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Compare HELOC rates in Cincinnati.
Key Points
• A home equity line of credit (HELOC) is a revolving line of credit that is secured by your home equity and drawn on as you need it.
• HELOCs are useful for managing large ongoing expenses, like a home remodel, or for paying off higher-interest debt.
• The rates for a HELOC are tied to the prime rate and to individual borrowers’ creditworthiness.
• HELOCs have variable rates, which means monthly payments can fluctuate over the life of the loan.
• It’s important to know the risks: If you default on a HELOC, it can lead to foreclosure.
Introduction to HELOC Rates
This is your comprehensive guide to home equity line of credit interest rates in Cincinnati, Ohio. Whether you are thinking about borrowing funds for a home renovation or paying for another significant expense, this article will give you information to help you make well-informed financial decisions about how to get equity out of your home. It will cover the factors that influence HELOC interest rates, along with the benefits and risks of opening a HELOC. By the end, we’ll equip you with the knowledge you need to understand current market conditions and qualify for the best available rates.
What Is a HELOC?
Before you make decisions about borrowing, it’s helpful to understand exactly what a home equity line of credit is. A HELOC is a line of credit that a homeowner can borrow against as needed, up to a limit that their lender sets based on their home equity. If you get a HELOC, your home is the collateral that secures the loan. This, of course, means that if you don’t repay what you borrow, you may face foreclosure.
Your home equity is the difference between your home’s value and your mortgage balance. To qualify for a HELOC, you typically need 15% equity, and you can borrow up to 90% of the equity you have accrued. HELOC interest rates are often lower than rates on unsecured loans. A HELOC has two main phases:
The Draw Period
During the HELOC’s initial draw period (usually 10 years) you can access funds in increments, as you need to. During this time, you’ll pay interest on what you borrow. Most lenders will not require you to pay down the principal — although you can do that if you wish to draw on the credit line again. A HELOC interest-only calculator is useful during the draw period.
The Repayment Period
After the draw period ends, the 10- to 20-year repayment period begins. Monthly payments will increase as you begin to repay the principal plus the interest. HELOC interest rates tend to be variable, which means the amount you pay monthly may go up or down as rates change. A HELOC monthly payment calculator can help you compute what you might owe.
Where Do HELOC Interest Rates Come From?
Lenders peg interest rates for HELOCs and different types of home equity loans to the prime rate — a figure that moves up or down with the Federal Reserve’s economic maneuvers. Each lender also tacks on a margin, which is why rates vary in the marketplace. The national average interest rate for a HELOC is 8.27%, but rates can range from 6.63% to 15.65%.
You’ll want to get rate quotes from multiple lenders if you apply for a HELOC. Your personal financial profile, including credit score, debts, and the amount of equity you’ve built in your home, affects the interest rate you’ll be offered. A higher credit score and more equity can tip the scales in your favor.
How Interest Rates Impact HELOC Affordability
You’ll have to invest time and energy shopping around to get the best HELOC interest rate, but that rate makes a big difference in what you’ll end up paying. Even a small shift in the rate can mean you’ll pay a lot more interest over the life of the HELOC. For example, if you used $50,000 from a HELOC during your 10-year draw period, the difference in the monthly interest payment based on an 8.50% versus a 9.50% rate is $42 per month (monthly payments would be $354 and $396, respectively).
If you happened to be repaying principal plus interest on the same $50,000 during a 20-year repayment period, monthly payments at the lower interest rate would be $620, and at the higher rate $647. That may not seem like such a large difference, but over the full repayment term, the lower interest rate could save you more than $3,000. Of course, since HELOCs have variable interest rates, real-world numbers may end up crunching somewhat differently.
Check out this chart, which compares HELOC loans at different loan amounts, 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
It’s hardly a crystal ball, but the prime interest rate can be a helpful gauge for HELOC rates. Since 2018, the prime rate has risen and fallen regularly, reaching a low of 3.25% in 2020 and then a high of 8.50% in 2023. This history can offer you some perspective on the current rates you’re about to start seeing in Cincinnati.
| 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 often come with adjustable interest rates. While these rates usually start lower than fixed rates, they can go up or down as they respond to market conditions. If you decide to move forward with a HELOC, you should examine each lender’s offer. You should be able to see the specifics of how often rates could change and where the lender might cap the rate. But if you are someone who can handle some financial ebb and flow, this might be a good choice for you.
Helpful Tools & Calculators
When you apply for a HELOC, you can use online tools to estimate the amount of money you’ll need to make your monthly payments, and what your interest costs might be. These tools will help you understand how a HELOC and its rates could sway your budget and 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
For you to land a top rate on a HELOC, the status of your credit score, DTI ratio, and home equity level are critical. Lenders look for potential borrowers to have at least 15% equity in their homes, generally — and more is even better. Here are a few ways to ensure your finances are in a good place before you apply.
Improve Your Credit Score
A top-notch credit score of 700 or higher is key to unlocking the very best HELOC rates. Good news is you can nudge your number up by paying every bill on time and steadily chipping away at any credit card balances you are carrying. Also, regularly review your credit report for inaccuracies and dispute errors. Your score will truly reflect your financial responsibility.
Calculate Your Debt-to-Income (DTI) Ratio
You can easily calculate your DTI ratio: Add up your total monthly debt payments and divide the sum by your gross monthly income. Most HELOC lenders are looking for DTIs under 50% from their borrowers. For the best HELOC interest rates on offer in Cincinnati, get yours down even further, below 36%. Paying off debt (or increasing earnings) will enhance your financial profile.
Application Process for a HELOC in Columbus
The application process for a HELOC in Cincinnati is straightforward, especially if you prequalify online. That early step lets you view the rate you might qualify for. If you decide to move forward with the full application, it’s a matter of gathering the necessary paperwork and submitting via the web. Here’s a step-by-step of the process:
Step 1: Run the Numbers
Before you take the plunge, check your credit score and calculate your debt-to-income ratio. You’ll also want to assess your home equity — you need at least 15% to qualify. You can easily calculate your level of equity by subtracting your current mortgage balance from your home’s estimated value, then dividing the answer by that same home value to get a percentage. Paying your mortgage payments on time every month is a no-fail way to build equity.
Step 2: Compare Lenders
Researching different lenders will help you to find the best HELOC interest rates in Cincinnati. Look at not only their advertised rates, but also their qualification criteria, credit line minimums and maximums, the fees they charge, and how long their draw and repayment periods run. Lenders may have unique terms and conditions — be sure to read the fine print.
Step 3: Submit Your Application
Gather your paperwork first. What you’ll need includes your recent pay stubs, W-2 forms, and tax returns. If you are self-employed, your potential lender may ask for a profit-and-loss statement, as well as two years’ worth of tax returns. You should have a copy of your homeowners insurance policy handy, too. Got everything together? You can apply online, over the phone, or in person. Double-check all information you provide for accuracy.
Step 4: Get an Appraisal
A lender will require an objective professional analysis of your home’s value. Once you’ve identified the most appealing HELOC offer, you’ll need to plan on paying between around $300 to $600 for an appraisal. This step will confirm the amount of equity you have in your home. It’s an important part of the HELOC application process.
Step 5: Prepare for Closing
Before you’ll get access to your funds, you’ll need to pay the required fees and sign your HELOC agreement. You will be able to find lenders who’ll have your funds ready within a few days of closing. Take the time to look over all of your documents carefully. Don’t be afraid to ask every question you have and make sure you thoroughly understand the terms of your HELOC.
Closing Costs and Fees
HELOCs will often come with closing costs that are lower than what you would pay in this phase for a home mortgage loan or a cash-out refi. An appraisal fee is usually the most significant expense among them. Other costs you could encounter may be for a title search, and application, origination, and administrative fees. Some lenders also charge an annual maintenance fee of up to $250. Keep in mind: If a lender offers to reduce or waive closing costs, you could end up with a higher interest rate.
Recommended: HELOC vs Home Equity Loan
Tax Benefits and Considerations
At this point, homeowners can deduct interest they pay on a HELOC if they use the borrowed funds to make significant improvements to their primary residence. Remember to itemize your costs and be aware that this 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 exist besides a HELOC. Some examples include home equity loans and cash-out refinancing, as well as personal loans. It’s worth considering all the options before you commit to a HELOC.
Home Equity Loan
What is a home equity loan? This option offers you a one-time lump-sum loan instead of a line of credit. It usually has a fixed interest rate and can often be for up to around 85% of your home equity. (A home equity loan calculator can help you figure out how much you might be eligible to borrow.) Lenders will look for you to have a 680 or higher credit score to qualify. If you know you prefer the predictability of a fixed interest rate and set payment schedule, this could be a fit for you. One difference between HELOCs and home equity loans is that with the home equity loan, you get the money all at once and you must begin repaying principal plus interest right away.
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 a lump sum of cash. This is an option to consider as long as the costs of the new mortgage are better than those on your current home loan. Things to consider with a cash-out refinance vs. a home equity line of credit: A refinance will require you to have a credit score of 620 or higher and a DTI ratio under 43%. A refi is slightly easier to get and also lets you choose a fixed or variable interest rate. It also leaves you with one monthly payment instead of two.
Personal Loan
This is an unsecured loan that you’ll repay in regular, fixed installments over two to seven years. A key benefit of this type of loan is that if you encounter financial challenges, your home is not at risk of foreclosure if you are unable to make your payments. Most lenders look for a credit score of 610 or higher for this type of borrowing. These loans are relatively quick to secure, but the interest rates tend to be higher compared to home equity loans or HELOCs.
The Takeaway
If you’re considering a HELOC, you should weigh both the benefits and the potential risks. HELOCs are a flexible venue for borrowing funds. It’s great to pay interest only on the portion of the credit line you use. They also come with the inherent risk of variable interest rates, and potential for foreclosure if payments become too difficult to make. In Cincinnati, it pays to explore current HELOC rates and terms with multiple lenders before you decide.
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.
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FAQ
What is the monthly payment on a $50,000 HELOC?
Your payment on a $50,000 HELOC will depend on your interest rate and repayment terms. During the draw period, if you used all $50,000 but made interest payments only, your monthly bill at 8.00% interest would be $333. Once you enter the repayment term of 20 years, the monthly cost would rise to $607. Since HELOCs have variable interest rates, these are just estimates.
Is a HELOC a smart move?
Whether a HELOC is a good idea right now or not depends on your financial concerns and the current HELOC rates in Cincinnati. If you need a flexible line of credit to help you with significant expenses, and you can manage your monthly payments changing, a HELOC might be a smart choice.
What could prevent you from getting a home equity loan?
A few things could stand in the way of your qualifying for a home equity loan or a home equity line of credit. You’ll need to have at least 15% equity in your home, for one thing, or 20% equity, depending on the loan and the lender. You’ll need to meet a lender’s credit-score requirements and have a healthy debt-to-income ratio, too.
How does a HELOC affect your credit score?
Upon opening a HELOC, you may see a slight dip in your credit score because of the lender’s hard inquiry. But by using your HELOC responsibly and making timely payments, you can actually improve your score, since you’ll show that you’re a reliable borrower. Then again, maxing out your line of credit or missing payments may have a negative impact on your score. This is why you need to manage your HELOC wisely.
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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