Interest on home equity lines of credit are extremely low right now, even when compared to traditional home loans. Some financial advisers say that borrowers should consider taking out a HELOC rather than doing a traditional refinance if they want to save on withdrawing equity.
CNN Money reports:
“HELOCs can be hard to get right now, but they are cheaper than doing a complete refinance. Recently, the average rate on a HELOC was 5.73%, a point lower than the new jumbo loans. What’s more, HELOC generally have no upfront fees. The rub is that HELOCs are adjustable, but with the economy looking sluggish it’s a good bet interest rates won’t rise soon.”
If you qualify to take out a home equity line and you live in an area that is not experiencing dramatic property value drops, it’s worth looking in to.
HELOCs have great rates now. But there are more stable options such as the fixed-rate home equity loan.
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