My First Mortgage - Home Equity Loan Rate

Home Equity Loan Rate - Determination

There are numerous factors working upon and against your home equity loan rate - all driving the numbers upward:

you have your credit history
the amount of home equity you have vs. the amount you propose to take out
market conditions
the success and stability in your primary home loan
appreciation rates

The list goes on and on. In short, there is no easy way to predict what rates you will see for your home equity loan - you simply have to get quotes. But you can approximate, and you can lower your rate with a few conditions that you do have control over.

What you can control in your home equity loan rate

Before you even worry about your home equity loan rate, take a good look at your current financial situation. How are your monthly mortgage payments coming along? Are they easy? Do you have extra space? Only consider second mortgages when you can afford the additional weight of yet another monthly payment. Then look at your credit - which should be good if you've been having an easy time with your primary mortgage. Even if you do have bad credit you still stand to find a relatively low home equity loan rate - lenders are more willing to judge you off your mortgage history rather than your entire history. After you take a good look at your current personal finances, consider where lenders will raise your home equity loan rate:

lets say you have $20,000 in equity and are looking to take out a $20,000 loan - expect high rates ( plus insurance payments)
now say you have $100,000 in equity and are looking to take out $50,000. Your rates will be much lower in this instance because you are borrowing more, but it is less when compared to your total equity.
With thee same ratio, if you have $200,000 in equity and move to borrow $100,000, your home equity loan rates will be even LOWER!

Lenders will love you if you have tons of equity, and the greater amount you move to take out the lower your home equity loan rate. Its a world for the big spenders, because at the end of thee day home equity financing is indeed a luxury.

Why your rate is higher than for your first mortgage

Most first-time home owners are extremely surprised to see that the average home equity loan rate is significantly greater than the average home loan rate - up to 4% greater! The reasoning is simple - you're taking on extra weight, and if you buckle beneath that extra weight your first mortgage provider has first dibs on your property. Your equity lender has more to loose, takes a greater risk,a and therefore charges a higher home equity loan rate. The only way to combat this would be to find a lender big enough where thee risk of loosing your payments isn't so great for the overall success of thee company. The Countrywide home equity loan traditionally carries on of the lowest, most stable equity loan rates around because when their clients fail to repay the bill, Countrywide will still survive ( and they will attack you like a dog in the meantime).