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The average rate on a 10-year HELOC (home equity line of credit), hit a new high—6.11%, according to Bankrate.com. At the same time, the rate on a 20-year HELOC is 7.28%, down 5 basis points from last week.
Home equity lines of credit let homeowners convert their equity—the appraised value of the home minus anything owed to the mortgage lender—into cash. Often referred to as HELOCs, these products offer owners the flexibility to make use of cash only as needed, and to pay interest only on what’s used.
Related: Best Home Equity Loan Lenders
Current HELOC Rates
10-year HELOC Rates
The interest rate for a 10-year HELOC averaged 6.11% this week. That’s up slightly from 6.09% last week and 2.55% at the lowest point over the last 52 weeks.
At today’s rate, a $25,000 10-year HELOC would cost a borrower approximately $127 per month during the 10-year draw period.
After the draw period, there is a repayment period during which time the interest rate may rise. HELOCs have variable interest rates, unlike home equity loans, which are taken out as a lump sum. They have repayment periods that can be equal to or different than the draw period. Generally, a HELOC’s term is the same as its repayment period—a 10-year HELOC gives you 10 years to pay back the loan.
Typically, a borrower pays only interest during the draw period.
20-year HELOC Rates
This week, the average interest rate on a 20-year HELOC is 7.28% compared to 7.33% last week and 5.14%, the low over the past year.
At this rate, a $25,000 20-year HELOC would cost a borrower approximately $152 per month.
How Do I Qualify for a HELOC?
Qualifying for a HELOC is similar to qualifying for a first mortgage. Borrowers typically can have a maximum debt-to-income (DTI) ratio of 43%; a minimum credit score of 620; at least 15% to 20% equity in the home; and a history of on-time mortgage payments, if applicable.
Lenders also usually require a third-party appraisal of the property’s value, since that helps determine how much equity is in the home.
HELOC Rate Insights
If you’re interested in tapping home equity, now is the time to do it. The Federal Reserve has signaled that it expects to raise its fed funds rate several times in 2022. This generally causes HELOC rates to move up.
The current average 10-year HELOC rate is 6.11%, but within the last 52 weeks, it’s gone as low as 2.55% and as high as 6.11%. On a 20…….