Current Home Equity Rates
In order to get a home equity loan or line of credit, a person should have managed to build enough equity after taking a mortgage to purchase the house. In addition, the rate at which the loan or line of credit on the built up equity is given is dependent on the creditworthiness of the borrower. So, if you have been paying your mortgage and other debts regularly and you have a low debt to income ratio, you will attract the best home equity rates.
When the lender is checking the application of a potential borrower, they are usually worried whether the borrower will be able to make payments for the primary mortgage as well as the equity loan or line of credit. Through proper documentation, the homeowner may have to prove his repayment abilities.
Also, the person should have built enough equity to get a loan or line of credit. Basically, the primary mortgage and the loan or line of credit together should not be more than ninety percent of the value of the house. However, there are some lenders that are giving loans with zero equity. Here the loan amounts around 125 percent of the value of the house. But, it goes without saying that such a loan will have very strict rules, high fees and higher than normal interest rate.
At this stage you may be wondering what are the current home equity rates. Well, these rates vary from lender to lender and if they are variable, the rates are dependent on the prime rates. If a person has around eighty percent or less loan to value ratio after the home appraisal is done, he or she would pay something like 3.25 percent variable interest, and between 5.99 percent and 6.99 percent fixed rate interest.
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