HAWAII HELOC RATES TODAY
Current HELOC rates in
Hawaii.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare HELOC rates in Hawaii.
Key Points
• HELOC rates in Hawaii are influenced by the prime rate and economic and housing market factors.
• A HELOC is a versatile financial tool that can be used for home improvements, debt consolidation, education, and investment properties.
• The application process for a HELOC involves a professional home appraisal.
• The repayment period of a HELOC typically lasts 10 to 20 years, during which borrowing ends and the principal is paid back with interest.
• Understanding the factors that influence HELOC rates in Hawaii, such as sufficient home equity, credit score, income, and CLTV ratio, can help borrowers secure competitive rates.
Introduction to HELOC Rates
If you’ve been making your home loan payments and building up equity in your home, now it’s time to see how you can leverage that equity to achieve your long-term goals. We’ll guide you through the current HELOC interest rates in Hawaii, helping you understand the factors that influence rates and how to secure the most competitive deal.
First things first: What is a home equity line of credit (HELOC)?
What Is a HELOC?
A HELOC is like a credit card secured by your home equity. That means interest rates are generally lower than other types of financing because the home serves as collateral. You can borrow up to 85% of your home’s value, minus your mortgage. Unlike different types of home equity loans, a HELOC is characterized by a variable interest rate, so it fluctuates with market conditions. A HELOC has two phases: draw and repayment.
The Draw Period
During the draw period, typically lasting 10 years, you can access funds up to your credit limit, make payments to reduce your balance, and borrow again. Interest payments are usually required during this period, but principal payments can be optional. This flexibility allows borrowers to manage their finances according to their needs and cash-on-hand.
The Repayment Period
The repayment period lasts 10 to 20 years, during which borrowing ends and the principal is repaid with interest. Borrowers pay interest only on the amount borrowed, not the entire credit limit.
Recommended: What Is a Home Equity Loan?
Where Do HELOC Interest Rates Come From?
HELOC rates in Hawaii are tied to the prime rate and influenced by economic and housing market factors. The prime rate is the benchmark interest rate that banks charge their most creditworthy customers. Federal Reserve policy decisions also impact HELOC rates. Understanding interest rate dynamics can help borrowers anticipate rate fluctuations and make informed decisions about the best time for a HELOC.
How Interest Rates Impact HELOC Affordability
Interest rates have a substantial impact on the affordability of a HELOC. Over a 20-year term, a mere 1% difference in interest rate can result in $11,000 in additional interest paid. That’s why obtaining a competitive rate is so important.
Here’s an example: Let’s say you draw $80,000 on your HELOC. When the repayment term comes around, an interest rate of 8.50% would mean a monthly payment of $744 over the next 20 years. An interest rate of 7.50% would equal a payment of $644. And over the entire term, the customer with the 8.50% rate would pay almost $12,000 in additional interest. The more you borrow and the higher the interest rate, the larger these numbers become.
HELOC Interest Rate Trends
HELOC rates in Hawaii consistently mirror the trends of the prime interest rate. Fluctuations in the prime rate serve as a reliable indicator of future movements in HELOC rates within the state.
Historical Prime Interest Rate
Getting to know the history of the average prime rate (shown in the chart and graphic below) can help you understand where current HELOC rates in Hawaii fall on the spectrum. Since 2018, the prime rate has undergone substantial fluctuations, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023.
| 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
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
When you’re figuring out how to get equity out of your home in Hawaii, you’ll need to get familiar with a few key concepts, including your home equity position and loan-to-value (LTV) ratio. Here’s the full list.
Home Equity
Home equity is the amount of your home value that you actually own. It’s calculated by subtracting your mortgage balance from the market value of your property. For example, if your home is worth $800,000, and your mortgage balance is $600,000, you have $200,000 in home equity. Having substantial equity in your home makes you appear less risky to lenders, potentially leading to lower interest rates.
Homeowners typically need at least 20% equity in their property to qualify for favorable HELOC rates. Using a home equity loan calculator can help determine your equity position and potential borrowing power.
Credit Score
Maintaining a credit score of 680 or higher is important for securing a HELOC. And some lenders prefer credit scores over 700. A higher credit score serves as a reliable indicator of lower risk, enhancing the likelihood of qualifying for the best available HELOC rates.
Stable Income
Lenders assess your income to make an informed judgment regarding your ability to repay the HELOC loans. But they’re not just looking at your annual salary. A consistent and stable income serves as a strong indicator of a lower risk of default, ensuring a smooth and efficient evaluation of your financial situation.
Loan-to-Value Ratio
Most lenders require your combined loan-to-value ratio (your mortgage balance plus hoped for HELOC, divided by your appraised home value) to be 90% or less, although some will allow you to borrow 100% of your home’s value. The CLTV ratio is a key metric in determining your credit limit.
If your home value is $800,000, your mortgage balance is $600,000, and you want a HELOC for $140,000, then your CLTV ratio is 92.5% – a level not all lenders will approve. If you bring down your HELOC amount to $90,000, however, you get a CLTV of 86.25%. Bingo!
Variable vs Fixed Interest Rates
As discussed earlier, HELOCs feature variable interest rates, which are subject to change throughout the duration of the loan. These rates initially start lower than the typical fixed rates, but they can be adjusted up or down with market conditions. A HELOC Repayment Calculator allows you to enter different interest rates to see how they affect your monthly payment.
Tools & Calculators
Online tools can be valuable resources for borrowers seeking to estimate their payments. Three of our favorites are below, including a HELOC interest only calculator, which calculates your monthly payment during the draw period.
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 qualify for competitive hHELOC rates Hawaii, borrowers have some financial housekeeping to do. Before you submit your application, prioritize maintaining a high credit score, demonstrating a stable income, and upholding a low debt-to-income ratio.
Tend of Your Credit Score
Making timely payments and reducing credit card balances can substantially improve your credit score, which is a big factor in securing more favorable HELOC rates. A higher credit score (700+) makes you a more desirable candidate for obtaining a home equity line of credit.
Assess Your Home Equity
The first step in a HELOC application is to assess your home equity. Regular mortgage payments help in building home equity over time. It can also grow through renovations that boost the property’s value. Increased home equity can lead to better terms and higher amounts when applying for a HELOC.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you owe in monthly debt payments (car payment, student loan, etc) divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 36%, but the lower your DTI, the better.
Application Process for a HELOC in Hawaii
The process for securing a HELOC loan in Hawaii has several important steps. Some of these steps are best taken before you apply: These include evaluating your financial well-being, conducting thorough rate comparisons, and preparing required documentation. After you formally submit your loan application, a professional home appraisal will be scheduled. Here’s the whole process in more detail.
Step 1. Run the Numbers
Check your credit score, calculate your DTI, and get a good estimate of your home equity position before you apply for a HELOC. Some lenders allow borrowers to prequalify for a HELOC online, streamlining the application process.
Step 2. Compare Lenders
See what interest rates you might qualify for by getting offers from multiple lenders. But also compare their qualification requirements, loan minimums and maximums, fees, the length of the draw and repayment periods they’re offering, and other factors.
Step 3: Gather Your Documents
Have all necessary paperwork ready, including proof of income, identification, and property documents. Being fully prepared with your documentation can significantly expedite and facilitate the approval process, potentially leading to a faster and more favorable outcome.
Step 4: Submit Your Application
Submitting your HELOC application takes place online, by phone, or in person. Ensure that all the information you provide is accurate and complete to prevent any unnecessary delays.
Step 5: Get an Appraisal
Getting an appraisal is a key step in the HELOC loans process. If your home appraises for more than your mortgage balance, the lender may approve you for a home equity line of credit. This appraisal helps determine the amount of equity you can access.
Step 6: Prepare for Closing
Before accessing your HELOC funds, you must sign loan documents and pay necessary fees. Some lenders make funds available within three business days of the HELOC closing. This final step concludes the HELOC process.
Tax Benefits and Considerations
Homeowners may be able to deduct HELOC interest if the borrowed funds are used for buying, building, or significantly improving their primary residence. Interest deductions are limited to the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consulting a tax advisor is a good idea, so you don’t have to navigate the eligibility and tax implications on your own.
How Much Does a HELOC Cost?
While it’s not a loan per se, HELOCs do come with “closing costs,” which are lower than for home purchases or mortgage refinances. The appraisal fee ($150-$500+) is often the highest expense. Other costs may include an application fee, origination fee, and administrative fees. You may also be charged annual maintenance fees, transaction fees, inactivity fees, or early termination fees. Look out for all these fees when comparing offers from multiple lenders.
Alternatives to HELOCs
In addition to HELOCs, other financing options to consider include home equity loans, cash-out refinancing, and personal loans. Evaluating these alternatives can help you make a well-informed decision.
Home Equity Loan
Unlike HELOCs, home equity loans provide a lump sum amount and are paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. Understanding the HELOC vs home equity loan differences and the various types of home equity loans can help you choose the right option for your financial situation.
Cash-Out Refinance
A cash-out refinance lets homeowners tap into home equity by refinancing for more than what’s owed on their mortgage. You’ll receive the difference in a lump sum. Accessing up to 85% of a home’s value is common, requiring at least 15-20% equity. Our Cash-Out Refinance vs Home Equity Line of Credit comparison article can be helpful if this option seems up your alley.
Personal Loan
A personal loan is an unsecured loan that you pay back in regular monthly payments over a term of 2 to 7 years. Personal loans don’t involve collateral, making them a better alternative for individuals who lack substantial home equity or other assets. However, as a result, you’ll pay a significantly higher interest rate.
Credit Cards
Credit cards and HELOCs are both forms of revolving debt. Instead of receiving a lump sum of money, you get access to a credit line that you tap as needed. But credit cards often come with higher interest rates compared to HELOCs, which can make them considerably more expensive if you maintain a substantial balance that carries over from month to month.
The Takeaway
HELOC loans offer Hawaii homeowners a versatile way to access their home’s equity for various needs, from home improvements to debt consolidation. However, a HELOC’s variable interest rate means that monthly payments can increase unexpectedly. But for homeowners who aren’t sure how much they need for a major project, a HELOC can be convenient and cost-effective. Compare lenders and understand the terms to ensure you’re getting a deal.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
FAQ
What is the monthly payment on a $50,000 HELOC?
To determine the monthly payment for a $50,000 HELOC, you can utilize a HELOC monthly payment calculator. This handy tool takes into account the loan amount, interest rate, and repayment period to provide an accurate estimate of your monthly payments. For example, if you borrow the max on a $50,000 credit line at an interest rate of 7.50% and a term of 20 years, your monthly payment would be $403.
Is a HELOC a good idea right now?
Deciding if a HELOC is a good idea depends on your financial situation and goals. HELOC loans offer flexibility and can be useful for home improvements, debt consolidation, or other large expenses. However, it’s important to consider the interest rates, repayment terms, and potential impact on your budget before making a decision.
What is the monthly payment on a $100,000 HELOC?
If you have used only $30,000 of your $100,000 limit, the payment might be just a few hundred dollars. On the other hand, if you have used the entire $100,000 credit line and are paying 8.00% interest over 20 years, your monthly payment would be $836. A HELOC repayment calculator can help you plan your budget accordingly.
What are the benefits of a HELOC?
A home equity line of credit is a very flexible way to borrow. You only withdraw the amount of the credit line that you need at any given time. (So you only pay interest on the amount you have borrowed.) Because they are secured by your property, HELOCs also typically have a lower interest rate than a personal loan or credit card. You can use the funds borrowed via a HELOC for just about anything.
Do you need an appraisal for a HELOC?
Yes, you typically need an appraisal for a HELOC. The appraisal helps determine the value of your home, which is crucial for calculating the amount you can borrow. Lenders use the appraisal to ensure that the loan amount does not exceed the home’s equity, reducing their risk.
What disqualifies you from getting a home equity loan?
Several factors can disqualify you from getting a home equity loan. These include a low credit score, high debt-to-income (DTI) ratio, insufficient home equity, and a history of late payments or defaults.
How difficult is it to get a HELOC?
The difficulty of getting a HELOC depends on your financial situation. Lenders consider factors such as your credit score, debt-to-income ratio, and home equity. If you have a good credit score, stable income, and sufficient home equity, you may find it pretty simple to qualify for a HELOC. However, the application process for HELOC loans can be rigorous, so it’s important to be prepared with the necessary documentation.
Does HELOC affect credit score?
Yes, a HELOC can affect your credit score. Applying for a HELOC will result in a hard inquiry on your credit report, which can temporarily lower your score. Additionally, using a significant portion of your available credit can increase your credit utilization ratio, potentially impacting your score. However, making timely payments on your HELOC can help improve your credit score over time.
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All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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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