Having a HELOC can be a budget saver, especially when you use your home’s equity for the right reasons, because the interest rate on a HELOC tends to be lower than rates on credit cards and personal loans.
cheatgame.info has chosen some of the best HELOC lenders across several categories to help you find the one that’s right for you.
Best HELOC lenders
Best cash-out refinance lenders
A cash-out refi can be a solid alternative to home equity lines of credit, and you’ll often find it offered with a lower fixed interest rate. Below are two cash-out refinance lenders, but be sure to review our entire list of the best cash-out refinance lenders.
Is getting a HELOC a good idea?
Many homeowners get a HELOC to pay for home repairs and renovations. The interest on the HELOC may be tax-deductible if the money is used to buy, build or substantially improve the home, according to the IRS. But defaulting on a HELOC could put your home at risk of foreclosure, so think twice before using one to pay for vacations, vehicles or other expenditures that don’t build wealth.
How does a HELOC affect your credit score?
Taking out a HELOC will probably reduce your credit score temporarily once it appears on your credit report. Some credit bureaus treat HELOCs as installment loans rather than revolving lines of credit, so maxing out a HELOC might not have the same negative effect on your credit score that borrowing up to the limit on a credit card would.
What credit score do you need for a HELOC?
Lender requirements vary, but typically you’ll need a credit score of 620 or higher.
How does a HELOC work?
A HELOC works like a credit card: You’re able to borrow up to a certain limit, repay some or all of what you took out, then do it again as needed. The lender uses your home’s value to set the HELOC limit. You may borrow during a draw period that lasts for several years and pay only interest on the balance. After the draw period ends, you may no longer take money out, and you pay principal interest.
What are the disadvantages of a HELOC?
The main disadvantage of a HELOC is that your home could be subject to foreclosure if you don’t repay the loan. Also, the interest rate on a HELOC is tied to the prime rate, meaning it can go up or down. When interest rates rise, your minimum monthly payments may go up, too.
Is it better to get a home equity loan or HELOC?
The answer depends on how you plan to use the money. A HELOC lets you borrow whatever amount you need, as you need it, and you only pay interest on the outstanding balance. A home equity loan provides a lump sum that you repay in installments.
Best HELOC lenders: summary
- Best for unique account features: U.S. Bank
- Best for unique account features: PenFed
- Best for face-to-face service: CitiMortgage
- Best for face-to-face service: Chase
- Best for financial flexibility features: PNC
- Best for financial flexibility features: Connexus
- Best for existing-customer perks: SunTrust
- Best for existing-customer perks: Flagstar Bank
- Best for selection of mortgage products: CitiMortgage
- Best for selection of mortgage products: Chase
- Best for cash-out refinance: Rocket Mortgage
- Best for cash-out refinance: Guaranteed Rate
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