How to Get a Low Interest Rate on a HELOC

How to Get a Low Interest Rate on a HELOC

October 17th, 2018 | Interest Rates, Home Equity

The amount of available home equity has recently hit all-time highs, meaning now is a great time to tap into your home’s value with a home equity line of credit (HELOC). These are revolving accounts that allow you to draw out money for anything from home improvement to college tuition to debt consolidation. Of course, just like with your primary mortgage, finding the best rate on a HELOC is essential. Here are some tips for scoring a great interest rate:

  • Check Your Equity
    The more equity you have in your home, the better your odds are of being approved and offered a good rate. Your equity is the difference between the current value of your home and the amount you still owe on your mortgage. HELOCS will not let you pull out more than 80% of the value of your home and you will have to prove your ability to repay the loan, but generally lenders look favorable on borrowers with a sizeable amount of equity.
  • Pump Up Your Credit
    Credit scores are very important in the lending world. They demonstrate your ability to make payments on time and your determination to repay debts. You can check your credit score with any of the three credit reporting agencies: Equifax, Experian and TransUnion. If your credit score is not great, consider waiting to apply for a HELOC until you can give it a boost. The best way to do this is to start making all your payments on time and by paying off debts. It takes time, but it can pay off handsomely when it comes to your rate.
  • Compare Offers
    There are plenty of different programs and HELOC offers out there. Checking around and comparing rates is a great way to make sure you are getting the best deal.
  • Understand Introductory Rates
    Most HELOC loans are adjustable rate mortgages that start off with a lower initial fixed rate. Be sure you understand how the rate works on your loan and that you can afford to make your payments after the teaser rate period expires. Check to see if there is a rate cap and how high your rate can possible rise.
  • Add Up the Fees
    Interest rates are not the only cost involved with a HELOC. There are usually lender fees, appraisals, and application fees that are paid up front and annual fees. Some HELOCs also include inactivity fees if you do not draw on your funds often enough. There may also be prepayment penalties that could negate any interest rates savings if you decide to repay your loan quickly. All these costs need to be factored into the interest rate. Talk to your lender about waiving some of these fees.

If you do your homework, you should be in prime position to win the best rate on a HELOC that can help you accomplish your financial goals.

Call us today at 510-339-2121 to discuss your goals and we at Holmgren and Associates help you understand the best options available for you.


Leave a Comment

Contact Us

Not readable? Change text.

Holmgren and Associates

DBA of Finance of America
4200 Broadway
Oakland, California 94611
Phone: 510-339-2121
NMLS 0910184/1071

Holmgren & Associates is a branch of Finance of America. We are a full service mortgage banker with an experienced staff offering expertise in residential mortgage lending, with primary focus on loans for home purchase, refinance, and reverse mortgages.

Find Us On:


©2019 Holmgren & Associates is a division of Finance of America Mortgage LLC |Equal Housing Opportunity | NMLS ID #1071 (| 300 Welsh Road, Building 5, Horsham, PA 19044 | (800) 355-5698 | Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act
Questions, comments, concerns? Send to 

This is not a commitment to lend. Prices, guidelines and minimum requirements are subject to change without notice. Some products may not be available in all states.  Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision.  Any materials were not provided by HUD or FHA. It has not been approved by FHA or any Government Agency.  A preapproval is not a loan approval, rate lock, guarantee or commitment to lend. An underwriter must review and approve a complete loan application after you are preapproved in order to obtain financing.  Questions, comments, concerns? Send to