CHARLOTTE HELOC RATES TODAY
Current HELOC rates in
Charlotte.
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 Charlotte are influenced by the prime rate and economic trends.
• Your credit score and debt-to-income ratio have a significant effect on your interest rate as well.
• HELOC rates can vary from lender to lender.
• The interest on a HELOC may be tax-deductible if used for home improvements.
• Online calculators can help you figure out the monthly payments and total costs before you commit.
Introduction to HELOC Rates
This article is your go-to guide for understanding home equity line of credit (HELOC) interest rates in Charlotte, North Carolina. We’ll help you grasp the factors at play, so you can qualify for the best terms. You’ll learn about the benefits and risks of HELOCs, how to compare different lenders, and the tools available to estimate your costs. Whether you’re planning a home renovation or need funds for other expenses, this guide will help you make informed financial decisions.
What Exactly Is a HELOC?
A HELOC is a revolving credit line secured by your home equity (the home’s value minus your current home loan balance). To qualify for a HELOC, homeowners typically need 15% equity. You can usually borrow up to 90% of your equity, but remember: If you don’t make your HELOC payments, you could face foreclosure. HELOCs have two payment periods, and it’s important to understand how they differ.
The Draw Period
The initial draw period for a HELOC can be up to 10 years. This stage is an important distinction between a HELOC vs. a home equity loan, because with a HELOC, you only have to pay interest on what you’ve borrowed during the draw phase. (With a home equity loan, you get a lump sum and start repaying principal plus interest immediately.) A HELOC interest-only calculator can help you estimate costs at this time.
The Repayment Period
After the draw period comes the 10- to 20-year repayment period when you stop borrowing and start repaying what you owe, plus interest. This is when a HELOC monthly payment calculator might be helpful, since HELOCs have variable interest rates that can change, rising (or falling) with market conditions. This means your monthly payment won’t always be the same, so you’ll need to be okay with this uncertainty.
Where HELOC Interest Rates Originate
HELOC interest rates are tied to the prime rate, which is influenced by the Federal Reserve. Lenders add a margin to the prime rate to determine the interest rate they’ll offer you. Your specific rate will depend on factors like your credit score, debt-to-income (DTI) ratio, and the amount of equity you have in your home. Because each lender can interpret your numbers slightly differently, you’ll want to seek out rates and examine terms from multiple lenders before you sign on to a HELOC.
How Interest Rates Impact HELOC Affordability
It’s worth pursuing multiple rate quotes because the interest rate on your HELOC can make a significant difference in how much you pay each month, as well as over the life of the HELOC. Let’s say you have a $50,000 HELOC and borrow the full amount at 8.50%. Repaying it over 15 years, you would have monthly payments of $492 during the repayment period and total interest of $38,627. At 9.50%, the monthly payments would be $522 and the total interest would be $43,980. HELOC rates are variable so your actual results may differ. But the lower the starting rate you can secure, the better.
HELOC Interest Rate Trends
Keeping an eye on the prime interest rate can be a smart move, as it often foretells the near future of HELOC rates. The rate hit a low of 3.25% in 2020 and a high of 8.50% in 2023. You’ll soon see how the rates you’re being offered fall in comparison. You may be tempted to wait for a very low rate before applying, but if you need funds for a renovation or other expenses, you may not have the luxury of waiting. Either way, focus on polishing your own financial profile so you’ll be offered the best of the available rates.
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
Variable vs. Fixed Interest Rates
With a HELOC, you’re looking at a variable (also known as adjustable) interest rate. If the prime rate goes up, your HELOC rate will likely follow. This can make your monthly payments harder to predict. However, a HELOC agreement usually spells out the allowed variance in rates and details a cap on rates. Knowing how adjustable rates work and reading the fine print on what is allowed in the HELOC you’re applying for is important for managing your finances.
Recommended: Different Types of Home Equity Loans
Helpful Tools and Calculators
Before you apply for a HELOC, you can use online tools to get an estimate of what your monthly payments and interest costs might be. Bookmark these useful calculators — you’ll likely come back to them again and again.
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 obtain a competitive HELOC rate, you’ll want to focus on a few key areas: your credit score, debt-to-income ratio, and the equity you’ve built in your home. As noted above, you can get a HELOC with an equity level of 15%. But for the best rates, lenders like to see an even greater proportion of equity.
Improve Your Credit Score
Reaching a credit score at 700 or above is key to unlocking the best HELOC rates, although you can qualify for a HELOC with a score of 640. You can push your score in the right direction by making payments on time and reducing credit card balances. Stay on top of your credit report and correct errors that are harming your score. Avoid opening new credit accounts (or closing old ones) in the months before you apply for a HELOC.
Calculate Your Debt-to-Income (DTI) Ratio
Add up your monthly debt payments and divide them by your gross monthly income. The result is your DTI ratio. A DTI number below 50% could get you approved for a HELOC, but for the best interest rates, lenders like to see a ratio of 36% or less. Pay down debt or increase your income (or do both) to yield a better DTI number.
Application Process for a HELOC in Charlotte
Some lenders offer the convenience of prequalifying for a HELOC online, which can be a real time-saver. It’s a great way to get a feel for the HELOC rates in Charlotte you might be eligible for and to gauge the equity you could tap into. After feeling out the market, move to these steps:
Step 1: Run the Numbers
Before you take the leap, it’s important to make sure you have 15% equity (at minimum). Subtract your mortgage balance from your home’s estimated value. Then divide the answer by the home value to get a percentage of equity. Also check your credit scores from all three major bureaus, and calculate your DTI ratio.
Step 2: Compare Lenders
See what HELOC interest rate offers you might qualify for in Charlotte. Carefully compare qualification requirements, minimums and maximums, any fees that may apply, and the length of the draw and repayment periods. This comparison can take time, but it will help you choose a lender you feel comfortable with.
Step 3: Submit Your Application
Get all your ducks in a row, from personal identification to proof of income and a comprehensive property dossier. For income verification, you’ll need your latest pay stubs, W-2 forms, and tax returns. If you’re self-employed, a lender might ask for a profit-and-loss statement and two years’ worth of tax returns. Have your homeowners insurance declaration page handy. Once you’ve got everything together, you can submit your application online, over the phone, or in person.
Step 4: Get an Appraisal
A home appraisal is a professional and objective assessment of your home’s value. The cost of this service ranges from $300 to $610, and you’ll want to hear from a lender with appraisal instructions before ordering the evaluation. If your home appraises for more than your mortgage balance, the lender may approve you for a HELOC. This step determines the maximum amount you can borrow and the HELOC rates you may qualify for.
Step 5: Prepare for Closing
Before you can tap into your HELOC, you’ll need to sign documents and take care of any associated fees. Some lenders can get the funds to you within three days of closing. Make sure to review all documents thoroughly and don’t hesitate to ask questions so you’re clear on the terms and conditions of your HELOC.
Closing Costs and Fees
The good news is that HELOC closing costs are generally more budget-friendly than what you’d encounter with a traditional home purchase or refinance. The appraisal fee is often the most significant cost. You might also see an application fee, an origination fee, and administrative costs. Some lenders may even tack on an annual maintenance fee, usually up to $250, and transaction fees for each withdrawal.
Tax Benefits and Considerations
For the 2025 tax year, you may be able to deduct HELOC interest on your federal taxes if the money you borrowed is used to substantially improve your primary residence. Keep in touch with your tax advisor for updates. You’ll have to itemize to capture this deduction.
Alternatives to HELOCs
There are other ways to get equity out of your home in Charlotte, including home equity loans, cash-out refinancing, and personal loans. Each has its own pros and cons.
Home Equity Loan
A home equity loan is a lump-sum loan with a fixed interest rate. Typically, you can borrow up to 85% of your equity with this type of loan which, like a HELOC, uses your home as collateral. A home equity loan calculator can help you figure out how much you might borrow. Lenders generally look for a credit score of 680 or higher, but for the best rates you’ll need 700 and above. Note that a home equity loan typically has a fixed rate and a consistent monthly payment amount over the entire term.
Cash-Out Refinance
A cash-out refinance is a mortgage refinance that lets homeowners get a new home loan for more than they owe on their original one. They then receive the difference in cash. For a cash-out refi, you’ll need a credit score of 620 or more and a DTI ratio under 43%. One cash-out refinance vs. home equity line of credit point of difference: A refi leaves you with a single monthly payment instead of two. Because it’s an entirely new mortgage, you can choose the loan term and decide between a fixed or variable rate.
Personal Loan
Your home wouldn’t be at risk if you can’t make payments on an unsecured personal loan. This type of lump-sum loan is repaid in regular, fixed installments over two to seven years, a shorter time horizon than most HELOCs and home equity loans. Many lenders want to see a credit score of 610 or higher on a personal loan application. While the process is often swift, do note that personal loans may carry higher interest rates than HELOCs or home equity loans.
The Takeaway
As you mull over the idea of a HELOC, consider the upsides and potential pitfalls. The flexibility and potentially lower interest rate are definitely perks, but the variable interest rate and the shadow of foreclosure if payments are missed are not to be taken lightly. In Charlotte, looking into HELOC rates from multiple lenders can give you a clear picture of what’s on the table and help you feel comfortable borrowing knowing you’ve gotten the best possible rate.
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FAQ
What would the monthly payments be on a $50,000 HELOC?
Your monthly payment on a $50,000 HELOC will vary based on the rate and terms of your loan. During the draw period, you might only need to pay interest, which can be quite manageable. For instance, at a 7.00% interest rate, your monthly interest-only payment would be approximately $292. But keep in mind, once the repayment period kicks in, you’ll be paying both principal and interest, so your monthly expense will increase.
What are the perks of a HELOC?
The key benefits of a HELOC are the fact that its interest rates are usually lower than a personal loan, and it’s a very flexible way to borrow. You can pull funds from your HELOC as needed up to your credit line and only pay interest based on the portion of the credit line that you have used. The draw phase, with its interest-only payments, is another perk. Other ways of borrowing have you making principal payments right away. Plus the interest paid on HELOCs is currently tax-deductible through the 2025 tax year, and likely into future years as well (consult a tax pro).
What could prevent you from getting a home equity loan?
A few factors could 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
Will a HELOC impact your credit score?
Yes, opening a HELOC account will likely have a minor impact on your credit score. When you apply for a HELOC, a lender will run a hard inquiry on your credit report to determine your creditworthiness. This can cause a small, temporary decrease in your credit score. However, if you manage your HELOC account well and make payments on time, your credit score will likely improve over time.
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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