If you have a home equity loan and are concerned with the rising interest rates, then there are several steps you can take in order to lower the interest rate.
Step #1 Refinance and Consolidate Your Loans
An affordable option may be to refinance your primary mortgage and home equity loan. By refinancing both loans you will then be able to consolidate them and have only one monthly payment. When you combine both loans, you are then able to qualify for a lower interest rate, since now you have only one mortgage. It may be in your best interest to look into a fixed interest rate, which will allow you one set monthly payment that will not fluctuate with the interest rates.
Step #2 Convert to a Second Mortgage
Some home equity loans will allow you to convert your equity loan into a second mortgage. However, once you convert the equity loan to a second mortgage you will not be able to borrow against it. Since second mortgage loans pay out a fixed amount in one sum, they have a fixed interest rate.
Step #3 Apply for a New Home Equity Loan
Another way for you to lower the interest rate on your current home equity loan is to apply for an entirely new home equity loan. This is a good option when you are not able to convert your current equity loan into a secondary mortgage.
Step #4 Boost Your Credit Score for a Lower Rate
It is true that the better your credit is, the easier it is for you to qualify for low interest loans. The best way to improve your credit is to reduce your outstanding balances, pay your debts on time and avoid skipping payments. Although the process of improving your credit may take time, it will be well worth your while and you will save more money.
Step #5 Shop Around
When looking to reduce your home equity loan interest rate, it is important to compare other lenders deals. Contact mortgage companies, credit unions, banks and other finance institutions.
Author: C.L. Haehl
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