How to Calculate Home Equity Loan Rates
Home equity loan rates changes when interest rates go up or down, usually as the Federal Reserve makes changes to their lending rates. These ranges are different from one lender to the next. Calculate these rates to determine which one is offering you the best investment by comparing different lenders, different types of loans and various terms.
- Determine the amount of equity you have in your home. Take your property’s current value (which you can obtain from an appraisal of the property) and subtract the current mortgage balance. This is the equity in your property, which you can borrow against.
- Find home equity loan lenders online. Most mortgage lenders provide home equity loans as well. Figure out what the average lending rate each lender is offering currently.
- Use a mortgage calculator to figure the monthly cost of the loan, based on the interest rate the lenders are offering to you. These calculators are available to you online for use without obligation or cost. You need the correct amount of money you are borrowing, the interest rate charged and the length of time you will hold the loan (the term).
- Determine the monthly payment of the loan if you changed the term from 48 months to more or less. Find the best monthly payment for your needs. As you extend the term, you increase the amount of interest you pay on the term over time.
- Try to consider a home equity line of credit, which has no fixed term, but offers an open line of credit you can borrow from and pay back over time. Calculate the cost of your monthly payments using the same online calculators.
- Get some estimates from home equity loan lenders on their rates, which are based on your credit score. The lenders will ask questions and need proof of your personal identity and finances. Compare several lenders and choose the most affordable.