ATLANTA HELOC RATES TODAY
Current HELOC rates in
Atlanta, GA.
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 rates are influenced by the prime rate and individual credit factors.
• HELOCs are a great option if you’re looking for a revolving line of credit with lower initial interest rates.
• It’s important to understand the draw and repayment periods.
• Consider alternatives like home equity loans and cash-out refinances.
• HELOC closing costs are usually less than those for home purchases or cash-out refinances.
Introduction to HELOC Rates
Welcome to your comprehensive guide to home equity line of credit (HELOC) rates in Atlanta. Whether you’re considering a home renovation or have other significant expenses in mind, this article is tailored to help you better understand the current market conditions and how to qualify for the most competitive rates when borrowing with a HELOC. We’ll explore the factors that influence HELOC rates, the benefits and potential pitfalls of HELOCs, and how you can use online tools to estimate your costs. First things first: Understand what a HELOC is.
What Exactly Is a HELOC?
A HELOC is a flexible line of credit that uses your home as collateral. To qualify for a HELOC, you typically need 15% equity in your home. Some lenders allow you to borrow up to 90% of that equity. It’s important to understand that when your home is used as collateral, the lender can foreclose if you fail to make your payments. HELOCs typically have two periods, and the payments are computed differently in each phase:
The Draw Period
During the HELOC’s draw period (usually 10 years) you can use funds from the credit line in increments, as needed. You’ll have to pay interest on what you borrow, but most lenders won’t require you to pay down the principal — although you can do so if you wish to draw on the credit line again. A HELOC interest-only calculator can help you estimate what your payments might be.
The Repayment Period
After the draw period ends, the repayment period of between 10 and 20 years begins. Monthly payments will increase as you begin to repay the principal plus interest. HELOC interest rates are usually variable, which means the amount you pay each month may go up or down as rates change. You can use a HELOC monthly payment calculator to estimate payments during this time.
The Origin of HELOC Interest Rates
Lenders set their HELOC rates based on the prime rate, a figure that is guided by Federal Reserve policies. Each lender adds a margin to the prime rate, which explains the range of rates you might encounter. This is why it’s so important to seek out rate quotes from multiple lenders before selecting a partner for your HELOC. Each lender will evaluate your financial profile, including your credit score, debt-to-income (DTI) ratio, and equity level slightly differently, and you’ll be offered a range of rates as a result.
How Interest Rates Impact HELOC Affordability
The interest rate on a HELOC can have a noticeable impact on its affordability. HELOCs’ variable rates makes it hard to pinpoint the precise amount the HELOC will cost, but if you borrowed $50,000 with a HELOC that had a 20-year repayment term, you would have the following monthly payment amounts at 7.00%, 8.00%, and 9.00% interest: $388, $418, and $450, respectively, and total interest paid of $43,036, $50,373, and $57,967, respectively.
Recommended: HELOC vs. Home Equity Loan
HELOC Interest Rate Trends
As you think about how to get equity out of your home in Atlanta, you’ll probably begin to pay more attention to the prime rate. Since 2018, the prime rate has been on a bit of a rollercoaster, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023. Having a sense of this history can help put the rates you are seeing in the current marketplace into perspective.
| 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
Variable vs. Fixed Interest Rates
It’s helpful to understand how interest rates can fluctuate because HELOCs often come with variable (also called adjustable) rates. Your HELOC agreement will tell you how often the rate might adjust and what the rate cap would be. You have to decide if you’re comfortable with this level of uncertainty.
Helpful Tools and Calculators
Using online tools to estimate your monthly payment and interest costs is one way to determine if a HELOC is the right fit for you. You’ll find yourself coming back to these helpful calculators repeatedly as you’re thinking about borrowing against your 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 to Qualify for a Competitive HELOC Rate
To secure a competitive HELOC rate, you’ll want to take some steps to improve your financial well-being. Having 15% home equity is a must. To check your equity, subtract what you owe on your home loan from your home’s estimated value. Divide the answer by your home value and you’ll get a percentage of equity. The more the better where HELOC rates are concerned.
Improve Your Credit Score
To get a HELOC rate in Atlanta, you’ll want to keep your credit score at 640 or above. But to get a really attractive interest rate, aim for a score of 700 or more. The good news is, you have the power to polish your credit score by making on-time payments and chipping away at credit card balances. Regularly checking your credit report for inaccuracies and disputing them can also give your score a nudge in the right direction.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a simple calculation: Divide your total monthly debt payments by your gross monthly income. HELOC lenders generally prefer to see a DTI under 50%, but the lower, the better. And for the best HELOC rate in Atlanta, you’ll want to be at 36% or below. You can improve your DTI by lowering your debts, increasing your income, or both.
Application Process for a HELOC in Atlanta
Prequalifying online with a few lenders can save you time and streamline the process of applying for a HELOC in Atlanta. You’ll get a peek at potential rates and terms before you commit to a full application. This way, you can weigh your options before you take the next steps.
Step 1: Run the Numbers
First things first, check your credit score and calculate your DTI ratio. Then assess your home equity: Subtract your outstanding mortgage balance from your home’s estimated value. Divide the answer by your home value to arrive at a percentage. Making regular mortgage payments helps build equity. Home improvements that boost the property’s value can increase equity, too.
Step 2: Compare Lenders
Take a look at the rates in Atlanta. Carefully compare qualification requirements, credit minimums and maximums, any associated fees, and the length of both the draw and repayment periods. Keep an eye out for lenders that offer competitive rates and flexible terms. Reading customer reviews and thoroughly checking lender reputations can also help you make a more informed decision.
Step 3: Submit Your Application
Gather all the necessary paperwork, including proof of identification, income verification, and property information. For income verification, you’ll need to provide your most recent pay stubs, W-2 forms, and complete tax returns from the previous year. If you’re self-employed, you may also need to provide a profit-and-loss statement and your tax returns from the past two years. Additionally, you’ll need to provide a homeowners insurance declaration page as part of the property documentation. Once you have everything you need, you can submit your application online, over the phone, or in person.
Step 4: Get an Appraisal
After you submit an application and solidify your choice of lender, you’ll likely need an appraisal. Work with the lender to ensure you get the appraisal and documentation the lender requires.The typical cost of having a pro weigh in on the value of your home is usually between $300 and $610. If your home is appraised for more than what you owe, you’ll have cleared a bar necessary for a HELOC.
Step 5: Prepare for Closing
Once you’re approved for a HELOC and decide to move forward, you’ll need to sign the HELOC documents and take care of any associated fees. Most lenders will make the funds available within three business days of the HELOC closing. Before you sign on the dotted line, be sure you understand all the terms and conditions. This is an important step to avoid any surprises and to make sure you’re prepared to use your HELOC.
Recommended: Different Types of Home Equity Lending
Closing Costs and Fees
HELOC closing costs are generally more affordable than those associated with a home purchase or a cash-out refinance. Plan for appraisal fees to be the most significant chunk of your expenses. A title search, if required, may cost between $100 and $450. Other potential fees include application, origination, and administrative costs, as well as annual maintenance fees that could climb to $250. Some lenders may also charge transaction, inactivity, or early termination fees.
Tax Benefits and Considerations
Homeowners can take advantage of a tax deduction on the interest paid on a HELOC if the funds are used to renovate the primary residence. This tax benefit is set to last through 2025 but should continue in future years. Before making any decisions, it’s important to consult with a tax advisor to confirm individual eligibility for deductions related to HELOCs.
Alternatives to HELOCs
If a HELOC isn’t for you, there are other financing options to consider. Here are the chief competitors for a HELOC:
Home Equity Loan
When weighing a home equity loan, note that the latter provides a lump-sum loan at a fixed interest rate. You can typically borrow up to 85% of your home’s equity. Lenders look for a credit score of 680, with many favoring 700 and above. This option is great if you have a specific need for a defined amount of money and prefer the predictability of fixed payments. A home equity loan calculator can help you see what you might qualify for.
Cash-Out Refinance
A cash-out mortgage refinance lets you refinance for more than you currently owe and take the difference in cash. It’s a good option, so long as the interest costs of a new mortgage are better than what you’d have at your current rate. Things to think about with a cash-out refinance vs. a home equity line of credit: With a refi you’d need a credit score of 620 or higher and a debt-to-income ratio under 43%. You can choose between fixed or variable interest rates.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed installments over a period of two to seven years. The key benefit here is that your home is not at risk of foreclosure should you encounter financial challenges. Most lenders look for a credit score of 610 or higher. While these loans are relatively quick to secure, the interest rates may be higher compared to HELOCs or home equity loans.
The Takeaway
When you’re thinking about signing on to a HELOC, it’s a smart move to consider the pros and cons. HELOC rates in Atlanta can be quite competitive compared to those for a personal loan, especially if your credit score is solid and you’ve built up a good amount of home equity. But the variable nature of HELOC rates can make monthly payments a bit unpredictable. And of course, it’s important to keep in mind that your home could be at risk of foreclosure if you fall behind on payments. Take your time to compare different lenders and explore alternatives like cash-out refinances or personal loans to find the best fit for your financial needs.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.
FAQ
What’s the advantage of a HELOC?
HELOCs allow you to use the funds for any purpose and to draw against the credit line in increments, as you need the money. You’ll only pay interest on the portion of the credit line that you use. Another advantage is that during the draw period of a HELOC, you have the option to pay interest only, so early payments can be smaller than those during the later repayment period. HELOCs have variable interest rates, which can go up or down — the latter being another possible advantage.
Do you need an appraisal for a HELOC?
You typically do need a home appraisal to qualify for a HELOC. The appraisal helps determine the current market value of your home, which is essential for calculating the maximum borrowing limit. It’s an important step in the application process to ensure the lender has an accurate assessment of your home’s value.
What could stop you from getting a home equity loan?
There are a few factors that could potentially disqualify you from securing a home equity loan. These include a low credit score, a high debt-to-income (DTI) ratio, and not enough equity in your home. Most lenders look for a credit score of 680 or better, a DTI ratio of 50% or less, and a minimum of 15% equity in your home. If you don’t meet these criteria, you might need to work on improving your financial profile or explore other financing sources.
Will a HELOC impact my credit score?
When you apply for a HELOC, a hard inquiry will be made on your credit report, which could lower your credit score slightly. But the good news is that this is a temporary dip, and if you manage your HELOC responsibly and make payments on time, having a HELOC can actually improve your credit score.
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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