Best Home Equity Line of Credit
A home equity of line of credit (HELOC) is a loan which uses home equity as collatoral. HELOCs are established as credit lines similar to those of credit cards, complete with a borrowing limit. This is in contrast to a typical home equity loan, which grants a specific dollar amount and is paid back over time. When shopping for a potential lender, bear in mind that while some companies function as direct lenders, others act as aggregators. These aggregators will compile several competing offers, and allow the borrower to choose between them. In order to select the best HELOC lender, consider the interest rate, the draw period, and the attendant fees associated with each offer.
LendingTree is an aggregator, rather than a direct lender. This allows consumers to compare HELOCs across a number of different direct lenders at the same time. By utilizing their service, LendingTree guarantees certain data points, including minimum APR proportional to the HELOC amount. Through LendingTree, a HELOCs draw periods can be between 10 and 20 years. While associated origination and closing costs will vary based on the eventual lender, the application fee will always be free.
Chase Mortgage is an exceptional lender of home equity lines of credit. While HELOCs are typically offered with an adjustable interest rate, Chase provides the option of converting to a fixed rate down the line. Depending on the term of the credit, this offer is good for a maximum draw period of 20 years. Interest rates may also be reduced at Chase, should the borrower be eligible for certain discounts. If a checking account is opened at the same time as the HELOC, then .25 - .50% may be subtracted. The discounts may be doubled if the opening balance of the HELOC is above a qualifying amount. Compared to other lenders, Chase boasts a strong online presence, which enables application tracking and a complete record of payment history. Chase is also relatively inexpensive, with only a one-time $50 origination fee and a $50 annual maintenance fee.
Rate Marketplace is also an aggregator of HELOC lending options. As HELOCs act as variable rate loans, Rate Marketplace pledges borrowers the lowest possible APR given the amount of their desired loan. Rate Marketplace's aggregated HELOC offers will have draw period ranging from five to 25 years. While closing costs, maintenance fees, and origination fees will ultimately differ by lender, Rate Marketplace never charges application fees and quotes are always free.
