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Here Are Today’s HELOC Rates: September 6, 2022—10-Year HELOC Rates Hit A New High – Forbes

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The average rate on a 10-year HELOC (home equit…….

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

The average rate on a 10-year HELOC (home equity line of credit), hit a new high—6.20%, according to Bankrate.com. Meanwhile, the rate on a 20-year HELOC is 7.19%, down 9 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

What Are Current HELOC Rates?

10-year HELOC Rates

This week, the average interest rate on a 10-year HELOC is 6.20%, a slight jump from the previous week, when it was 6.11% and 2.55%, the low over the past year.

At the current interest rate, a $25,000 10-year HELOC would cost approximately $129 per month during the 10-year draw period.

It’s followed by the repayment period, when interest and principal must be paid. Home equity lines come with variable interest rates, so your rate can rise during the repayment years. A HELOC’s term is the same as its repayment period, so a 10-year home equity line gives a borrower 10 years to pay back the loan.

Borrowers usually pay only interest during the draw period. However, some borrowers may choose to always pay down the principal amount, too.

20-year HELOC Rates

The average interest rate on a 20-year HELOC is 7.19%, down a bit from 7.28% last week. This week’s rate is higher than the 52-week low of 5.14%.

At today’s interest rate of 7.19%, a $25,000 20-year HELOC would cost approximately $150 per month during the draw period.

How Do I Qualify for a HELOC?

If you already have a mortgage, some of the requirements for taking out a HELOC will likely be familiar. As a rough rule of thumb, homeowners usually need a maximum debt-to-income (DTI) ratio of 43%; a minimum credit score of 620; a history of on-time mortgage payments; and at least 15% to 20% equity in the home. Some of the specifics may vary from lender to lender.

In addition, lenders typically require an appraisal to determine the value of the home, which in turn determines how much equity the owner has.

HELOC Rate Insights

HELOC rates are tied more closely to banks than are first-mortgage rates, which tend to track the performance of the bond market. The Federal Reserve, which controls the interest rates that banks charge each other, has signaled to investors …….

Source: https://www.forbes.com/advisor/home-equity/heloc-rates-september-06-2022/

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