Home Equity Loan Comparison: What to Look For

Complete a home equity loan comparison to view your options side by side. Borrowers who consider multiple loan options typically receive better rates, more favorable terms, and a better understanding of their loan. Here are a few items to compare:

  • Fixed versus variable rate - Aim for a fixed rate to reduce the risk factor of your loan and gain a more predictable payment.

  • Installment versus revolving - Revolving lines tend to be more flexible, but they often only come with variable rates. You will not often get the best of both worlds.

  • Prepayment and modification fees - These terms will tell you how much you will owe if you decide to refinance, prepay or otherwise modify the loan in the future. 

  • Origination fees - These will not be as high as they were for your mortgage, but you may owe a few hundred dollars to cover the registration of the second lien holder against your deed and other issues.

  • Default and late payment procedures - Take notes of what the lender will do if you are late on a payment or default on the loan. You should look for a lender with flexible options to allow you to defer payments or recover from missed payments in order to avoid foreclosure on your home.

 

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