This is by far the most frequently asked question of our loan officers regarding home equity lines of credit (HELOC).
SHORT ANSWER: A borrowers rate is based on the borrower's credit rating and the combined loan-to-value (CLTV) of the subject property. HFCU's HELOC rate set at time of closing is tied to the WSJ Prime Rate and is reviewed monthly. The HEL rate is fixed for the term of the loan.
Two things determine the rate you pay for a HELOC. The first thing you have no control over. The second thing, you have total control over.
1. The Prime Rate:
Our rate is based on the WSJ Prime Rate. We review it monthly and usually set it at the beginning of the month. WSJ stands for the Wall Street Journal. Each week day, this newspaper surveys at least 70% of the 30 largest banks and publishes the consensus prime rate. The WSJ Prime Rate is widely known as the "official" source of the prime rate. You have no control over this rate but you can monitor it with an eye towards getting a loan when the rate is down. If you are looking for a line of credit, the rate will fluxuate.
2. Your Credit Score:
This aspect of determining your HELOC rate is something that you have complete control over. The better your credit, the lower the rate you will pay. The rates you see advertised at any financial institution always have a footnote that reads something like:
"Rates shown are for members with the best credit profile. Other rates are available, based on your credit history. Contact us for rate details."
Even a small increase in your credit score can save you big bucks over the life of a loan. So, while you're shopping rates, take the time to review your credit report and score. If you're not sure how to get or read your credit score, sign up for a free credit score review. Our experts will color code your credit report for you and walk you through how to read and understand it.
You can learn more about home equity by downloading our free Equity Edge eBook. This eBook will introduce you to what home equity means, 3 ways to access your home equity, how to qualify, and important questions to ask when shopping for a home equity line of credit.
Hanscom FCU’s 3 in 1 Home Equity Advantage Plan combines the convenience of an equity line of credit, with options for fixed rate advances and a credit card. There are no application fees, no minimum draw requirements, and no closing costs.*
Our home equity and mortgage experts are happy to answer your questions and help you understand your available options. We understand your unique financial needs and have the tools and expertise to help you achieve your goals. Let our dedicated home equity team find the perfect solution to make your financial dreams a reality.
Learn more at www.hfcu.org/equity.
- Home Equity FAQs - How long will it take to process the loan?
- Home Equity FAQs - Home Equity Loan vs. Home Equity Line of Credit
- Home Equity FAQs - What are your closing costs?
* If you terminate your line within the first 24 months after closing, you will be responsible for closing costs.