Current Mortgage Rates

Friday, July 04, 2008



Home-equity loans provide an easy source of cash. The interest rate on a home-equity loan - although higher than that of a first mortgage - is much lower than on credit cards and other consumer loans. As such, the number-one reason consumers borrow against the value of their homes via a fixed-rate home equity loan is to pay off credit card balances (according to bankrate.com). Interest paid on a home-equity loan is also tax deductible, as we noted earlier. So, by consolidating debt with the home-equity loan, consumers get a single payment, a lower interest rate and tax benefits. Some of the benefits to home equity loans are detailed below:
  • Home equity loans offer far lower rates of interest than unsecured loans and credit cards, and this is because they are secured loans and therefore less of a risk to the lender. This contributes towards lower monthly repayment as well as less interest to pay overall on the total loan.
  • Home equity loans enable you to borrow money over a far longer term that unsecured loans in many cases, and this means that you can spread the loan over a longer repayment period and therefore enjoy lower monthly payments.
  • Home equity loans often enable you to borrow far more than an unsecured loan or standard credit card, although this does depend upon the level of equity tied up in your property. Some lenders will let you borrow over and above the level of equity in your home.
  • Home equity loans are easier to get than standard loans because of their secured nature. This is particularly true for those with a tarnished credit rating or history, who would normally find it hard to get a loan based on their financial past.
  • Home equity loans enable you to unlock the cash that is tied up in your property without having to actually sell your property. That means that you can get your hands on the capital when you need it rather than having to wait until you sell your property.
Home equity loans are best used for home improvements that will increase the value of your home. Some improvements, such as swimming pools, don't usually increase the value upon resale. Others, such as additional bathrooms, living space, renovated or updated kitchens, etc., generally do increase the value of your home. The bottom line is this: if your home is worth more than you owe on it, a home equity loan can be a great way to take advantage of this, but it can also get you into serious financial trouble, and should be used wisely. Why not use the equity in your home as part of your retirement fund instead of spending it on things that may not last?



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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.38%
30-yr. fixed jumbo6.75%
15-yr. fixed6.00%
15-yr. fixed jumbo6.50%
7/1 ARM6.00%
5/1 ARM5.88%
3/1 ARM5.62%
1-yr. ARM5.62%
1-yr. LIBOR ARM5.50%
10/1 ARM7.75%
40-yr. fixed7.00%
*Mortgage Rates Updated: 07/03/2008