If you are a homeowner with a Home Equity Line of Credit (HELOC) in addition to your mortgage, you may be concerned with the effect of rising interest rates on your monthly payments. These equity lines of credit come with variable interest rates that the lender will adjust at regular intervals. To avoid paying too much for the financing on your equity line of credit, consider converting the loan to a fixed interest rate.If you have decided to convert your equity line of credit there are several ways to accomplish this. Here are three ways to convert your equity line and save money in the process.I. Refinance & Consolidate Your LoansThe most affordable option may be refinancing your primary mortgage and equity line of credit. This will allow you to consolidate the loans to one monthly payment. You will also qualify for a lower interest rate since you are only carrying one mortgage. A fixed interest rate will allow you to budget for a mortgage payment that does not change when interest rates go up.II. Convert to a Second MortgageSecond mortgage loans pay out a fixed amount in one sum at a fixed interest rate. You may have the option of converting your equity line of credit to a second mortgage. Once you convert the equity line you will no longer be able to borrow against it; however, you will have a fixed interest rate locked in. You will need to contact your lender to see if your equity line of credit qualifies for conversion.III. Apply for a New Home Equity LoanIf your lender is not willing to convert your equity line into a second mortgage, you may be able to refinance the line of credit with another equity loan. If you qualify for a second mortgage based on the value of your home you can use the proceeds from this loan to pay off your equity line of credit.
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