How To Secure the Best HELOC Rates

Though rates vary from lender to lender, the interest rate a lender offers is largely influenced by your credit score, existing debt, and the amount you hope to borrow.

Your credit score significantly impacts your HELOC rates. Typically, the better your score, the better your rates. Lenders take into account your score and previous credit history to determine how reliable of a borrower you are and whether you are likely to make timely payments. If, in the past, you have paid back money on time and in full, then you are more likely to do this in the future and, therefore,  low risk to a lender. Low risk means lower rates.

Though each lender has different eligibility requirements, for the best HELOC rates in Oregon and Washington, aim to keep your credit score in the high 600s or the 700s. Get a free credit report before you apply to find out where your score stands. A lower score won’t necessarily preclude you from being eligible, but it can raise your rates.

For maximum savings and financial flexibility, improve your credit score before you apply for a HELOC by:

●         Making credit payments on time

●         Paying down debt

●         Keeping credit card balances low

●         Increasing credit limits

●         Building credit history

●         Disputing any errors on your credit report

Your DTI compares your existing debt to your gross monthly income, or how much income you earn before taxes and other deductions. To calculate your DTI, take your total monthly debt payments and divide them by your gross monthly income. The DTI is expressed as a percentage and measures your ability to manage monthly payments.

Lenders use your debt-to-income ratio to assess risk and your ability to repay debt. If your DTI is too high, a lender may offset the risk by offering a higher interest rate. Conversely, a lower DTI communicates to a lender that you can easily afford monthly payments and are therefore more likely to make payments on time each month.

To secure the best interest rates on your HELOC, aim to keep your DTI as low as possible. Better rates equal more savings and increased financial freedom and flexibility.

How much available equity you have in your home also can affect your interest rates. Though this varies from lender to lender, you will typically need at least 20 percent equity in your home. For better rates, it’s helpful to have 30 percent or more equity in your home.

To build equity, continue to pay down your mortgage or consider increasing value through home improvements.

 

In addition to improving your credit history and lowering debt for the best rates, these strategies can help you maximize your savings:

Before starting the application process with your current mortgage lender, get quotes from multiple lenders and compare rates. Don’t get locked into higher rates with your current lender without first exploring all options.

To effectively compare lenders, look at:

●         Interest rates

●         Additional fees

●         Repayment loan terms

Compare lenders’ specific terms and rates side by side. Look at which option has the best interest rates, the lowest fees, and the loan terms that best fit your lifestyle and goals. Then look at customer reviews to assess the quality of loan products and customer service.

Unlock your equity your way by partnering with Riverview Bank. Whether you want to save money through debt consolidation, increase your monthly cash flow, pay for home improvements, or cover an unexpected emergency, we are here for you. We care about our community members. Contact us today to explore all your possibilities for growth and savings.

Don’t be afraid to negotiate with lenders for better terms or lower fees. Even if a lender's initial rates are fixed, ask whether they’re willing to waive or reduce application fees or closing costs, and try to negotiate better terms for rate locks and origination fees.

●      Getting offers or pre-approval letters from competing lenders

●      Working with a lender you already have a relationship with

●      Having a reliable credit history and healthy financial profile

If you are a loyal client with a lender such as Riverview Bank, you can unlock added perks as well.

Though borrower eligibility requirements are different for each lender, you can improve your rates by meeting these basic qualifications:

●         Aim to have a credit score in the high 600s

●         Keep your debt-to-income ratio low

●         Have equity of at least 20 percent

With these basic requirements, you can secure better savings and more flexible terms.

To get the best HELOC rates in Oregon and Washington, maintain good financial practices by paying down existing debt and freeing up income. This will improve your financial profile, showing lenders you have healthy financial habits and have the money management skills necessary to qualify for the best interest rates available.

Follow these strategies and have the financial freedom to achieve your goals and finance your future!