3 Tips for Finding a Low Rate Home Equity Loan
Locating a low rate home equity loan can provide you with a significant financial advantage as a homeowner. Being able to borrow money from your home equity will allow you to complete a number of different tasks. Here are a few tips for finding a low rate home equity loan.
1. Use a Broker
One way to find a low rate on a home equity loan is to utilize a loan broker. Many people overlook this option. A loan broker is an individual that has relationships with many lenders. By contrast, many people work with one particular lender that has only one set of programs available. If you work with a mortgage broker, you tell him or her what you are looking for and provide some personal information, and he or she goes out and tries to find it for you. The loan broker taps into a large database of available lenders and then passes on the results to you. He or she often has access to programs that you would not be able to find otherwise.
A loan broker typically does not handle the application process for the loan. He or she simply connects you with the lenders that meet your criteria and is then paid a referral fee when the loan is completed. Loan brokers can be a very valuable asset to you in the mortgage and home equity markets.
2. Online Lenders
Online lenders are another option that you should investigate when looking for the best rate on a home equity loan. Lenders that primarily do their business online often have a very low cost of overhead to run their business. Since they do not have as many employees or facilities, their expenses are quite a bit lower than their competitors'. This means that they can, in turn, pass the savings on to you in the form of lower interest rates.
Before you get involved with an online lender, though, you will want to make sure that you are dealing with a reputable company. Anyone could put up a nice-looking website and claim to be a home equity lender. However, you want to work only with a legitimate company. In order to tell the difference, you can check out the Online Better Business Bureau. This organization can help you distinguish the legitimate companies from the scams.
3. Shop Around
Once you have looked online, you should also try out your local market as well. The banks that you have in your market could potentially have some great rates on home equity loans. When you are in the market, you need to shop around at a variety of different lenders. Try banks, credit unions and mortgage lenders to get the best mix of options. When you look at multiple lenders, they will try to compete for your business. If one of them wants your business badly enough, they may be willing to give you a better deal than they advertise. Do not be afraid to ask them to beat a competitor's rate either. You never know when they might oblige your request.