Should we keep shopping for a better interest rate on a Home Equity Loan?

Question

We have applied with one lender. Our home is paid for, our credit is excellent our debts are low and income is very adequate for the amount that we would like to borrow. The lender came back with 10.7 interest. Couldn't believe it we qualified for 3.9 interest on our depreciating truck purchase that we bought this time last year. How is this interest rate figured? I thought being a secured loan and also great credit there would be no problem of getting around 6.5 Could someone explain this? We do intend to shop further. Thanks in advance.

Answer 1

Did the lender say you guys had excellent credit? 10.7 seems a little high, what kind of loan did he/she quote you for? There is tons of different kinds of loan out there, make sure you guys know what kind of loan you guys want. Don't let the loan officer make the decisions for you. And if you guys are not paying for the closing cost, it can be it too. Pay for the closing cost and uasally they will make it cheaper. Plus you can pay points as well, 1point = 1% of loan amount. drop 7% to 6% get it??... But i say if your home is paid for, you might want to look into "Line of equity" this is the only best way that you don't have to pay for closing cost because it acts as a credit card but at the same time the payment is as cheap as a mortgage. Be sure to read everything at the title before you sign!! some things to look for.

-Prepaid Penalty

-what type of loan it is ex: 2/28, 5/25, 30 yr fix, 15 yr fix

-interest rate fix or not?

Answer 2

I used the rate calculators on Bank of America and Wells Fargo websites. I got much better rates, but not 6.5%. That's what you'd see for a 1st mtg, not a home equity loan.

The rate may be affected by several factors, including the loan-to-value ratio, and the dollar amount.

Answer 3

Keep shopping.

Try some of the online banks:

Etrade
INGDirect
etc.

Answer 4

Maybe it's OK