FAYETTEVILLE HELOC RATES TODAY
Current HELOC rates in
Fayetteville, NC.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Key Points
• The interest rate on a home equity line of credit is based on the prime rate, your credit score, and your debt-to-income ratio, among other factors.
• HELOCs offer a flexible line of credit with interest-only payments during the draw period.
• Borrowers can use online calculators to estimate monthly payments and total costs.
• It’s best to compare multiple lenders to find the most advantageous rate and terms.
• Homeowners can usually deduct HELOC interest if the funds are used for home improvements.
Introduction to HELOC Rates
Welcome to our guide to home equity line of credit rates in Fayetteville, North Carolina. We’re here to help homeowners navigate the sometimes-murky waters of home equity borrowing. We’ll walk you through the factors that determine HELOC rates, the pros and cons of this way of borrowing, and provide tips on how to size up different lenders. Whether you’re dreaming up a home makeover, aiming to streamline your debt, or just want to be prepared for unexpected expenses on the horizon, we’re here to help you make a savvy financial move. Let’s start by making sure you understand what a HELOC is in the first place.
What’s a HELOC?
A HELOC is a flexible financial tool that leverages the equity you’ve built up in your home by paying off your home loan. Your equity is the market value of your home minus whatever you still owe on it. Typically, you’ll need at least 15% equity to qualify, and you can often borrow up to 90% of your equity. Of course, using your home as collateral for borrowing means that if you fail to repay what you owe, the lender could foreclose. So while it can be relatively easy to get a HELOC, it’s not a responsibility to take lightly. HELOCs come with a draw period and a repayment period, and your payments will differ in each.
The Draw Period
During the draw period, which usually extends to 10 years, you can access funds as needed, make interest-only payments, and re-borrow up to your credit limit if you decide to repay the principal. You may find it helpful to have a HELOC interest-only calculator on hand to estimate your payments.
The Repayment Period
Next you hit the repayment period, which lasts 10 to 20 years and requires you to make monthly principal-plus-interest payments. HELOCs have variable interest rates, so monthly payments can increase or decrease over the term as market conditions change. A HELOC monthly payment calculator will be handy.
Recommended: Different Types of Home Equity Loans
How Are HELOC Interest Rates Determined?
HELOC interest rates are tied to the prime rate, which is affected by the Federal Reserve’s policies. Lenders then add a margin to the prime rate, which is why you’ll see different HELOC rates at different lenders — and why it is so important to seek out estimates from multiple lenders and to evaluate them carefully before deciding which lender to use for a HELOC. Your personal credit score, debt-to-income (DTI) ratio, income, and the amount of equity in your home also play a role in the rate you receive. We’ll share tips on how to put your best foot forward in your HELOC application below.
How Interest Rates Impact HELOC Affordability
Your interest rate is a key player in the affordability of your HELOC over time. Even a seemingly small variance in rates can translate to significant savings or added costs. Here’s an example: If you borrow $50,000 with a HELOC and have a 10-year repayment term and an interest rate of 8.00%, your monthly payment would equal $607 and total interest paid would be $22,797. But if you managed to get a 7.50% rate, your monthly payment would shrink to $581 and total interest would be $19,665. That’s a savings of over $3,000. Of course the more you borrow and the larger the change in interest rate, the bigger the numbers get.
HELOC Interest Rate Trends
Keeping an eye on the prime interest rate can be a smart move when you’re considering a HELOC, as it often signals the direction of HELOC rates in Fayetteville. Since 2018, the prime rate has seen its ups and downs, hitting an unusually low 3.25% in 2020 and a recent high of 8.50% in 2023. Knowing this history can show you what kind of swing you might see in the HELOC’s variable rate. It also puts 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 come with variable (also called adjustable) interest rates, which can change with the market. This means your monthly payments might be a bit of a moving target. The changes won’t be entirely unpredictable, though. Your HELOC agreement will spell out how often the rate can change, how large the variance can be, and what the overall rate cap is. If you’re someone who can absorb varying payment amounts, and manage the changes, then a HELOC can be a smart way to borrow.
Helpful Tools and Calculators
One way to test the waters and see what payments might be like on a HELOC before you apply for one is to use online calculators. Try putting in different borrowed amounts and different interest rates into either of the HELOC calculators below to get a feel for what your costs might look like at different phases of the HELOC.
Run the numbers on your HELOC.
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Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment
CalculatorPunch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only
CalculatorUse 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 snag a competitive rate on your HELOC, you’ll want to focus on a few key financial areas. First of all, make sure you have at least 15% equity in your home: Look up your home value on a real estate site. Subtract whatever you owe on your mortgage from that number, then divide the result by your home value to arrive at a percentage of equity. Then move on to these additional to-dos.
Improve Your Credit Score
To ensure you’re in the best position to secure a HELOC with a favorable interest rate, aim to maintain a credit score of 700 or higher. You can get a HELOC with a score of 640, but better rates go to better scores. Making timely payments and reducing credit card balances can significantly boost your credit score. Regularly checking your credit report for errors and disputing them can also help. Finally, 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
Your DTI ratio is a simple equation: your total monthly debt payments divided by your gross monthly income. Most HELOC lenders prefer to see a DTI under 50%, but the lower, the better. For the best rates, aim for a DTI ratio below 36%.
Application Process for a HELOC in Fayetteville
Some lenders provide the convenience of prequalifying for a HELOC online, making the process smoother and more straightforward. Prequalification can shed light on the HELOC rates available in Fayetteville and the potential credit line you could access. Once you’re prequalified, you can move forward with a full application, which will involve sharing more comprehensive financial and property details.
Step 1: Run the Numbers
In addition to checking your credit score and DTI ratio following the instructions above, you’ll want to examine your equity to make sure you have at least 15%. Look up your home value on a real estate site. Subtract whatever you owe on your mortgage from that number, then divide the result by your home value to arrive at a percentage of equity.
Step 2: Compare Lenders
Determine what offers you might qualify for when it comes to interest rates, but also look at lenders’ qualification requirements, minimums and maximums, fees, and the length of the draw and repayment periods. Lenders in Fayetteville have different HELOC rates and terms, so it’s important to compare them.
Step 3: Submit Your Application
Gather recent pay stubs, W-2 forms, and tax returns before you start applying. If you’re self-employed, a lender might request a profit-and-loss statement and a couple years’ worth of tax returns. Also have your homeowners insurance documents handy. Doublecheck the info you’ve filled in and then submit your application. You can apply online, over the phone, or in person, depending on the lender.
Step 4: Get an Appraisal
An appraisal will establish your home’s value, which will determine officially your equity level and how much you might borrow with a HELOC. It typically costs between $300 and $600. A prospective lender will tell you what kind of appraisal is required, so wait for the lender’s instructions.
Step 5: Prepare for Closing
Before you can access your HELOC funds, you’ll need to sign the documents and pay fees. Some lenders can make the funds available as soon as three days after the HELOC is closed. Prepare for the closing by giving all the documents a thorough review and making sure you’re clear on the terms and conditions. Have the necessary funds ready to cover the closing costs.
Closing Costs and Fees
HELOC closing costs are generally more affordable than those associated with a home purchase or a cash-out refinance. The priciest item on the list is often the appraisal. A title search, if needed, might set you back $100 to $450. Then there are the smaller costs, such as application, loan origination, and administrative fees, which can add up. Some lenders may also charge annual maintenance fees, which could reach $250, as well as transaction, inactivity, or early termination fees. Be aware that while some lenders might lower closing costs, they could compensate with higher interest rates.
Recommended: HELOC vs. Home Equity Loan
Tax Benefits and Considerations
For homeowners in Fayetteville, and throughout the country, the interest on a HELOC is deductible on federal taxes if the funds are used to significantly improve your primary residence. This tax benefit is in place through 2025. To make sure you understand the tax implications and eligibility for a HELOC, consult a tax advisor. (The advisor can also keep tabs on how tax policies change in 2026 and beyond.)
Alternatives to HELOCs
Apart from a HELOC there are other ways to get equity out of your home, such as a home equity loan and a cash-out refinance. Here are popular options for borrowers who decide a HELOC isn’t quite their cup of tea:
Home Equity Loan
Home equity loans offer borrowers a lump-sum loan at a fixed interest rate. You can typically borrow up to 85% of your home’s equity. Lenders usually look for a credit score of 680 or more, with many favoring 700 and above. This option is great if you have a specific need for a defined amount of money and like a fixed rate. Use a home equity loan calculator to find out how much you might be able to borrow.
Cash-Out Refinance
A cash-out mortgage refinance lets you borrow against your home’s equity by refinancing your mortgage for more than you currently owe and pocketing the difference. This option is handy when you need a one-time lump-sum loan. To qualify, you’ll likely need a credit score of 620 or higher and a debt-to-income ratio under 43%. A cash-out refinance vs. home equity line of credit point of difference? The former leaves you with just one monthly payment.
Personal Loan
A personal loan is a typically unsecured loan that you repay in regular, fixed installments over a fairly brief period of two to seven years. The key benefit here is that there’s no risk of foreclosure if financial challenges arise. Most lenders look for a credit score of 610 or higher when considering your application. While the process is often swift, personal loans can carry higher interest rates than HELOCs or home equity loans.
The Takeaway
When you’re considering a HELOC, it’s important to weigh the benefits and risks. HELOCs offer flexibility, and you’ll only pay interest on the portion of the credit line you’re actively using. However, they also come with the risk of losing your home if you default. Always compare HELOC rates and terms from multiple lenders before choosing a lender for your borrowing needs.
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FAQ
What can a HELOC be used for?
A HELOC can be used for a variety of things, including home renovations, personal expenses, and debt consolidation. It offers flexibility, allowing you to draw funds as needed during the draw period and pay interest only on the amount used. This makes it a versatile tool for managing your financial needs, especially when HELOC rates in Fayetteville are favorable.
What’s the monthly payment on a $50,000 HELOC?
Your monthly payment on a $50,000 HELOC will depend on the interest rate and the repayment terms. During the draw period, if you used the full $50,000 but just made interest payments, your monthly bill at 8.00% would be $333. Once you enter the repayment term of 20 years, the monthly cost would rise to $607. Remember, these are only estimates because HELOCs have variable interest rates.
How hard is it to get a HELOC?
Gaining approval for a HELOC is within reach if you meet the lender’s criteria. Lender requirements vary, but the basic prerequisites are a credit score of at least 620, a debt-to-income ratio below 50%, and a home equity level of 15%. The best interest rates go to those with a credit score of at least 700 and a DTI ratio under 36%. The application process includes submitting financial records and arranging for a home appraisal.
How does a HELOC impact your credit score?
The mere act of opening a HELOC can cause a slight dip in your credit score due to the necessary hard credit inquiry by a prospective lender. But use your HELOC responsibly — make timely payments and keep balances in check — and you may actually see an improvement in your score. On the flip side, missing payments or maxing out your HELOC can be detrimental.
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SOHL-Q225-450
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