Home equity interest rates edge higher

HELOC Rates Increase Slightly, But Homeowners Still Tapping into Equity

HELOC rates saw a minor bump today as the Federal Reserve chose not to cut rates once again. Despite this increase, homeowners are continuing to tap into the value of their homes at a record pace. According to ICE Mortgage Technology, HELOC withdrawals in the first quarter of the year were the highest in 17 years. U.S. homeowners still have access to a staggering $11.5 trillion in equity.

Looking at today’s rates, Zillow reports that a 10-year HELOC now stands at 6.79%, which is up by seven basis points. VA-backed HELOCs are also slightly higher at 6.30%. With over $34 trillion in home equity available nationally, many homeowners are hesitant to let go of their primary mortgage, especially with rates hovering in the high 6% range.

For those looking to access their equity, a HELOC can be a great alternative. Unlike primary mortgage rates, HELOC rates are based on an index rate plus a margin. While the prime rate currently sits at 7.50%, lenders have the flexibility to adjust rates based on factors such as credit score and debt amount.

It’s important to note that average national HELOC rates may include introductory rates that can change after a certain period. However, by keeping your primary mortgage and considering a second mortgage like a HELOC, you can access your equity without giving up your low-rate mortgage.

The key to finding the best HELOC lender lies in comparing fees, repayment terms, and minimum draw amounts. FourLeaf Credit Union, for example, is offering a 6.49% introductory rate on HELOCs up to $500,000 for 12 months. Remember to consider both the introductory and variable rates when shopping for a lender.

HELOCs offer the flexibility to use your equity as needed, with the ability to pay back and reuse funds as necessary. Rates can vary significantly among lenders, ranging from 7% to 18%, depending on creditworthiness and lender terms.

For homeowners with low primary mortgage rates and substantial equity, now may be an ideal time to consider a HELOC. Whether for home improvements, repairs, or even a vacation, a HELOC can provide access to cash without sacrificing your current mortgage rate.

If you’re considering a HELOC, keep in mind the repayment terms and the potential for long-term debt. While a HELOC can provide financial flexibility, it’s essential to borrow responsibly and pay off the balance in a timely manner to avoid accruing unnecessary interest.