Best HELOC Rates and Lenders in Pennsylvania for 2024
Updated: December 28, 2023
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A HELOC can be used for many purposes, including major home repairs and improvements, emergency cash needs and consolidation of existing debts. A HELOC also offers several distinct advantages over standard financing options, including lower interest rates and repayment terms ranging from 5 to 30 years.
In Pennsylvania, HELOC rates range from 0.99% to 18%, and Bank of America is the best overall HELOC lender. Before choosing a HELOC lender, it’s important to compare lenders to find the one that best fits your needs.
Home Equity Line of Credit (HELOC) Rates for 2024
In the table below, MoneyGeek provided an overview of different lenders’ rates, requirements, loan amounts, fees and other pertinent details so that you can find the right one for you. It’s important to note that this information was updated as of May 2022. Lenders' rates and terms frequently change, so we regularly update our pages as new information becomes available.
MoneyGeek’s Picks for Best HELOC Lenders in Pennsylvania
MoneyGeek’s priority is the consumer, so we’ve compiled a list of the best HELOC lenders for different borrower profiles to help you choose the best one for your situation.
Finding a lender with competitive rates and reasonable borrower requirements can be challenging because typically only national banks offer HELOC loans. If you don’t meet the requirements for a HELOC loan with a national bank, you should check with your local credit union.
Best Overall HELOC Lender in Pennsylvania: Bank of America
Best HELOC Lender for Good Credit in Pennsylvania: U.S. Bank
Best HELOC Lender for Bad Credit in Pennsylvania: Figure
Best HELOC Lender for Competitive Rates in Pennsylvania: PenFed
HELOC vs. Home Equity Loans
Though they both use your home as collateral, a home equity line of credit is different from a home equity loan (HELOAN).
A HELOAN is given to the borrower as a lump sum. It has a fixed interest rate and a fixed repayment term, making it a good option for borrowers that want to pay the same amount each month.
On the other hand, a HELOC is an unsecured revolving line of credit based on your home’s value. A HELOC acts like a credit card, wherein a borrower can borrow up to a specific amount during the draw period. It has a variable interest rate, which is why the borrower isn’t locked into a fixed monthly payment.
MoneyGeek outlined additional differences between a HELOC and a HELOAN in the table below.
How to Apply for a HELOC
It’s usually easy to apply for a HELOC because most lenders have online applications. Most lenders will also let you submit your information online and await the lender's approval, meaning you can complete your application when it’s convenient.
MoneyGeek recommends taking the following steps before you apply for a HELOC.
Determine how much you need
This is one of the most important steps before applying for a home equity line of credit. You want to ensure you are not borrowing more or less than you need. A home equity line of credit can be used for large purchases and expenses such as debt consolidation, renovations and college expenses. If you only need a small amount of money, you should look into alternative funding sources.
Assess your financial standing
Now that you know how much money you need to borrow, the next step is to see if you qualify for a HELOC. To qualify for a home equity line of credit, you must meet certain lender requirements, such as having a sufficient credit history and income. It’s also important to evaluate your capability to repay the loan. If you already have existing debt, taking on another loan may not be the best financial decision.
Shop around and compare lenders
Now that you have determined how much money you need and assessed your financial standing, it’s time to select the best lender for your needs.
You should consider several factors when choosing a lender, including interest rates, fees, repayment terms, loan-to-value ratio limits, etc. Considering all these factors will save you money on unnecessary costs in the long term.
Apply
After finding a lender that meets your needs, it’s time to apply. Typically, completing an online application is a fast and simple process. In order to get approved for a home equity line of credit, you’ll need to provide verifiable documentation such as pay stubs, bank statements, tax returns and W2 forms.
Use funds wisely
If you’re approved, you’ll receive a notification from your lender that your account has been activated. After which, you’ll be able to use your funds. Be mindful that failure to make payments could cause you to lose your home, so it’s important to properly manage your spending. It’s best to use these funds for large purchases like paying off high-interest debt, renovating your house or purchasing investment properties.
Frequently Asked Questions About HELOCs
MoneyGeek answered some frequently asked questions about home equity lines of credit to help you further understand the topic.
The interest rate on a home equity line of credit varies depending on your financial situation, chosen lender and loan amount. PenFed Credit Union and Bank of America offer the lowest starting APRs of 0.99% and 1.99%, respectively, in Pennsylvania.
In Pennsylvania, homeowners can use a home equity line of credit for renovations or repairs, college tuition or debt consolidation.
The interest paid on a HELOC is often tax-deductible, but you should consult with a financial advisor or your lender to determine your eligibility for tax-deductible interest.
Each lender sets its maximum and minimum borrowing limits. Loans up to $1 million are available from Bank of America and PenFed Credit Union. Typically, the lowest loan amount is $5,000.
That depends on your financial situation and management style. HELOCs may be best for those that are financially responsible and disciplined with their spending. On the other hand, HELOANs are often better suited for those that have difficulty monitoring their spending, as funds are disbursed as a lump sum and repaid at a fixed rate.
HELOC rates vary depending on several factors like current market interest rates, the amount borrowed, length of term and property value.
sources
- Bank of America. "Home Equity." Accessed June 20, 2022.
- U.S. Bank. "Home Equity Line of Credit (HELOC)." Accessed June 20, 2022.
- Figure. "Get a Home Equity Line." Accessed June 20, 2022.
- PenFed. "PenFed Home Equity Line of Credit (HELOC)." Accessed June 20, 2022.