: These are the latest HELOC rates, and here’s how to get the best rate on one

Home equity line of credit (HELOC) rates for loans with a 10-year repayment period increased to 5.82% from 5.64% the week prior, according to Bankrate data from the week ending November 21. Rates on 20-year HELOCs rose to 7.82%, but 30-year HELOCs remained at 6.49% for the third straight week. That said, the rates you may qualify will vary, and you can see the best HELOC rates you may get here.

The pros and cons of getting a HELOC

Especially compared to personal loans and credit cards, HELOCs are often one of the most affordable loan types, particularly for homeowners with good financials and significant equity in their homes. Thus, for borrowers looking to consolidate high-interest debt or fund home improvement projects, HELOCs can be a smart option.

But, it’s important to mention that because you use your home as collateral when you take out a HELOC, you run the risk of losing your home if you’re unable to repay the loan. And HELOC rates are typically variable, so you may need to brace for higher payments at some point during your repayment period.

See the best HELOC rates you may get here.

How HELOCs work

They’re composed of a two-part structure, often with a 10-year draw period and a 20-year repayment period that together equal a 30-year term. During the draw period, a borrower can withdraw as little or as much money as they like. As soon as the repayment period begins, money can no longer be withdrawn and the borrower must pay back the principal in addition to interest. It’s worth mentioning that because HELOCs are based on the amount of equity someone has in their home, the amount of money a borrower qualifies for will vary.

How to get the best rates on HELOCs

Borrowers with higher credit scores, lower debt-to-income (DTI) ratios and substantial equity in their home tend to get the most competitive rates, often with lower interest rates than they’d receive on credit cards or personal loans. To calculate your DTI, add up your monthly costs including your mortgage payment, credit card, child support, insurance, other debts, etc. and divide the total by your gross monthly income. HELOC rates vary between lenders so be sure to shop around.