AMARILLO HELOC RATES TODAY
Current HELOC rates in
Amarillo, TX.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Key Points
• Home equity line of credit (HELOC) interest rates in Amarillo are influenced by the prime rate and economic conditions, along with a borrower’s financial standing.
• HELOCs offer flexible access to funds; you pay interest only on the funds you actually use.
• Variable interest rates on HELOCs can lead to unpredictability, since your future monthly payments may be lower or higher.
• To qualify for a HELOC, you’ll generally need to have at least 15% equity in your home and a credit score of 640 or better, as well as meet other qualifying factors.
• If you default on your HELOC, you may face foreclose on your home.
Introduction to HELOC Rates
Our guide to HELOC interest rates offers you all the information you need as a homeowner looking to understand how to get equity out of your home in Amarillo, Texas.
If you’ve been paying down your home loan month-to-month and building up significant equity in your property, you may wonder if a home equity line of credit is the way to find the cash to pay for an update to your living space, invest in your child’s (or your own) education, or consolidate higher-interest debt. Here, you’ll find resources that can help you make well-informed choices — you’ll learn about factors that sway home equity loan rates, the advantages and potential pitfalls of these financial tools, and how to find favorable lenders and terms.
Just what is a home equity line of credit, anyway? And is it the right choice? Keep reading to find out exactly what a HELOC is and what it can do for you.
What’s a HELOC?
A HELOC is a revolving credit line that allows you to tap into equity you’ve built in your home. Because it’s a line of credit, you can use it to borrow the money you need in increments — as you need it, up to whatever maximum amount your lender sets for you.
You’ll typically need to have accumulated at least 15% equity to qualify, and generally you can borrow up to 90% of the equity you have. As a homeowner, you’ll want to have a plan for repayment of your HELOC. Missing payments will put you at risk for foreclosure.
A HELOC involves two phases:
The Draw Period
In the HELOC’s initial draw period, usually lasting 10 years, you can access funds in increments, as you need them. During this time, you’ll have to pay your lender interest on the money you borrow, but most of the time you won’t have to pay down the principal. You will need to do that if you max out the credit line and want to draw on it again. A HELOC interest-only calculator can help you compute exactly what you’ll owe during this phase.
The Repayment Period
Once the draw period is over, a repayment period of 10 to 20 years begins. Most likely, your monthly payments will increase because now you’ll have to start paying off both the loan principal and the interest that accrues on it. HELOC interest rates tend to be variable, which means that your monthly payment amount may rise or fall if your rate changes. During this phase, a HELOC monthly payment calculator can help you predict how interest rate fluctuations may affect your budget.
How Do Lenders Determine HELOC Interest Rates?
Lenders typically set interest rates on HELOCs, along with different types of home equity loans, by looking at the prime rate, which is influenced by Federal Reserve policies. Lenders may add a margin to the prime rate when determining the interest rates they’ll offer. They always consider a borrower’s credit score, debt-to-income (DTI) ratio, income, and the amount of home equity they have, too. That’s why rates vary from lender to lender, and also why you should seek out quotes from multiple lenders before taking the plunge.
How Interest Rates Impact HELOC Affordability
What may look like a small difference between two lenders’ HELOC rates can actually make a big difference in the cost of your home equity line of credit over the long term. Rates on a $50,000 HELOC with a 20-year term, for example, could differ by just one percentage point, from 7.00% to 8.00%. If you went for the higher rate, it would bump up your monthly payment by $30 — and also increase the total interest you’d pay over the HELOC’s life by nearly $7,000. The more you end up borrowing with a HELOC, the greater effect you’ll see from even a slight interest rate increase or decrease. Be sure to keep an eye on what comes after the decimal point.
Check out this chart, which compares HELOCs at different credit limits, terms and interest rates.
| Repayment Amount | Term | Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 | $100,746 |
| 7.00% | $775 | $86,072 | ||
| 10 years | 8.00% | $1,213 | $45,593 | |
| 7.00% | $1,161 | $39,330 | ||
| $50,000 | 20 years | 8.00% | $418 | $50,373 |
| 7.00% | $388 | $43,036 | ||
| 10 years | 8.00% | $607 | $22,797 | |
| 7.00% | $581 | $19,665 | ||
| $25,000 | 20 years | 8.00% | $209 | $25,186 |
| 7.00% | $194 | $21,518 | ||
| 10 years | 8.00% | $303 | $11,398 | |
| 7.00% | $290 | $9,833 |
HELOC Interest Rate Trends
Keeping an eye on the prime interest rate will benefit you, since this fluctuating number can clue you in on the direction HELOC rates may be heading. The prime rate has experienced significant ups and downs since 2018, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023.
Understanding this key rate’s historical patterns will give you a helpful perspective when you consider the rates lenders are offering. Some borrowers take pains to time their HELOC applications so that they’ll coincide with a rate dip. But that game is difficult to win, and you’ve got other, possibly more effective strategies you can use to increase your chances of getting the best available rate. We’ll discuss those below.
Historical Prime Interest Rate
| Date | U.S. Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.5% |
| 9/27/2018 | 5.25% |
Source: U.S. Federal Reserve
Adjustable vs Fixed Interest Rates
If you decide to move forward with a HELOC, you’ll want to look at lender offers not only in terms of their starting rates, but for specifics like how often a rate can change, and if the lender will cap it at some point. If you can handle a bit of financial uncertainty, a HELOC might be the right choice for you.
Helpful Tools & Calculators
Before taking the leap and obtaining a HELOC, you will want to use online tools to estimate your costs. Here are a few useful ones to try out if you’re thinking about borrowing against your home equity.
Run the numbers on your HELOC.
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Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
How Does a Homeowner Qualify for a Competitive HELOC Rate?
Trying to grab the most competitive HELOC rate out there? Your credit score, debt-to-income (DTI) ratio, and level of home equity are going to be important factors in the equation. Lenders will look for you to have at least 15% home equity — though more is better. Follow these tips to ensure your finances are up to par before you start your application.
Improve Your Credit Score
Keeping your credit score at 700 or better is key to unlocking the top HELOC rates. The good news is, you can nudge your number up by paying bills on time and paying down your credit card balances. Review your credit report, too — you may discover inaccuracies. Disputing errors ensures that your score truly reflects your financial responsibility.
Calculate Your Debt-to-Income (DTI) Ratio
A simple equation will give you your DTI ratio: Divide your total monthly debt payments by your gross monthly income. Most HELOC lenders would like to see a DTI that is under 50%, but to qualify for Amarillo’s best HELOC interest rates, you’ll want to try to get yours below 36%. Work on paying down any debt you’re carrying or increase your earnings to enhance your financial profile.
Application Process for a HELOC in Amarillo
Making the effort to get prequalified online will reward you with a snapshot of HELOC rates available in Amarillo, along with an estimate of the amount you might qualify for. Once you’ve scoped out the various lenders and rates available to you, you may be ready to move on to the full application. It will require more financial details and specific property information.
Step 1: Run the Numbers
Before jumping into a HELOC, look closely at your finances. Review your credit scores from the three major credit bureaus and calculate your debt-to-income (DTI) ratio. Next, suss out your level of home equity, which grows as you make regular mortgage payments and improvements or as home values in your area increase. Subtract your outstanding mortgage balance from the estimated value of your home, then divide the answer you get by your home’s value to arrive at that magic percentage. As noted above, you will need at least 15% equity to move forward on that HELOC.
Step 2: Compare Lenders
To find Amarillo’s best HELOC lenders, and the best match for you, compare them and determine which ones offer the best rates and terms. Look at their advertised interest rates, and look into the qualification requirements, minimum and maximum amounts you can borrow, fees, and draw and repayment periods, all of which can vary among lenders. It’s important to shop around and read the fine print regarding terms and other details before committing to a HELOC.
Step 3: Submit Your Application
Gather your paperwork, including government-issued identification, recent pay stubs, W-2 forms, and copies of your last tax return. If you are self-employed, a lender may ask to see a profit-and-loss statement in addition to two years’ of tax returns. Required property documentation will include a homeowners insurance declaration page. You’ll most likely be able to submit your HELOC application online, over the phone, or in person to get the ball rolling.
Step 4: Get an Appraisal
An appraisal is an analysis conducted by an objective professional to determine your home’s value. The cost of an appraisal on your home typically ranges from about $300 to $600. You’ll need the result of your home appraisal to be more than your existing mortgage balance to be approved by a lender for a HELOC. This step will be important, since it will help determine the amount of equity you can potentially access, along with your HELOC agreement’s specific terms.
Step 5: Prepare to Close
Once you’ve been approved, but before you can access your HELOC funds, you’ll need to sign the HELOC agreement and take care of your line of credit’s closing costs. Some lenders will make the funds available to you soon after your closing; others may take a bit longer. You may have to pay for elements like the appraisal, title search, origination fee, or other charges. Don’t leave anything to surprise; you should go to your closing knowing all the costs involved with your HELOC.
Closing Costs and Fees
HELOCs typically involve lower closing costs than home mortgage loans or cash-out refis. The most significant expense tends to be the appraisal fee. Other possible costs may be for a title search, and application, origination, and administrative fees. Some lenders charge an annual maintenance fee of up to $250 per year. Keep in mind: If a lender offers to reduce or waive closing costs, it could mean that the interest rate they will give you will be higher.
Recommended: HELOC vs. Home Equity Loan
Tax Benefits and Considerations
Currently, homeowners can deduct HELOC interest if the funds they borrow are used to make significant improvements on a primary residence. This policy may change in the future, though, so keep in touch with a tax advisor to be sure deductions apply to your specific circumstances.
HELOC Alternatives
Other ways of getting equity out of your home exist. Besides a HELOC, they include home equity loans and cash-out refinancing. Before you decide on a HELOC, it’s a good idea to consider your options — another one out there is a personal loan.
Home Equity Loan
What is a home equity loan? It gives a borrower a lump-sum loan at a fixed interest rate, and you can typically use it to borrow up to 85% of your home’s equity. Lenders generally look for a credit score of 680 or higher, and many want your score to be 700 or above before they will offer you their best rate.
This is a strong option if you have a specific need for a defined amount of money, and if you prefer fixed monthly payments that are predictable over the life of the loanm. A home equity loan calculator can help you determine the maximum loan amount you’ll qualify for.
Cash-Out Refinance
A cash-out mortgage refinance is another option that will let you borrow more than you currently owe on your mortgage, and then collect the extra funds in cash. If your credit score is 620 or more and your DTI ratio is under 43%, this option is open to you, with a fixed or variable rate.
What is the actual difference in a cash-out refinance vs. home equity line of credit? The refinance option will require just one monthly payment.
Personal Loan
You don’t risk foreclosure if you find yourself unable to make payments on a personal loan, which is typically unsecured, so there’s one pro right there. Borrowers typically repay personal loans in regular, fixed installments over a two- to seven-year period. Lenders will likely look for your credit score to be 610 or higher for these loans. They are relatively speedy to secure — another advantage — but personal loans tend to carry higher interest rates than HELOCs.
The Takeaway
If you are considering a HELOC in Amarillo, take the important step of weighing both the potential benefits and the possible risks you’ll be taking on. HELOCs offer financial flexibility and can come with more attractive interest rates than other options, making them a well-suited borrowing choice if you’re managing large, ongoing expenses. But they also come with a risk of losing your home should you default for some reason. Always realistically assess your financial situation before taking out a loan. You’ll likely need a credit score of at least 640 to qualify, and you’ll want to look at multiple lenders’ rates if you think a HELOC is the right pick for you.
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Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.
FAQ
Is a HELOC a wise move at this point?
If you are looking for flexibility to access funds in increments for big expenses, and you feel comfortable signing up for a loan with a variable interest rate, a HELOC could be a good move for you — especially if a prime rate drop is forecast. But if the stability of fixed payments better suits you, a home equity loan might be a better choice.
What would the monthly payment on a $100,000 HELOC be?
The payment on a $100,000 HELOC will depend on the interest rate, the repayment terms, and how much of the credit line you use upfront. If you need to borrow the full $100,000 and you have an 8.00% rate, you might pay around $667 per month in interest during the draw period. During the repayment phase, you’d start paying down the principal, too, so your monthly payment would rise to more than $1,200. HELOCs have variable interest rates, so your payments will vary.
Do you need an appraisal to get a HELOC?
Yes, you’ll need a home appraisal if you want to obtain a home equity line of credit. Your best bet is to wait for instructions from your potential lender so you know how your home should be appraised to meet their terms. An appraisal will help a lender determine your home’s current market value, which will impact the amount you’ll be approved to borrow.
Will a HELOC impact your credit score?
Opening a HELOC involves a hard inquiry on your credit report, and that can cause a slight, temporary drop in your credit score. But if you manage a HELOC responsibly, it can positively impact your credit score. (Missing payments, on the other hand, will harm your creditworthiness.)
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SOHL-Q225-385
More HELOC resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare