Current Mortgage Rates

Wednesday, October 08, 2008



With a HELOC, you should expect some real concessions on settlement costs with no strings attached. But don't forget to ask, because many of the perks are unwritten, and lenders save them for those times when they need help to woo customers. Many lenders will say "yes" in order to keep your business. It always helps to ask.

Here's another tip: Rather than paying for a fresh appraisal, ask if you can use the same appraisal that was done when you first bought your home. Although lenders will normally not let you use "stale" appraisal data for a typical mortgage, they often allow this when issuing a home equity line of credit. Skipping the new appraisal process can save you hundreds of dollars in closing fees. If you decide that a HELOC is right for you, what features should you look for?

Here are ten things that should be at the top of your list:
  1. No application fee (or fee should be refunded at closing
  2. No appraisal or closing costs
  3. No account maintenance or check-writing fees
  4. No "non-usage" fee
  5. Variable APR equal to or near the prime rate (adjusted quarterly)? The only cost involved with a good home equity credit line should be interest charged (APR) on the balance borrowed.
  6. Periodic cap on interest rate changes (the amount that the rate can be changed at one time)
  7. Lifetime cap on rate increases (the amount that the rate can be adjusted over the loan's life)
  8. Ability to convert to a fixed rate loan
  9. Interest-only payments allowed
  10. Unrestricted ability to repay principal without penalty.


However, HELOCs have some significant disadvantages that should be discussed as well. One of the primary differences between a HELOC and other adjustable rate mortgages (ARMs) is the fact that interest is calculated daily. The primary disadvantage to HELOCs is the increased risk from rising interest rates. All HELOCs are adjustable rate, but they carry a higher risk than standard ARMs. Market changes affect HELOCs very quickly.

Another HELOC disadvantage is the difficulty of comparing the rate with other loans. Annual percentage rate (APR) for HELOCs does not include points or upfront costs, as APR for other loans do. The requirement to disclose the APR for a HELOC basically amounts only to a two-time mandatory disclosure of the regular rate. Despite these disadvantages, HELOCs can be a sound choice for many borrowers. However, it is important to be aware of the risks associated with these credit lines before committing to them.




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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.12%
30-yr. fixed jumbo7.62%
15-yr. fixed5.88%
15-yr. fixed jumbo7.12%
7/1 ARM6.25%
5/1 ARM6.00%
3/1 ARM5.88%
1-yr. ARM5.50%
1-yr. LIBOR ARM6.12%
10/1 ARM8.25%
40-yr. fixed7.12%
*Mortgage Rates Updated: 10/07/2008