Home equity loans have become a popular option for many homeowners in Utah who need to borrow money for various reasons. One popular type of home equity loan is the cash-out home equity loan. This loan allows homeowners to borrow against the equity in their homes, typically at a lower interest rate than other types of loans, and use the cash for things like home renovations, debt consolidation, or other large expenses.

Before you consider taking out a cash-out home equity loan, it’s important to understand how interest rates work for this type of loan and what you can expect to pay. Here is a breakdown of what you need to know:

What is a cash-out home equity loan? A cash-out home equity loan is a type of loan that allows you to borrow against the equity you’ve built up in your home. Equity is the difference between the value of your home and the amount you owe on your mortgage. For example, if your home is worth $300,000 and you owe $200,000 on your mortgage, you have $100,000 in equity.

With a cash-out home equity loan, you can borrow against that equity and receive a lump sum of cash. You’ll then make monthly payments, typically with a fixed interest rate, until the loan is paid off.

How do interest rates work for cash-out home equity loans? Interest rates for cash-out home equity loans are typically lower than rates for other types of loans, such as personal loans or credit cards. This is because the loan is secured by your home, which means that if you default on the loan, the lender can take possession of your home.

The interest rate you’ll pay on a cash-out home equity loan depends on a variety of factors, including your credit score, the amount of equity you have in your home, and the loan amount you’re seeking. Generally, the higher your credit score and the more equity you have in your home, the lower your interest rate will be.

What are the current cash-out home equity loan rates in Utah? Cash-out home equity loan rates in Utah vary based on the lender and the specific loan terms. As of May 2023, the average interest rate for a cash-out home equity loan in Utah is around 4-6% APR. However, your rate may be higher or lower depending on your individual circumstances.

It’s important to shop around and compare rates from different lenders to find the best deal for your needs. You can also work with a financial advisor or mortgage broker to help you navigate the process and find the best loan for your situation.

In conclusion, if you’re a homeowner in Utah looking to borrow money, a cash-out home equity loan could be a great option. With a lower interest rate than many other types of loans and the ability to use the cash for a variety of purposes, it’s a popular choice for those looking to finance large expenses. However, be sure to do your research and compare rates from multiple lenders to ensure that you’re getting the best deal possible.