HELOC Rates For June 1, 2022: 20-Year HELOC Rates Tumble – Forbes Advisor - Forbes

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Updated: Jun 1, 2022, 11:58am
HELOCs, or home equity lines of credit, are loans that allow you to borrow against your home’s equity—the current market value of your home minus your remaining mortgage balance. When you get a HELOC, you can take the money available in installments as you need it, and pay interest only on what you’re using.
The average rate on a 10-year HELOC is 4.74%, according to Bankrate.com, while the average rate on a 20-year HELOC is 5.57%.
Related: Best Home Equity Loan Lenders

This week’s average interest rate for a 10-year HELOC is 4.74%, the same as last week. That compares to the 52-week low of 2.55%.
At the current interest rate, a $25,000 10-year HELOC would cost approximately $99 per month during the 10-year draw period.
A HELOC has a set draw period, often 10 years, that’s followed by a repayment period. The HELOC’s term is generally the same as its repayment period. So, a 10-year HELOC may give you 10 years to use the funds and 10 years to repay.
Borrowers usually pay only interest during the draw period. However, some borrowers may choose to pay down the principal amount, too. HELOCs have variable interest rates, meaning that the interest rate may change as you are paying it back.
This week’s average interest rate for a 20-year HELOC is 5.57%, versus 7.14% last week. That compares to the 52-week low of 5.03%.
At this rate, a $25,000 20-year HELOC would cost a borrower approximately $116 per month.
HELOCs are a form of credit called a revolving loan. That means a borrower can draw only what’s needed against the line of credit, pay that back and then draw again, repeating that process over the life of the loan.
That differs from a home equity loan, which is a lump-sum amount that’s borrowed and paid back in regular installments. Home equity loans also carry fixed interest rates, while lines of credit are variable—and may rise during the period in which a borrower needs to make payments.
That’s especially true now since the Federal Reserve intends to raise interest rates several times in the coming months and years. That may make a home equity loan, or another fixed-rate product, a better option.
It’s always a good idea to start your search for the best HELOC rate with the lender who has your first mortgage, if you have one. But you should get some other quotes, as well.
Look for lenders who offer prequalification online, and complete that process with a few lenders. That will give you a sense of their terms and rates, as well as their fees.
HELOC rates are based on the prime rate, which is what banks and other lenders charge creditworthy borrowers. The prime rate is based on the federal funds rate, which is set by the Federal Reserve.
HELOC rates are tied more closely to banks than are first-mortgage rates, which tend to track the performance of the bond market. The Fed, which controls the interest rates that banks charge each other, has signaled to investors that it expects to raise the fed funds rate several times in 2022 and beyond.
Currently, the 52-week high on a 10-year HELOC is 5.64%, while the 52-week low is 2.55%. The 52-week high on a 20-year HELOC is 5.70% and the 52-week low is 5.03%.
There are no guidelines about how you must use HELOC funds. Many borrowers use them for home upgrades or repairs, but education costs or other large purchases are also allowed. Don’t forget that the variable interest rate on a HELOC may mean that other forms of financing make more sense. 
With a HELOC, you can generally borrow up to 80%-85% of the equity you have in your home. The value of your home is determined by an independent appraisal.
Home equity is calculated by taking the appraised value of your home minus anything you owe a lender, like a mortgage banker.
Andrea Riquier is a New York-based writer covering mortgages and the housing market for Forbes Advisor. She was previously at Dow Jones MarketWatch, on the housing market and financial markets beats. Before that, she covered macro and central banks for Investor’s Business Daily, and municipal bonds for Debtwire.


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