DALLAS HELOC RATES TODAY
Current HELOC rates in
Dallas, 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 rates in Dallas are set based on the prime rate and borrower factors.
• HELOCs come with a draw period for borrowing, followed by a repayment period.
• Variable interest rates mean monthly payments can fluctuate.
• Keep your credit score at 700 or above for the most attractive rates.
• Home equity is the difference between your home’s value and your mortgage balance.
Introduction to HELOC Rates
Welcome to a comprehensive guide to home equity line of credit (HELOC) rates in Dallas, Texas. Whether you’re thinking about how to get equity out of your home to finance a renovation, consolidate debt, or cover other major expenses, this guide will help you understand the current market and secure the best available interest rate and terms. You’ll learn about the factors that influence HELOC rates, the benefits and risks of HELOCs, and how to compare different lenders.
What Exactly Is a HELOC?
A HELOC is a smart way to leverage your home equity. What’s equity, you ask? It’s the difference between what your home is worth and what you owe on your mortgage. Typically, you’ll need at least 15% equity to qualify. Subtract your current home loan balance from your home’s estimated value, then divide the answer by your home value to arrive at a percentage of equity. With a HELOC, you can borrow up to 90% of your equity. Because your home is the collateral for a HELOC, you could be at risk of foreclosure if you fail to make payments. A HELOC has two phases:
The Draw Period
The draw period is the time when you can borrow money as you need it, up to your credit limit. You can repay what you’ve borrowed (or carry a balance), and borrow again. During this time, you may only have to make interest payments, so you may find it helpful to use a HELOC interest-only calculator.
The Repayment Period
In the repayment period, you can no longer borrow and must pay back the principal plus interest. HELOCs have variable interest rates so the monthly payment amount can vary over the 10 or 20 years of the repayment term. This is when a HELOC monthly payment calculator is handy.
Recommended: Different Types of Home Equity Loans
The Origin of HELOC Interest Rates
HELOC interest rates are tied to the prime rate, which is influenced by the Federal Reserve’s monetary policies. Each lender adds a margin to the prime rate, leading to varying HELOC rates. Lenders also take into account individual borrower factors such as credit score, debt-to-income (DTI) ratio, income, and the amount of equity in the home. Because there are so many factors in play, it’s a good idea to get rate quotes and explore HELOC terms with multiple lenders so that you obtain the best available interest rate.
How Interest Rates Impact HELOC Affordability
It’s worth taking the time to explore offers from different lenders because the interest rate on a HELOC can have a big impact on the costs of borrowing. Let’s say you borrow $50,000 with a HELOC and have a 10-year repayment term. If your interest rate was 8.00%, your monthly payment would be $607 and total interest paid would be $22,797. But if you instead had a 7.50% rate, your monthly payment would be $581 and total interest $19,665. The more you borrow and the longer the repayment term, the higher the costs. Remember, due to a HELOC’s variable rates, your actual numbers will differ somewhat.
HELOC Interest Rate Trends
While there’s no such thing as a crystal ball where interest rates are concerned, keeping an eye on the prime interest rate can shed light on what to expect with HELOC rates in Dallas and beyond. We saw the prime rate dip to 3.25% in 2020 and peak at 8.50% in 2023. Having a sense of this history can put current rates 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
HELOCs usually have variable (also called adjustable) interest rates. For example, if you start with a 7.00% interest rate, and the prime rate goes up, you could eventually be looking at a rate of 9.00%. When you’re considering a HELOC, think about how comfortable you are with the potential for your rate to change. Your HELOC agreement would spell out how extensive the rate change can be and also state a rate cap. If you can live within these parameters, a HELOC could be a good fit for you.
Recommended: HELOC vs. Home Equity Loan
Helpful Tools and Calculators
Before you apply for a HELOC, use online tools to calculate what your monthly payments might be and how much interest you’ll pay. Here are three calculators you will find useful.
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 stellar HELOC rate, it helps to exceed the minimum 15% home equity mark. Lenders will also be carefully examining your credit score and DTI ratio. Here’s how to make them shine:
Improve Your Credit Score
A credit score of 700 or higher will help you achieve the best HELOC rates in Dallas, though you may be approved for a HELOC with a score of 640 or better. You can give your score a boost by paying on time and keeping credit card balances in check. Avoid closing old credit accounts or opening new ones in the months leading up to your HELOC application. And before you apply for a HELOC, take a peek at your credit report, clear up any errors, and watch your score rise.
Calculate Your Debt-to-Income (DTI) Ratio
Your DTI ratio is a simple calculation: just tally up your monthly debt payments and divide them by your gross monthly income. Most HELOC lenders prefer a DTI below 50%, but naturally, the lower, the better. A reduced DTI can work in your favor, potentially opening doors to a HELOC with more attractive terms.
Application Process for a HELOC in Dallas
Some lenders are now offering the convenience of prequalifying for a HELOC online, which can give you a sense of the rate and credit limit you could be approved for, based on your financial situation. Prequalifying can help you make a more informed decision before you commit to a full application.
Step 1. Run the Numbers
First, check your credit score and calculate your DTI ratio to ensure they meet the minimum qualification number (640 for credit score and 50% for DTI ratio). Then, assess your home equity: Subtract your outstanding mortgage balance from your home’s estimated value. Then divide the answer by your home value to arrive at a percentage. Is it 15% or greater? Move to Step 2.
Step 2. Compare Lenders
Take a look at HELOC rates in Dallas from different lenders. But also compare qualification requirements, credit minimums and maximums, fees, and the length of both the draw and repayment periods. Keep an eye out for lenders that offer competitive rates and flexible terms. Read customer reviews and thoroughly check a lender’s reputation before deciding where to apply.
Step 3: Submit Your Application
Gather all the necessary paperwork. This includes 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 tax returns from the prior 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. 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 necessary. The typical cost of having a pro weigh in on the value of your home is between $300 and $600.
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.
Closing Costs and Fees
HELOC closing costs are generally more affordable than those associated with a home purchase or mortgage refinance. The most significant expense is often the appraisal fee. A title search, if required, can cost between $100 and $450. You might also encounter application, origination, and administrative fees, as well as annual maintenance fees that can go up to $250.
Tax Benefits and Considerations
You can deduct HELOC interest from your taxes, but only if the funds were used to significantly improve your primary residence. Keep in mind, the current tax guidelines for this deduction are in place through 2025. To make sure you’re getting the most out of your HELOC, consider consulting a tax advisor. They can help you navigate the specific tax implications and confirm your eligibility for any deductions related to HELOCs, potentially providing additional financial benefits beyond just the lower interest rates often associated with HELOCs.
Alternatives to HELOCs
There are other ways to tap into your home’s equity besides a HELOC, and they’re worth considering before you lock in a borrowing method.
Home Equity Loan
With a home equity loan, you get a one-time lump-sum loan and a fixed interest rate. You can usually borrow up to 85% of your home equity. Lenders often look for a credit score of 680 or higher, with many leaning toward 700, in order for borrowers to qualify. If you’re someone who likes a fixed interest rate and a predictable payment amount, this might be a good fit for you. You can use a home equity loan calculator to see how much you might be able to borrow.
Cash-Out Refinance
A cash-out refinance lets you refinance for more than you already owe and take the difference in cash. It can be a wise move if the interest rate on a new mortgage would be better than your current rate. Things to consider 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 under 43%. A refinance also allows you to choose between fixed or variable interest rates.
Personal Loan
A personal loan is usually an unsecured loan that you repay in regular, fixed installments over two to seven years. The key benefit here is that your home is not at risk of foreclosure should you miss payments. Most lenders look for a credit score of 610 or higher when considering a personal loan application. 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 considering a HELOC, it’s important to weigh the benefits against the risks. HELOCs are great because they offer flexibility and potentially lower interest rates than personal loans, making them a viable option for managing significant expenses. But, as with any borrowing method that uses your home as collateral, there’s the risk of losing your property if payments aren’t made. Always compare different lenders and understand the rates and terms before making a decision.
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 smart move at this time?
Whether a HELOC is a good idea for you right now depends on your financial situation and goals. If you need funds for significant expenses like home renovations or education costs, a HELOC can be a cost-effective way to ensure you can pay the bills as they come. However, it’s important to have a plan in place to repay the funds when the draw period ends — after all, foreclosure is a risk if you miss payments.
What’s the monthly payment on a $100,000 HELOC?
Your monthly payment on a $100,000 HELOC will depend on how much of the credit line you have used, what your interest rate is, and whether you are in the draw period (paying interest only) or in the repayment phase (paying down the principal plus interest). Because there are so many variables, you’re best off using an online HELOC payment calculator to find your number.
Do you need an appraisal for a HELOC?
An appraisal is generally required to qualify for a HELOC. This is because the lender needs to determine the current market value of your home to decide how much equity you have. The lender will then set your credit limit based on this value. The appraisal fee is one of the most expensive parts of the application process, typically costing between $300 and $600. Some lenders may allow an electronic evaluation of your home’s value vs. an in-person appraisal. Wait for the lender’s instructions to figure out what is required.
How tough is it to get a HELOC?
Getting a HELOC can be quite manageable if you meet the lender’s criteria. Typically, you need a minimum credit score of 640, a debt-to-income (DTI) ratio under 50%, and equity in your home of 15% or more. Better numbers will get you better interest rates. The application process involves a bit of number crunching, comparing offers, and a home appraisal. But once you sign the closing documents, you can access funds after as few as three days.
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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