People who currently have a home equity line of credit (HELOC) may be feeling a little pressured by today’s rising interest rates. HELOCs are adjustable-rate loans, which means the interest rate you pay changes based on a set rate (usually the prime rate). And these days, fees are increasing, which means the cost and minimum payments for most HELOCs are increasing as well. Fortunately, most HELOC borrowers can convert their loan to a fixed rate. That is how:
refinance your house
One option available to many HELOC borrowers is to refinance their home for a
more than your current mortgage, and using the additional loan
money to pay the HELOC. By choosing a fixed rate refinance mortgage, you
essentially convert your HELOC balance into a fixed rate home loan. This is a
great option for people who should refinance their home anyway, like
anyone whose mortgage interest rate is higher than current rates in the
market.
Convert it to a home equity loan
Unlike a HELOC, a home equity loan generally pays the cash down in one lump sum.
sum–and the rate is often fixed. Some HELOC borrowers can convert
your HELOC into a fixed-rate home equity loan. Although you will no longer be
you will be able to withdraw the balance, you will get the current low rate locked in for
the life of the loan. Check with your HELOC lender to see if this is an option
for you.
Get a new home equity loan
If you are unable to convert your HELOC to a home equity loan through your
current lender, you may be able to get another home equity loan. If so, you
you can use the money you borrow to pay off your HELOC on a do-it-yourself basis
conversion from HELOC to home equity loan. Find lenders willing to work with
consulting local banks and online loan companies.
If you currently have a HELOC, you’re not stuck with an adjustable raise
interest rate. There are numerous options that can help you leave your HELOC
balance to zero and move the balance to a less expensive fixed-rate loan.
