A HELOC works like a credit card, allowing homeowners to access cash based on their home's equity and pay it back over time. It’s meant for homeowners who want an additional source of financing and a flexible payment plan for paying off debt or making big-ticket purchases.
HELOC offers several distinct advantages over traditional loans and other types of mortgages. The interest rate is usually much lower than what you’d pay with a standard fixed-rate loan, and repayment terms range from 5 to 30 years.
MoneyGeek’s data shows that Bank of America is the overall best HELOC lender in Rhode Island, although rates across all lenders range from 0.99% to 18%. Before choosing a HELOC lender, we recommend you shop around for rates and lenders that meet your needs.
Home Equity Line of Credit (HELOC) Rates for 2023
In the table below, we provided an overview of the major lenders’ rates, requirements, loan amounts and fees as of May 2022. Because lenders’ rates and terms frequently change over time, we regularly update our pages as new information becomes available.
When looking for a new home equity line of credit, it’s important to weigh your options since each lender has its own structure for its HELOC products.
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 | 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, | Not specified | Not specified | |
3.65% to 8.80% | $15,000 to $750,000 | 730 | 10-year draw period, | $90 | Not specified | |
Starting at 3.99% | $10,000 to $500,000 | Not specified | 10-year draw period | $75 | Not specified | |
Starting at 4.64% | $10,000 to $500,000 | Not specified | 10-year draw 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, | $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 | None | 24 hours | |
3.75% to 10.63% variable | $10,000 to $500,000 | Not specified | 10-year draw period, | None | Not specified |
MoneyGeek’s Picks for Best HELOC Lenders in Rhode Island
MoneyGeek cares about consumers and wants to help them find the best HELOC lender for their financial needs. As such, we compiled a list of the top-rated institutions that offer HELOCs with competitive rates and terms.
HELOCs are mainly offered by national banks, which often have strict borrower requirements. If you aren’t eligible for a HELOC with a national bank, we recommend that you check with your local credit union.
Best Overall HELOC Lender in Rhode Island: Bank of America
- Bank of America
Bank of America provides a 1.99 % introductory APR for six months.
- 7.49% (introductory rate) then 9.90%APR Range
- UndisclosedMinimum Credit Score
- Generally $25,000 to $1,000,000Loan Amount Range
- 10-year draw period; 20-year repayment periodRepayment Terms
- NoneAnnual Fees
- UndisclosedPre-Approval Time
Best HELOC Lender for Good Credit in Rhode Island: U.S. Bank
- U.S. Bank
You can apply for a HELOC with U.S. Bank over the phone, online or in person.
- 8.95% to 12.70%APR Range
- 660Minimum Credit Score
- $15,000 to $750,000 ($1 million in California)Loan Amount Range
- 10-year draw period; up to 30 years repayment periodsRepayment Terms
- Up to $75Annual Fees
- UndisclosedPre-Approval Time
Best HELOC Lender for Bad Credit in Rhode Island: Figure
- Figure
Figure offers the best home equity line of credit for borrowers with low credit scores — those with a minimum credit score of 620 are eligible.
- 6.10% to 14.74%APR Range
- 640 (680 for investment properties or second homes)Minimum Credit Score
- $20,000 to $400,000Loan Amount Range
- 5 to 30 yearsRepayment Terms
- NoneAnnual Fees
- 24 hoursPre-Approval Time
Best HELOC Lender for Competitive Rates in Rhode Island: PenFed
- PenFed Credit Union
For the first six months, PenFed Credit Union offers a competitive introductory APR of 0.99% — the lowest among its competitors.
- Starting at 8.625%APR Range
- 680Minimum Credit Score
- $25,000 to $500,000Loan Amount Range
- 10-year draw period; 20-year repayment periodRepayment Terms
- $99Annual Fees
- UndisclosedPre-Approval Time
HELOC vs. Home Equity Loans
It’s important to understand the differences between a home equity loan (HELOAN) and a home equity line of credit (HELOC) so you can choose the best one for you. While they both involve borrowing against your home, they serve different purposes.
HELOANs allow homeowners to borrow against the value of their homes. A home equity loan has a fixed interest rate and a fixed term for repayment. It’s given to the borrower as a lump sum. This type of loan is best for borrowers that are prone to overspending, as they don’t have access to a revolving line of credit.
Meanwhile, a HELOC functions similarly to a credit card in that a borrower may borrow up to a certain amount during the draw period and then must pay it back over time. With its variable interest rate, the borrower won’t pay a fixed monthly payment, but this may require better oversight of one’s spending.
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 pay | Repayment starts as soon as |
Fund Disbursements | Line of credit | Lump sum delivery |
How to Apply for a HELOC
Most lenders accept online applications, making it easy to apply for a HELOC. Typically, you’ll submit everything online and wait for approval, but some lenders may require a follow-up phone call to verify certain documents.
To simplify the process for you, MoneyGeek listed the following steps that you should take before you apply for a HELOC:
Determine how much you need
Before applying for a home equity line of credit, you should evaluate your funding requirements. It’s important to accurately assess how much money you need to avoid borrowing extra cash. Simply having access to funds could lead to unnecessary spending that’s subject to interest. A home equity line of credit may be used for big purchases and expenses such as debt consolidation, home improvements and college tuition. For small expenses, it may be best to find an alternative funding source.
Assess your financial standing
Check your eligibility for a HELOC after determining how much money you need to borrow. Several criteria must be satisfied to qualify for a home equity line of credit, including good credit history and sufficient income. You should also evaluate your capacity to repay the HELOC. If you already find it difficult to repay existing debt, a HELOC may not be the best choice for you.
Shop around and compare lenders
After determining how much money you need and evaluating your financial situation, it’s time to search for a lender.
When selecting a lender, you should evaluate various factors, such as interest rates, fees (if any), repayment terms, maximum loan-to-value ratios, etc. It’s important to also check that you meet the lender’s requirements, including those for credit scores and income.
Apply
After finding a lender who meets your needs, it's time to fill out an application. Most lenders offer online applications, making it easy to apply for your HELOC. However, some allow you to apply over the phone or in person if you prefer to have a lender representative guide you through the process. For a home equity line of credit to be approved, you must provide documentation like pay stubs, bank statements, tax returns and other relevant documents.
Use funds wisely
Remember to use funds responsibly and to avoid needless spending. We recommend that you use your HELOC for significant expenses, such as paying off debts with high-interest rates, renovating your home or acquiring investment properties.
Frequently Asked Questions About HELOCs
First-time borrowers may find it difficult to choose the best home equity line of credit for their needs. MoneyGeek answered some of the most commonly asked questions below to help you better understand the topic.
sources
- Bank of America. "Home Equity." Accessed June 21, 2022.
- U.S. Bank. "Home Equity Line of Credit (HELOC)." Accessed June 21, 2022.
- Figure. "Get a Home Equity Line." Accessed June 21, 2022.
- PenFed. "PenFed Home Equity Line of Credit (HELOC)." Accessed June 21, 2022.