Today we are going to discuss HELOC Rates: Where are they now and where are they going? HELOC rates have been shifting, and if you’re thinking about tapping into your home’s equity, now is the time to understand where they stand. Over the past year, rates have dropped, and many experts predict they will continue to go down. But should you wait, or is now the right time to get a HELOC? In this guide, we’ll break down where rates have been, where they are now, and what you can expect in the coming months.
Where Have HELOC Rates Been?
Over the last 12 months, HELOC rates have been on a slow but steady decline. The prime rate, which HELOCs are based on, has dropped to 7.5%. This means that if you qualify for a good HELOC, your interest rate should be around 7-8%.
Where Are HELOC Rates Now?
Right now, the average HELOC rate sits around 7.5% to 8%, depending on the lender and your credit profile. Here’s how HELOCs compare to other types of debt:
- HELOCs: Around 7.5% – 8%
- Credit Cards: Around 24% – 29%
- Home Improvement Store Cards: Over 29%
For those looking to consolidate debt, a HELOC is currently about one-third the cost of credit card interest.
Where Are HELOC Rates Going?
Most experts expect rates to continue decreasing over the next 12-24 months. If the Federal Reserve lowers its rates, the prime rate will drop too. Since HELOCs are tied to the prime rate, your interest rate will go down automatically.
Should You Wait for Rates to Drop?
No! If you need a HELOC now, don’t wait. Here’s why:
- HELOC rates adjust downward when rates drop, so you benefit automatically.
- The money saved from consolidating high-interest debt now outweighs any small rate decrease in the future.
- HELOCs are cheap and easy to refinance, so you can switch to a better rate later if needed.
HELOC vs. Cash-Out Refinance: Which is Better?
For most people, a HELOC is a better option than refinancing their mortgage. Here’s why:
- HELOCs keep your low mortgage rate intact. A cash-out refi could mean going from a 3-4% mortgage rate to 6-7%.
- HELOCs only apply to what you borrow. You don’t pay interest on unused funds.
- Cash-out refinances combine your good mortgage debt with bad debt. This increases your overall interest costs.
How to Find the Best HELOC Rates
Not all HELOCs are priced the same. Every lender adds a margin to the prime rate, which affects your final interest rate. To get the best deal:
- Shop around. Credit unions and regional banks often have the lowest margins.
- Look for a margin of 0% or lower. Some lenders offer negative margins, meaning your rate could be below prime.
- Avoid high closing costs. Most HELOCs cost $200-$500, but some lenders charge thousands.
HELOCs Are Great for More Than Just Debt Consolidation
While many use HELOCs to pay off high-interest debt, they’re also useful for:
- Home improvements – Increase your home’s value or make it more comfortable.
- Cash flow management – Use it to cover short-term expenses and pay it back quickly.
- Unexpected expenses – Keep funds available for emergencies.
Don’t Wait – Take Advantage of HELOC Savings Now
If you have high-interest debt, waiting to get a HELOC could cost you hundreds per month in extra interest. Since HELOCs are easy to refinance, there’s no reason to delay. Lock in a lower rate now and benefit even more if rates drop later.
Use our HELOC Shopping Guide (link below) to compare lenders and find the best rate for your needs.
Have Questions?
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