate is high and the opposite occurs when the prime rate reduces. However, when it comes to fixed equity loans, there is no fluctuation of the interest rate. As the name suggests, the interest rate remains fixed.
Some banks in the US tend to use the London Interbank Offered Rate, also known as LIBOR. This is the prime rate used in the UK. In case the prime rate is high, then it is best to get in touch with banks who use LIBOR as they will be the ones offering the best fixed home equity loan rate. It has been seen that when the prime rate in the US is high, LIBOR rates are low.
Another factor that goes to decide the interest rate with banks who use prime rate is the creditworthiness of the borrower. If the borrower has good credit standing and does not have too many debts to his or her name, the banks are more conducive to giving a good and competitive interest rate. Hence, credit scores make a big difference when it comes to looking for fixed home equity loan rate when you are taking the loan from a bank that uses prime rate to determine the interest rate.
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