If you’re looking for New Jersey home equity loan rates, you’re in the right place. See below for the latest New Jersey home equity loan rates available today from a variety of lenders.
A home equity loan is a type of home loan used by many New Jersey homeowners to borrow against home equity. A home equity loan offers access to cash that can be used to consolidate debt, pay for home repairs or improvements, or make a large purchase.
Home equity loans use your home as collateral, so they’re usually best for financially responsible homeowners who have significant equity in their homes.
Today’s New Jersey Home Equity Loan Rates
See below for today’s home equity loan rates in New Jersey. Note that interest rates are subject to market conditions and can change at any time.
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 equity. Home equity loans are similar to personal loans and cash-out refinances because they usually have fixed interest rates and a set payment that pays off in full 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, and come with variable interest rates.
The home equity loan we’re referring to here typically comes with a fixed rate, lump sum payout, and a set repayment period (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 a large amount of cash. Many lenders have minimum loan amounts of $50,000 to $75,000 for cash out refinances.
- 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.
- Lower closing costs. Home equity loan closing costs are usually lower than cash-out refinance closing costs.
- Fixed rates and loan terms. 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.
- 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. Home equity loan rates in New Jersey are often higher than rates for cash-out refinances or HELOCs.
- Shorter loan terms. Home equity loans often have higher payments because they have shorter loan terms than most cash-out refinances. However, this also means 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. You may want to check out a HELOC if you want more borrowing flexibility.
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.
New Jersey home equity loan rates depend on your credit scores, how much home equity you have, how much you’re borrowing, and other factors. Check out the rate table at the top of this page for the latest home equity loan rates in New Jersey from a variety of lenders.
Home Equity Loan Vs Home Equity Line of Credit (HELOC)
Home equity loan rates in New Jersey 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 during the draw period.
Once the draw period ends, the lender recalculates the payment into a fully-amortized payment that pays off the loan balance in full at the end of the loan term. This so-called recast could make your payment increase significantly. It’s important to understand this risk before you get into a HELOC.
The following table summarizes the differences between a HELOC and a home equity loan.
|Home Equity Loan
|10 to 30 years
|10 to 25 years
|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
|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 Home Equity Loan Rates In New Jersey
If you want the best home equity loan rates in New Jersey, you need to have strong credit scores. New Jersey home equity loan rates are heavily dependent on credit scores.
Debt-to-income ratio 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.
How Can I Improve My Credit Scores?
Again, New Jersey home equity loan rates depend heavily on credit scores. It’s important to keep your credit scores as strong as possible.
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 in a timely manner.
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 interest rate you pay for a home equity loan depends on your credit scores, how much home equity you have, how much you’re borrowing, and other factors. Check out the rate table on this page for the latest home equity loan rates from a variety of lenders.
What can I use a HELOC for in New Jersey?
A HELOC is used by many New Jersey homeowners to consolidate debt, pay for home repairs or improvements, or make large purchases. You can use the funds from a HELOC for pretty much whatever you like.
What is the current interest rate on a home equity loan?
Interest rates vary depending on market conditions, credit scores, how much you borrow, how much home equity you have, and other factors. Check out the rate table on this page for the latest home equity loan rates from a variety of lenders.