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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 a slight jump from last week, when it was 6.09%, and from its lowest point over the last 52 weeks, when it was 2.55%.
At the current interest rate, a $25,000 10-year HELOC would cost approximately $127 per month during the 10-year draw period.
A HELOC has a set draw period, often 10 years, that’s followed by a repayment period. The HELOC’s term is generally the same as its repayment period. So, a 10-year HELOC may give you 10 years to use the funds and 10 years to repay. HELOCs have variable interest rates, meaning that the interest rate may change as you are paying it back.
Generally, a borrower pays only interest during the draw period, but they can also repay their principal during that time if they wish.
20-year HELOC Rates
The interest rate for a 20-year HELOC averaged 7.28% this week. That’s 7.33% last week.
At this rate, a $25,000 20-year HELOC would cost a borrower approximately $152 per month.
HELOCs vs. Home Equity Loans
Though both tap into your home equity and are backed by your house or other property, HELOCs and home equity loans have some key differences.
A HELOC lets you draw money as you need it and pay interest only on what you borrow during the draw period (usually 10 or 20 years). You repay the entire balance and interest during the repayment period (usually 20 years). Home equity loans require homeowners to take their funds all at once and repay the balance with fixed monthly payments.
This can make a home equity loan a better option if you have an extensive project and need one-time funding. Home equity loans have fixed rates, while the rates on HELOCs are variable.
How Do I Qualify for a HELOC?
HELOC qualifications may be somewhat stricter than those for initial mortgages, …….