Home equity line of credit rates are the rates of interest charged to a borrower on the amount borrowed. It is also known as the ‘annual percentage rate’ or APR. The APRs of a financial institution’s home equity lines of credit depend on a factor known as ‘prime.’ Prime is the rate published in the Wall Street Journal on the first day of publication after the 10th of each calendar month.The margin of ‘prime’ varies and depends on the approved credit line amount and combined loan-to-value (CLTV) ratio. CLTV ratio is the percent of a property’s appraised value that the lender will allow as a loan. The loan is calculated as the sum of the proposed credit line and the balance of any outstanding mortgage debt amount combined together. Value is estimated as the current market value of the property.Insurance on a property that is to be secured is necessary. Flood or fire insurance, may also be required. Generally, any additional fees or conditions imposed by the city, state or county where the subject property is located are the borrower’s responsibility. The APRs are subject to change without notice.Many financial institutions provide certain rate discounts to new home equity customers. They may specify a certain minimum amount to be drawn for a certain period of time as the criteria. Existing customers are generally required to clear their current balance. These conditions may vary depending on the lending organization’s policies.There are many organizations that offer competitive rates for home loans. Their respective web sites carry all the relevant information pertaining to home equity line of credit rates. They also have credit calculators that display the amount approved and monthly payments by considering the current APRs and Prime.There are several fees that are applicable apart from the standard rates quoted by the company. A borrower must select a lender who offers competitive rates and does not have too many assorted and hidden charges.
