An open line of credit is great for home repair and other open ended problems we face in everyday life. However, with rates higher than we are accustomed, it may be time to get a fixed rate and get out of the variable interest rate mess.
For folks who want to pay down that principal every month, refinancing into a home equity loan is an increasingly popular option.
About seven in 10 new second mortgages is a home equity loan, whereas a year ago it was one in 10. Bankrate’s weekly national survey on July 12 pegged the average home equity loan rate at 7.85 percent.
Because of the requirement to pay principal, not everyone is ready for the rigor of a home equity loan.
Of course, you have other options if you want to lower your HELOC prices. You can choose a HELOC hybrid with a fixed rate, you can refinance your home and pay off the HELOC or you can just wait it out. Many don’t expect the prime rate to climb more than a half point further.
By Philippe Volo
Compare Your Loans Contributing Editor
