Best Home Equity Loan Lenders of 2024 - NerdWallet (2024)

FAQs

Will home equity loan rates go down in 2024? ›

They, along with home equity loans, are forecast to retreat further in 2024. With the Fed still looking to lower rates later in 2024, a HELOC may be more beneficial than a home equity loan because the rate could go down.

If you took out a 10-year, $100,000 home equity loan at a rate of 8.75%, you could expect to pay just over $1,253 per month for the next decade. Most home equity loans come with fixed rates, so your rate and payment would remain steady for the entire term of your loan.

Loan payment example: on a $50,000 loan for 120 months at 7.65% interest rate, monthly payments would be $597.43.

Home equity lines of credit (HELOCs) were a popular option throughout 2023 and could remain so in 2024. With interest rates expected to drop later in the year, the timing might work well for a variable-rate HELOC with an introductory rate offer.

Home Equity Loan Disadvantages

Higher Interest Rate Than a HELOC: Home equity loans tend to have a higher interest rate than home equity lines of credit, so you may pay more interest over the life of the loan. Your Home Will Be Used As Collateral: Failure to make on-time monthly payments will hurt your credit score.

Don't: Use it to Pay for Vacations, Basic Expenses, or Luxury Items. You have worked hard to create the equity you have in your home. Avoid using it on anything that doesn't help improve your financial position in the long run.

Overall, forecasters predict mortgage rates to continue easing, but not as much as previously thought. While McBride had expected mortgage rates to fall to 5.75 percent by late 2024, the new economic reality means they're likely to hover in the range of 6.25 percent to 6.4 percent by the end of the year, he says.

Example 2: 15-year fixed-rate home equity loan at 9.13% interest. The current interest rate for 15-year home equity loans is slightly higher at 9.13%. If you borrow $75,000 with these terms, you'll pay $62,971.97 in interest over the course of the loan — but your monthly payment will be lower at $766.51.

Now let's calculate the monthly payments on a 15-year fixed-rate home equity loan for $20,000 at 8.89%, which was the average rate for 15-year home equity loans as of October 16, 2023. Using the formula above, the monthly principal and interest payments for this loan option would be $201.55.

Mortgage rate predictions 2024

The MBA's forecast suggests that 30-year mortgage rates will fall into the 6.4% to 6.7% range throughout the rest of 2024, and Fannie Mae is forecasting the same. NAR believes rates will average 7.1% this quarter and fall to 6.5% by the end of 2024.

How low will interest rates drop in 2024? ›

Mortgage rates are expected to decline later this year as the U.S. economy weakens, inflation slows and the Federal Reserve cuts interest rates. The 30-year fixed mortgage rate is expected to fall to the mid- to low-6% range through the end of 2024, potentially dipping into high-5% territory by early 2025.

Will mortgage rates go down in 2024? In Fannie Mae's April rate forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 6.4%. The Mortgage Bankers Association also predicts the rate will drop to 6.4% by the end of the year.

CME Group predicts federal funds rate changes with its CME FedWatch Tool. It gives a 54% chance that the Fed will cut by 0.25% in June 2024 and a 92% chance of lower rates by September. A homeowner who opens a HELOC now could see their rate drop by 0.75% by the start of 2025, according to the tool.