What kind of interest rates go with a home equity loan?
Loan rates vary between institutions, which is why it is important to shop around. Start by comparing the APR, annual percentage rate, which is the cost of credit on an annual basis. But don’t forget, that the APR is not your only cost associated with a home equity loan. There are opening fees, closing fees, and points, all of which are important, especially if you are trying to decide between the line of credit, and a second mortgage where the APR includes the total credit cost for the year. Most home equity lines of credit carry variable interest rates, which means the rate and your payments may rise and fall though out the year. You may start off low, especially with an introductory offer, but fluctuating markets can drive your payments up in no time. A fixed rate, if available, may cost more in the first few months, but over the life of the loan, gives you stability of interest rates and monthly payment amounts. If a variable rate is attached to your offer, check out all the terms.
