Taking out a home equity loan? These 5 factors matter most, according to experts

High interest rates have forced many potential borrowers to put plans on hold. If you need money right now, you might have to turn to more expensive unsecured options, like personal loans or credit cards. Those options can get costly, as the average personal loan interest rate is almost 12% right now while credit card users are paying an average of more than 21% interest.

However, homeowners have a more affordable borrowing option with home equity loans. Unsecured borrowing options are in double digits, while home equity loans average 8.60% in interest.

“Almost 80% of homeowners have a mortgage interest rate below 5%,” says Tom Hutchens, the executive vice president of production at Angel Oak Mortgage Solutions. “By utilizing a home equity loan, a homeowner can tap into this equity while keeping their all-time low first lien interest rate in place.”

If you’re thinking about taking out a home equity loan, it first helps to know the factors that matter most. We asked some experts for their insight.

 

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