Looking for home equity loan rates in Massachusetts? You’re in the right place. See below for the latest Massachusetts home equity loan rates available today from a variety of lenders.
A home equity loan is a type of home loan commonly used by homeowners in Massachusetts to borrow against home equity. A home equity loan offers access to cash that can be used to consolidate debt and reduce expenses, pay for home repairs or improvements, or make large purchases.
Today’s Massachusetts Home Equity Loan Rates
See below for today’s home equity loan rates in Massachusetts. Note that interest rates are subject to market conditions and can change at any time. Scroll down the page if you’d like more information about how a home equity loan works.
Table of Contents
What is a Home Equity Loan?
A home equity loan enables you to borrow a lump sum of cash against your home’s equity. Home equity loans are similar to personal loans and cash-out refinances because they usually come with fixed interest rates and a fully-amortizing payment that pays off the balance at the end of the loan term.
Most home equity loans are written as second mortgages behind an existing primary mortgage, but you don’t need to already have a mortgage to get a home equity loan.
You may hear the term “home equity loan” used interchangeably with the term “home equity line of credit”, or “HELOC”. HELOCs are a type of home equity loan, but they usually operate on a revolving basis, have interest-only payments during the draw period, and come with variable interest rates.
The home equity loan we’re referring to here typically comes with a fixed rate, lump sum payout, fully-amortizing payment, and a set loan term such as 10 years, 15 years, etc.
There are several advantages to a home equity loan:
- Smaller loan amounts. A home equity loan may be a better option than a cash-out refinance if you don’t need to borrow a large amount. Mortgage lenders typically have minimum loan amounts of $50,000 to $75,000 for cash out refinances.
- Fixed rates. Most home equity loans have fixed interest rates. Many homeowners prefer home equity loans over HELOCs for this reason. HELOCs usually have variable interest rates based on the prime rate. When rates go up, HELOC rates (and payments) go up as well.
- Lower closing costs. Home equity loan closing costs are usually lower than cash-out refinance closing costs.
- Keep your primary loan. A home equity loan enables you to borrow against your equity without refinancing your existing mortgage. This is a big advantage if you have a low interest rate on your existing mortgage.
- Simpler application process. The application process for a home equity loan is often faster and simpler than for a cash-out refinance.
Home equity loans have some potential disadvantages:
- Higher rates than other loan options. Massachusetts home equity loan rates tend to be higher than cash-out refinance or HELOC interest rates.
- Shorter loan terms and higher payments. Home equity loans often have higher payments because the loan terms are typically shorter than for cash-out refinances. However, this also means that you’re paying off the loan faster.
- You have to borrow the full amount up front. Most home equity loans have only a lump sum payout. You have to borrow the full amount up front even if you don’t need all the money right now.
If you have a low-rate mortgage already and don’t need a huge amount of cash, a home equity loan could be a good option for you.
Home Equity Loan Vs Home Equity Line of Credit (HELOC)
Home equity loan rates in Massachusetts are usually fixed. The full loan amount is borrowed at closing and repaid on a monthly basis over a set loan term (such as 10 years, 15 years, etc.).
A home equity line of credit, or HELOC, usually has a variable rate (but not always). HELOCs are revolving credit lines (similar to credit cards) and the payments are usually interest-only.
| Home Equity Loan | HELOC | |
|---|---|---|
| Interest Rate | Fixed | Variable |
| Loan Term | 10 to 30 years | 10 to 25 years |
| Payment | Fixed, includes principal and interest | Variable, interest-only during draw period |
| How Funds Are Borrowed | The entire loan amount is borrowed as a lump sum at closing | Funds are borrowed on a revolving basis as needed |
| Amortization | Usually fully-amortized and pays off in full at the end of the loan term | Initially interest-only, but recasts to fully amortized payment at the end of the draw period |
How to Get the Best Massachusetts Home Equity Loan Rates
If you want the best home equity loan rates in Massachusetts, you need to have strong credit scores. Massachusetts home equity loan rates are heavily dependent on credit scores.
Income sometimes matters as well, but the rate will be determined largely by your credit scores.
Credit scores range from a low of 350 to a high of 850. According to Credit.com, the average credit score in the United States was 711 in 2021. There are five main factors that influence your credit scores:
- Payment history: 35%. It’s very important for your credit scores that you make your payments on time.
- Credit utilization: 30%. If you have high utilization (i.e., you’re “maxed out”) on credit cards, expect your scores to suffer even if you make your payments on time. Keep your utilization below 30% of the credit limit.
- Credit age: 15%. Length of credit history is important. Avoid closing old accounts unless absolutely necessary.
- Credit mix: 10%. Lenders like to see a mix of different types of credit accounts, such as revolving (credit card) accounts and installment loans like mortgages, car loans, etc.
- New credit: 10%. Be careful when applying for new credit cards or loans. Too many new accounts can damage your scores.
Massachusetts home equity loan rates depend on credit scores, so you want to keep your scores strong.
The best way to improve your credit scores is to make your payments on time.
It’s also important to avoid overutilizing your revolving credit. High utilization can damage your credit scores even if you make your payments on time.
If you’d like to close a few accounts, close your newer accounts first. Length of credit history contributes to good scores.
Be careful not to open too many new accounts at one time. If you’re shopping aggressively for new loans, it may hurt your credit scores.
Are interest rates higher on home equity loans?
They can be, but not always. The rate you pay depends on your credit scores and credit history, how much you borrow, and how much equity you have in your home. If you have excellent credit and a lot of home equity, you’ll receive a lower rate than somebody with lower scores and more limited home equity.
