How to Lower Your Home Equity Rate

Obtaining a lower interest rate on your home equity loan is possible simply by applying for a new loan from your current lender or another bank. However, changes in your credit or the value of your home could make it difficult or impossible to lower your current rate. Your home may have significantly declined in value since your current home equity loan, or your credit score may not qualify for the best rates. Doing research in advance of the application can answer those questions.

Instructions

1

Check your billing statement of contact the customer service department of the lender to review your current home equity rate.

2

Call local banks and credit unions to ask about their lowest rates on home equity loans. Speak directly with a loan officer to ask about credit qualifications necessary for the lowest rates.

3

Check websites for lenders not located in your city to get more rates. In addition, obtain rates from your current lender.

4

Order a home appraisal by a licensed appraiser to determine the fair market value of your home. A less expensive alternative is to have a real estate agent compare your home against similar homes that recently sold in your neighborhood. It is almost impossible to lower your equity rate if you owe more on the home than it is worth. Homes sometimes sharply decline in value during a recession or housing crisis.

5

Contact a loan officer, if necessary, to discuss your home equity situation and determine if you have enough equity in the home to qualify for a new loan.

6

Obtain copies of your credit report from AnnualCreditReport.com. The Federal Trade Commission authorizes the site to offer free credit reports under the terms of the Fair Credit Reporting Act. Use the website to view and print copies of your report from the major credit bureaus TransUnion, Experian and Equifax. Follow instructions on one of the reports pay a fee to obtain your credit score separately.

7

Review each of the credit reports for errors that could affect your credit score. Write letters to the respective credit bureaus to correct the mistakes, or follow instructions on the credit report to dispute the errors online or by telephone. Allow 30 days for the credit bureaus to fix errors, and then order copies of your credit report and score again. Although standards vary, credit scores of 720 or higher generally qualify a borrower for the best rates on home equity loans.

8

Apply for a new home equity loan offering better rates if your credit is outstanding and you have sufficient equity in your home to qualify for the loan.