Home Equity Rate

Home Equity Rate - The Rising Tide

Homeowners are in a potentially dangerous situation these days. Interest rates for all forms of home financing are on the rise, and home prices are stagnating - and in many locations starting to slide. Not only does this give any new home loan the potential to actually generate a loss, but homeowners wishing to access their home equity will have to keep a close eye on the rates they pay.

Staying abreast of your home equity rate

Our advice: lock into a fixed home equity rate today before it climbs any hight. In the first three months of 2006 interest rates on $75k home equity loans soared from about 7.38% to well over 7.80%. Thats a huge change in only a short amount of time, and probably the best indication that times are a changing. No longer are people gaining mass amounts of equity simply for buying and owning a home, and no longer are banks willing to place all bets on your ability to handle the extra costs of equity financing. But an increase in home equity rates is not necessarily a bad thing - they've been so low for such a long time that its good we're getting a respite from borrowing.

The curse of low rates

We're all creatures of opportunity - taking advantage of a good thing when we see it. When most home owners could qualify for an incredibly low home equity rate they went for it, even if they didn't need to access their equity at that time. Even if they couldn't afford the extra monthly obligations - their home equity loan rate was simply too low to pass up. But now, with rates on the rise, we have to think longer on our equity decisions. We have to commit more energy to our applications and choose where we spend our equity very, very carefully. Which is how it should be! The curse of a low home equity rate is that it forces us to take unnecessary risks with our home, which now becomes less a financial investment and more a centerpiece to our real lives.

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