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 2023
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.
Lender | APR | Loan Amount | Min. Credit Score Requirement | Repayment Terms | Annual Fees | Pre-Approval Time |
|---|---|---|---|---|---|---|
3.75% to 18% | $25,000 to $1,000,000 | 660 | 10-year draw period and 20-year repayment period | None | N/A | |
Not specified | Not specified | Not specified | Not specified | Not specified | Not specified | |
1.99% special | $25,000 to $1,000,000 | Not specified | 10-year draw period, 20-year repayment period | Not specified | Not specified | |
3.65% to 8.80% | $15,000 to $750,000 | 730 | 10-year draw period, unspecified repayment period | $90 | Not specified | |
Starting at 3.99% | $10,000 to $500,000 | Not specified | 10-year draw period and 20-year repayment period | $75 | Not specified | |
Starting at 4.64% | $10,000 to $500,000 | Not specified | 10-year draw period and 20-year repayment period | None | 24 hours | |
Starting at 3.50% | $15,000 to $400,000 | 620 | 5 to 30 years | 3% to 4.99% | 24 hours | |
Starting at Prime - 0.50% | Starting at $17,500 | Not specified | 10-year draw period, 15-year repayment period | $50 | Not specified | |
Starting at 3.34% | Starting at $25,000 | 740 | Not specified | $50 | Not specified | |
3.49% for 6 months | Starting at $5,000 | Not specified | 15-year draw period with 15-year repayment period | None | 24 hours | |
3.75% to 10.63% variable | $10,000 to $500,000 | Not specified | 10-year draw period, and then 20 years for repayment | None | Not specified |
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
- Bank of America
Bank of America has no application fees, no closing costs and no annual fee.
- 9.55%APR Range
- $25,000 to $1,000,000Loan Amount Range
- 10-year draw period; 20-year repayment periodRepayment Terms
- NoneAnnual Fees
- Not specifiedPre-Approval Time
Best HELOC Lender for Good Credit in Minnesota: U.S. Bank
- U.S. Bank
U.S. Bank has flexible application options — you can apply by phone, online or by visiting a branch.
- Not specifiedAPR Range
- $15,000 to $750,000Loan Amount Range
- 10-year draw period; unspecified repayment periodRepayment Terms
- $90Annual Fees
- Not specifiedPre-Approval Time
Best HELOC Lender for Bad Credit in Minnesota: Figure
- Figure
Figure's credit score requirements for a HELOC are among the lowest at 620.
- 8.25%APR Range
- $15,000 to $400,000Loan Amount Range
- 5 to 30 yearsRepayment Terms
- NoneAnnual Fees
- 24 hoursPre-Approval Time
Best HELOC Lender for Competitive Rates in Minnesota: PenFed
- PenFed Credit Union
PenFed offers the lowest APR (0.99%) available to eligible borrowers.
- Not specifiedAPR Range
- $25,000 to $1,000,000Loan Amount Range
- 10-year draw period; 20-year repayment periodRepayment Terms
- $99Annual Fees
- Not SpecifiedPre-Approval Time
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.
HELOC | Home Equity Loan | |
|---|---|---|
Interest Rate | Adjustable interest rate, | Fixed interest rate |
Monthly Payment | Changes depending on | Fixed monthly payments |
Repayment Terms | During the draw period, borrowers | Repayment starts as soon as |
Fund Disbursements | Line of credit | Lump sum delivery |
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.
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.