During times of low interest, home equity lines of credit offer attractive and competitive adjustable rates. These HELOC loans work in a way that's quite similar to a convenient consumer credit card. But lately the rates they charge are also starting to resemble those of credit cards, making them more of a liability than a perk.
The lure of fixed-rate home equity loans
Borrowers are shifting into fixed rate equity loans by the droves in order to take advantage of interest rates that are still near historic lows. Homeowners who got spoiled in the beginning with popular "teaser" rates on adjustable-rate home equity lines of credit are now beginning to see the other side of the coin, and it's coming as a sudden and burdensome jolt to the household budget. But there's a simple solution to the dilemma, and those who quickly switch to a fixed rate second mortgage to replace a HELOC will be able to breathe a welcome sigh of relief.
Shopping for a second mortgage
When shopping for the best mortgage, compare prices by requesting quotes from several different brokers and mortgage companies. Lenders, also feeling the pressure of higher rates, will compete to make you happy. Let them know that there are better deals elsewhere and that you'll give your business to the company that offers you the most attractive package. Once you find a loan that fits your needs, lock in your rate. Then give yourself a pat on the back. While others watch their HELOC payments rise, you can look forward to predictable rates for years to come.
