Best HELOC Rates and Lenders in Minnesota for 2024
Updated: December 28, 2023
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You can use a HELOC to finance significant expenses, such as home renovations, education costs, medical bills and debt consolidation. This type of loan is perfect for homeowners with good credit ratings and considerable home equity.
If you're considering taking out a home equity line of credit, shop around and find a lender you can trust. Compare rates to see which one offers the best deal.
MoneyGeek found that Minnesota homeowners can currently find home equity line of credit rates ranging from 0.99% to 18%. Bank of America is the best home equity line of credit lender overall.
Home Equity Line of Credit (HELOC) Rates for 2024
When looking for a HELOC, it is important to compare interest rates and terms from different lenders to find the most suitable one.
The table below provides information about equity rates, repayment terms and other key details about home equity lenders as of May 2022. The rates and other details may change in the coming months, but MoneyGeek will update them as necessary.
MoneyGeek’s Picks for Best HELOC Lenders in Minnesota
MoneyGeek aims to help you find the most suitable HELOC lender for your financial requirements. We have compiled a list of the best HELOC lenders in Minnesota to help you find the perfect solution for your situation.
It’s worth noting there aren't many lenders that offer HELOCs, and the few that do usually only lend to borrowers with excellent credit scores. Should a national lender reject your HELOC application, MoneyGeek suggests checking with your local credit unions for other options.
Best Overall HELOC Lender in Minnesota: Bank of America
Best HELOC Lender for Good Credit in Minnesota: U.S. Bank
Best HELOC Lender for Bad Credit in Minnesota: Figure
Best HELOC Lender for Competitive Rates in Minnesota: PenFed
HELOC vs. Home Equity Loans
If you need to finance a major expense, home equity loans (HELOANs) and home equity lines of credit (HELOCs) are excellent options. It’s important to know the difference between the two to choose the right option for you.
Borrowers typically receive a lump sum of cash when they take out a HELOAN. In most cases, the interest rate and monthly payment on the loan are fixed. Borrowers who want predictability and don't want to overspend will benefit from a HELOAN.
HELOCs, however, work like credit cards, as they are revolving credit lines. You can withdraw money as often as necessary within a specified time-frame, up to a specified limit (like a credit card) and repay it as required. HELOC rates usually fluctuate, meaning they may change depending on economic conditions. Those who are good at budgeting and want more flexibility than what a home equity loan can offer should choose this option.
How to Apply for a HELOC
Many lenders allow online applications for HELOCs, which can be convenient. A lender typically requires your contact details and personal information before it can approve your loan.
Determine how much you need
To apply for a HELOC, you must know the amount of credit you wish to access and how you will use it. HELOCs are suitable for numerous financial purposes, such as consolidating debt, remodeling a home and financing a college education.
Assess your financial standing
You need to determine if your financial situation meets the minimum lending requirements. Review your credit score, income and current loan-to-value ratio since these factors affect your interest rate. As you analyze your financial standing, you will also find out whether you have the ability to repay the debt.
Shop around and compare lenders
Finding the best HELOC lender for your needs and situation requires comparison shopping. Compare terms, rates and offerings. Ensure that you also check the closing costs, annual fees and rate discounts each lender provides.
Apply
Online HELOC applications are generally available, but some lenders require you to call or visit a physical branch. In most cases, you must submit information about your income and assets as part of your application.
Use funds wisely
Avoid falling deeper into debt by staying within your means once you begin withdrawing. Since your home is used as a collateral, keep in mind that if you can't make the payments, your house could be at risk.
Frequently Asked Questions About HELOCs
First-time borrowers may find it challenging to understand how a home equity line of credit works, so MoneyGeek has provided answers to some frequently asked questions below.
Rates for HELOCs vary depending on your financial situation. Among Minnesota’s lenders, PenFed and Bank of America offer the most competitive rates because of their introductory offers, which are at 0.99% and 1.99%, respectively.
You can use a HELOC in Minnesota to cover significant expenses, such as medical bills, debt consolidation, home renovations, investments and your children's education.
In most cases, the interest on a HELOC is tax-deductible, but you should ask a financial advisor for more details. Asking a financial advisor will also help you determine how much to budget for.
Lenders have different maximum and minimum loan amounts. Bank of America and PenFed Credit Union, however, offer the highest loan amount of $1,000,000. Typically, the minimum loan amount is $5,000.
HELOCs and HELOANs are both good options, but you'll need to decide which is best for you based on your specific situation. A HELOC is a line of credit where you can borrow up to a specific limit and only pay back the amount you withdraw. However, HELOANs are lump sums with fixed interest rates and monthly payments.
In most cases, no. HELOCs are revolving lines of credit with variable interest rates based on the amount borrowed.
sources
- Bank of America. "Home Equity." Accessed June 7, 2022.
- Bank of America. "Home Equity Assumptions." Accessed June 7, 2022.
- Bank of America. "Home Equity Line of Credit Application." Accessed June 7, 2022.
- U.S. Bank. "Home Equity Line of Credit (HELOC)." Accessed June 7, 2022.
- U.S. Bank. "Home Equity FAQs." Accessed June 7, 2022.
- Figure. "Homeowners, We're Here for You." Accessed June 13, 2022.
- Figure. "Figure Home Equity Line FAQs." Accessed June 13, 2022.
- PenFed. "PenFed Home Equity Line of Credit (HELOC)." Accessed June 7, 2022.
- Internal Revenue Service. "Publication 936 (2021), Home Mortgage Interest Deduction." Accessed June 7, 2022.