Do you negotiate HELOC interest rate?

Question

I have been researching HELOCs and I have narrowed on few sources. Some offer 95% CLTV and some 80%. Some offer 1.99% for first 6 mos, then 2.99% with a floor of 2.99%, while some offer tad higher interest rates.

My question - Do you negotiate interest rates with Banks/CUs for HELOC?

If your response is a YES - please help me how you go about asking for lower rate? What questions do I need to ask the Bank/CUs to get lower rate?

If your response is a NO - I want to understand your thinking behind that, please elaborate.

If your response is 'it depends' - please elaborate on the dependenc(y)ies.

TIA.

Kyle J. · Answer

@Nick Shri  I've spoken to a number of lenders about their HELOC products, and also have a couple HELOCs myself.  However, I'm not aware of their rates being negotiable in the traditional sense when people think of negotiations.  For example, they offer you a 5% rate, you counter with 3%, and you guys settle in the middle at 4%.

That being said, HELOCs are just products of the individual lenders that offer them.  Meaning that, there are no standard (Fannie/Freddie) guidelines or rules for them.  Each lender can/does make up their own rules when it comes to HELOCs.  So it might not hurt to ask.

Here's what I have seen though, and is more likely in my opinion.  Lenders won't technically negotiate their rates, but they may have ways for you to "earn" or get lower rates.  Or save money in other ways.

For example, with both of my HELOCs, I got a small discount (.25%) on the rate for opening a checking account with the banks that issued the HELOCs (previously I didn't have an account at either bank).  One of the lenders also waived the annual fee ($75) for the HELOC if I maintained a certain minimum balance in the checking account.  (The other lender doesn't have an annual fee for their HELOC.)Additionally, one of the lenders often sends me "promo offers" where I can get roughly a 2% discount on the rate, and lock it in at a fixed rate (instead of the usual variable rate) if I withdraw at least $10,000.

Additionally, one of the lenders also has a special program where I can request a special fixed rate for a term anywhere from 1-20 years (again, instead of the usual variable rate) if I know I want to withdraw a larger amount and pay it off over a fixed amount of time with a guaranteed payment amortization schedule.

Ultimately, I probably wouldn't have known about any of these things if I hadn't asked a bunch of questions back when I was calling around to different lenders, and going through the process of opening up my HELOCs.  So definitely be sure you ask for any ways you can save money.

Joe Splitrock · Answer

@Nick Shri ours is variable depending on prime rate. Our line of credit was only 60% of value, but had a cap at $200K that kicked in first. We chose this loan product due to very low setup costs. I am not sure if you can negotiate in most cases, because most likely these are established programs. Still no harm in trying. You may be able to get setup fees waived.