Lower Rates on Home Equity Loans Scripps Howard News Service
In the bleak mid-winter, a little pick-me-up for homeowners: lower interest rates on home equity lines of credit.
In January, the Federal Reserve lowered short-term interest rates twice for a total of one point. That led to a reduction in the prime rate from 9.5 percent to 8.5 percent. Since most home equity lines are linked to the prime rate, you will be able to find a better deal this month than last.
For instance, a home equity line offered at the prime rate plus half a point would mean a savings of almost $500 in interest this year for someone borrowing $50,000 compared to the rates last year.
The Fed's action also is likely to mean lower rates on credit cards, but rates on cards won't be as low as those on home equity loans. That's one point to consider when deciding whether to lump your credit card debt into a single payment and transfer it to a home equity loan. Another point: if you do that, will you just run up the credit cards again? If so, think twice before eating up the equity you've built in your house with the kinds of purchases made on credit cards.
Facts About Refinancing
- Last week, refinancing accounted for 55 percent of mortgage applications, according to the Mortgage Bankers Association.
- Forty-five percent of total mortgage loans outstanding are ripe for refinancing, according to Credit Suisse First Boston , an investment bank.
- If your mortgage rate is 8 percent or higher, run the numbers on an online mortgage calculator to see if refinancing makes sense for you.
BET and Home Buying
Bet.com, a Web site designed for African Americans, says it has just added an interactive home buyer's program developed by a big Florida lender. Potential buyers can get a loan approval online as well as use calculators and other information. Find these tools at www.bet.com and choose Home Center.
