Fixed Home Equity Loan

The most exciting benefit to a fixed interest home equity loan is that the loan interest rate will not change over the course of the loan term. Loans that have a variable rate, like ARM (adjustable rate mortgage) mortgage loans can rise and fall as the federal prime rate moves. With such low rates today, it is better to obtain a fixed equity loan instead of a variable rate equity loan in order to lock in the loan at these low rates.

Having a fixed equity loan means that you can count on the mortgage payment always being the same amount, no matter what happens with interest rates over time. Since they are not likely to go much below where they are today, this is an excellent time to get into home equity fixed loans.

Another benefit to fixed home equity loans is that shorter term loans offer even better interest rates than the traditional 30 year loan fixed rates. This means with just a little higher monthly payment you can rebuild equity and pay off that loan much faster. Rates on fixed equity loans are down around 4.49% or lower, depending upon the type of home equity loan. ARM loans can have lower rates, but are subject to high fees and changing monthly payments.

The home equity fixed loan rate is an excellent choice for longer term loans because of their ability to lock in today’s low rates, which are near historical lows. Borrowing against the value of your home that is above what is owed on a first mortgage is a move many homeowners do in order to free up large amounts of cash at low interest rates. By using this equity value, you can make home improvements, pay off bills, or make investments with money at very low rates that also has tax advantages.

The interest paid on home equity loans is usually tax deductible, which is why many people use them for making home improvements rather than using credit cards that do not have tax advantages. If loans are for a considerable amount, as home equity loans usually are, having the tax advantages is an important issue and benefit.

Home equity loans allow the homeowner to get low interest loans by using the part of the home value that is already paid off. Lenders look at how much the home is worth minus any other mortgages. The balance can be used as collateral to get a low interest home equity loan. The only problem that would occur is if the homeowner is unable to repay the loan. With a locked in fixed rate and guaranteed same monthly payments, it is much easier for the homeowner to manage their budget if prices and interest rates go up substantially.

Because the home is used for collateral, equity loans do put the property at risk if the homeowner is unable to make loan payments. In most situations, fixed interest rates for home equity loans are beneficial to the borrower.