What kind of HELOC interest rate did you receive when you established your home equity line of credit? I hope that you did as much research as I did because there are certainly a lot of variables out there amongst the different lenders. I did my homework all right. I found out all about draw periods and repayment structures, fixed and variable rates and a whole host of other terms that I had no idea even existed. Ultimately, I ended up with a HELOC interest rate that was better than what I had hoped it could be and I learned a lot during the process.
Benefits of a HELOC
A lot of folks when they need money for home improvement projects or for paying college tuition first look at how to refinance mortgages that they already have in place. I considered that too, but I found the benefits to a HELOC type of loan too good to pass up. I could draw on the funds over a period of about ten years, instead of having to receive the entire payment as a lump sum. I only had to pay interest on the actual amount I had borrowed, which worked out pretty well, because the addition to my house was going to be spread out over a year or two and it didn’t make sense to me to pay interest on money that essentially would just be sitting in the bank for a year or two.
Variable HELOC interest rates
I should tell you that the HELOC interest rate I received, though a good one, was a variable rate. This means that the rate on my loan varied based on whatever the prime interest rate is doing; if the prime went up, so did my payment. This is an important consideration when looking at the HELOC interest rates that the lender is going to offer, but it should not stop you from taking advantage of this type of loan.