CHARLESTON HELOC RATES TODAY
Current HELOC rates in
Charleston, SC.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Compare HELOC rates in Charleston.
Key Points
• Home Equity Line of Credit (HELOC) rates in Charleston are influenced by the prime rate and aspects of the borrower’s financial profile.
• HELOCs offer flexible access to funds, with interest accruing only on the funds you use.
• Variable interest rates on HELOCs can lead to unpredictability with future monthly payments.
• Home equity is the difference between your home’s value and the outstanding mortgage balance.
• 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.
Introduction to HELOC Rates
We put this overview together to offer you, as a homeowner, tools to increase your understanding of how to get equity out of your home in Charleston, SC.
What is a home equity line of credit, or HELOC? If you’ve been paying down your home loan month by month and have built up a fair amount of home equity, you may be wondering if a HELOC can help you modernize your living space, invest in education, or consolidate higher-interest debt. This article will give you the tools to make well-informed choices as we look into the factors that influence HELOC rates, the advantages and potential pitfalls of these financial tools, and the keys to finding the most favorable lenders and terms. Is a HELOC the right choice for you? This guide should help you know for sure.
What Is 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 credit line, you can 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 at least 15% equity to qualify, and you can borrow up to 90% of that equity. It’s important that you have a plan for repaying a HELOC, because missing payments will put you at risk for foreclosure.
A HELOC has two phases:
The Draw Period
In the HELOC’s initial draw period (usually 10 years) you can access funds in increments, as needed. During this time, you’ll need to pay interest on what you borrow, but most lenders won’t require you to pay down the principal. You’ll only need to do so if you max out the credit line and want to draw on it again. A HELOC interest-only calculator can help you compute what you’ll owe during this phase.
The Repayment Period
Once the draw period ends, a repayment period of 10 to 20 years will begin. Your monthly payments will increase because now you’ll be paying off both the principal and interest. HELOC interest rates are generally variable, so the amount of your monthly payment may go up or down if your rate changes. A HELOC monthly payment calculator is useful during this phase. It can help you predict fluctuations.
How Are HELOC Interest Rates Determined?
HELOC interest rates, along with those for different types of home equity loans, are typically set based on the prime rate, which is greatly influenced by Federal Reserve policies. Lenders usually add a margin to the prime rate to determine the interest rate they’ll offer, but they also consider your credit score, debt-to-income (DTI) ratio, income, and the amount of equity you have in your home. That’s why rates vary from lender to lender, and also why getting quotes from multiple lenders before settling on an offer and signing a HELOC agreement is important.
How Interest Rates Impact HELOC Affordability
What looks like a small difference between two HELOC rates can actually make a noticeable difference in the cost of a HELOC over the long haul. For example, on a $50,000 HELOC with a 20-year term, a one-percentage-point rate change from 7.00% to 8.00% would bump your monthly payment up by $30, and increase the total interest you’d pay over the life of the HELOC by almost $7,000. The more you borrow with a HELOC, the greater the effect of even a slight increase or decrease in interest rate, so keep an eye on what comes after the decimal point.
HELOC Interest Rate Trends
Be watchful of the prime interest rate, too. It can clue you in on the direction HELOC rates might be heading. Since 2018, the prime rate has experienced ups and downs, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023. An understanding of historical patterns can give you perspective on rates you see in the marketplace. Some borrowers try to time their HELOC applications to coincide with a dip in rates. But it’s difficult to win at that game. There are other, possibly more effective ways to increase your chances of getting the best available 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
HELOCs are likely to come with adjustable interest rates, which generally start off lower than those on fixed-rate loans, but can go up or down in response to market conditions. If you decide to move forward with a HELOC, you’ll want to examine lender offers not only for starting rates, but for the specifics on how often a rate can change, and what the cap is. If you can handle a bit of financial ebb and flow, a HELOC might be the right choice for you.
Helpful Tools & Calculators
Before applying for a HELOC, try out some online tools, which can help you get an estimate of what your monthly payments and interest costs might be. These useful calculators can assist you in understanding the impact of HELOC rates on your budget, so you can plan accordingly.
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 land a top rate on a HELOC, your credit score, DTI ratio, and home equity level are critically important. Lenders generally look for you to have at least 15% equity in your home — and more is better. Here are some ways to ensure your finances are up to snuff before you apply.
Improve Your Credit Score
A stellar credit score of 700 or higher is key to unlocking the best HELOC rates. The good news is, you can nudge your number up by paying your bills on time and steadfastly chipping away at those credit card balances. Also, regularly review your credit report for inaccuracies. Dispute any errors you see, and your score will truly reflect your financial responsibility.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is simple to calculate: Divide your total monthly debt payments by your gross monthly income. Most HELOC lenders are looking for a DTI under 50%, and for the best HELOC interest rates in Charleston, you’ll want to get yours down even further, below 36%. Paying down debt (or increasing earnings) will enhance your financial profile.
Application Process for a HELOC in Charleston
The application process for a HELOC in Charleston is fairly straightforward, especially if you take the time to prequalify online. This preliminary step lets you view the rate you might qualify for. If you decide to move forward and complete a full application, it’s a matter of gathering the necessary paperwork and submitting via the web. Here’s the full process:
Step 1. Run the Numbers
Before taking the plunge, run a check on your credit score and calculate your debt-to-income ratio. Then assess your home equity — you need at least 15% to proceed. To calculate your equity percentage, subtract your current mortgage balance from your home’s estimated value, then divide the answer by that same home value. There you have it. Making your regular mortgage payments is a surefire way to build equity, and home renovations also help it grow.
Step 2. Compare Lenders
Research different lenders to find the best HELOC interest rates in Charleston. Look at not only their rates, but also qualification requirements, credit line minimums and maximums, fees, and the length of their draw and repayment periods. Each lender may have unique terms and conditions. It’s important to read the fine print.
Step 3: Submit Your Application
Now it’s time to gather your paperwork. You will need recent pay stubs, W-2 forms, and tax returns. If you’re self-employed, you may be asked for a profit-and-loss statement and two years’ worth of tax returns. Have your homeowners insurance policy handy, too. Once you’ve got everything together, you can apply online, over the phone, or in person. Double-checking the information you provide for accuracy will keep the process moving smoothly.
Step 4: Get an Appraisal
A lender will require an objective professional analysis of your home’s value, so once you’ve identified the HELOC offer that’s most appealing to you, you should expect to pay between $300 and $600 for an appraisal. This step confirms the amount of equity you have in your home and is an important part of the HELOC application process.
Step 5: Prepare for Closing
Before you’ll be able to tap into your funds, you’ll need to sign your HELOC agreement and pay the required fees. You can find many lenders who’ll have your funds ready within a few days of closing. Be sure to take time to review all of your documents carefully, and ask any questions you have to make sure you’re clear on the terms of your HELOC.
Closing Costs and Fees
HELOCs typically come with lower closing costs than you’d pay with a home mortgage loan or a cash-out refinance. The appraisal fee is usually the most significant expense. Other costs you may encounter are title search, application, origination, and administrative fees. Some lenders also charge an annual maintenance fee, which could be up to $250 per year. Keep in mind that if a lender offers to reduce or waive closing costs, it could mean a higher interest rate for you.
Recommended: HELOC vs. Home Equity Loan
Tax Benefits and Considerations
Right now, homeowners can deduct HELOC interest if they use the borrowed funds to make significant improvements to their primary residence, and itemize costs. Policy may change in the future. Consult with a tax advisor about your specific circumstances.
Alternatives to HELOCs
Other ways to get equity out of your home besides a HELOC include home equity loans and cash-out refinancing, as well as personal loans. Before you commit to a HELOC, it’s worth considering all the options.
Home Equity Loan
What is a home equity loan? It offers you a one-time lump-sum loan instead of a line of credit. This loan usually has a fixed interest rate and can often be for up to 85% of your home equity. (A home equity loan calculator can help you see how much you might be eligible to borrow.) Lenders look for you to have a credit score of 680 or higher to qualify. If you prefer the predictability of a fixed interest rate and a set payment schedule, this could be a good fit for you. One difference between a HELOC and a home equity loan is that you get the money all at once and begin repaying principal plus interest right away with the home equity loan.
Cash-Out Refinance
A cash-out mortgage refinance allows you to refinance for more than you owe on your mortgage right now and take the difference in cash. It’s a good option as long as the costs on a new mortgage are preferable to what you’d continue to have with your current home loan. Things to think about with a cash-out refinance vs. a home equity line of credit: With a refinance you’d need a credit score of 620 or higher and a DTI ratio that is under 43%. A slightly easier to get refi also lets you choose between fixed or variable interest rates, and leaves you with one monthly payment instead of two.
Personal Loan
A personal loan is an unsecured loan that you repay in regular, fixed installments over a period of two to seven years. The key benefit to one of these loans is that your home is not at risk of foreclosure should you encounter financial challenges and be unable to make your payments. Most lenders look for a credit score of 610 or higher for this type of borrowing. While these loans are relatively quick to secure, the interest rates tend to be higher compared to HELOCs or home equity loans.
The Takeaway
When considering a HELOC in Charleston, it’s important to weigh both the potential benefits and the possible risks you are taking on. HELOCs offer financial flexibility and may come with more attractive interest rates compared to other borrowing options, and that makes them well-suited for managing large and ongoing expenses. However, they also come with a risk of losing your home should you fall into default. Always take the time to assess your overall financial situation before taking out a loan — you’ll likely need a credit score of at least 640 to qualify. If you think a HELOC is right for you, look at multiple lenders’ rates.
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
Is a HELOC a wise move at this point?
If you need flexibility to access funds in increments for big expenses and feel comfortable with variable interest rates, a HELOC could be a smart move. That said, if you prefer the stability of fixed payments, a home equity loan might suit you better.
What would the monthly payment on a $100,000 HELOC be?
Payments on a $100,000 HELOC fluctuate based on the interest rate, the terms of repayment, and how much of the credit line you are actually using. If you borrow the full $100,000 and have an 8.00% rate, for example, you might only pay around $667 per month in interest during the draw period. Once the repayment phase arrives, you’d start paying down the principal and your monthly payment would rise to more than $1,200. HELOCs have variable interest rates, so your exact results may vary and your rate could go up in time.
Do you need an appraisal for a HELOC?
Yes, you’ll need a home appraisal to obtain a home equity line of credit. Your best bet is to await your potential lender’s instructions so you know exactly how your home should be appraised. An appraisal will help lenders determine your home’s current market value and the amount you can borrow. It also plays a role in how lenders set the interest rate you’ll be offered.
Will a HELOC impact your credit score?
Opening a HELOC involves a hard inquiry on your credit report, which can cause a slight, temporary drop in your score. However, if you manage a HELOC responsibly, it can have a positive impact on your credit score. (Missing payments, on the other hand, will hurt 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