INDIANA HELOC RATES TODAY
Current HELOC rates in
Indiana.
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Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Compare HELOC rates in Indiana.
Key Points
• HELOC rates in Indiana are influenced by borrower factors such as home equity stake, credit score, and income.
• Indiana HELOC rates are tied to the prime rate, which banks offer to their most creditworthy customers.
• HELOCs in Indiana have two phases: the draw period, where borrowers access funds, and the repayment period, where they pay back the principal with interest.
• Using financial calculators, such as a HELOC interest-only calculator and a HELOC repayment calculator, can take some of the guesswork out of budgeting for a HELOC.
• Maintaining a good credit score, stable income, and low debt-to-income ratio can help homeowners secure competitive HELOC rates in Indiana.
• Alternatives to HELOCs include a home equity loan and cash-out refinance, each with its own requirements and benefits.
Introduction to HELOC Rates
If you’re wondering what is a home equity line of credit and how do you get the best available interest rates, you’ve come to the right place. This guide provides an overview of current HELOC rates in Indiana, helping readers understand the current landscape and how to navigate it. By exploring how HELOC rates are set in Indiana, readers can make more informed decisions when seeking out financing for big-ticket items, such as home improvements and debt consolidating.
Read on to learn why HELOCs are such a popular way to get equity out of your home.
What Is a HELOC?
A HELOC is a revolving credit line (similar to a credit card) that is secured by your home equity, which means the interest rate is lower than for an unsecured personal loan. The amount you can borrow is based on the difference between your home’s current value and your mortgage balance.
A HELOC has two phases: draw and repayment. During the draw period, you access funds and make payments. During the repayment period, you pay back the principal with interest.
The Draw Period
During the draw period, typically lasting 10 years, borrowers can access funds up to their credit limit. They can make payments to pay down their balance and borrow the money again. Interest payments are usually required during this period, but payments toward the principal may be optional. This flexibility allows homeowners to manage their finances according to their needs.
The Repayment Period
The repayment period follows the draw period, typically lasting 10-20 years. Borrowers pay interest only on the borrowed amount, not the entire credit limit. The variable interest rate means that payments can be unpredictable, as the rate can go up or down with market conditions.
A HELOC repayment calculator can help you estimate what your payments might be before you even apply. Just plug in different interest rate numbers to see whether you can afford the payments if rates drift to the higher side.
Where Do HELOC Interest Rates Come From?
HELOC rates are tied to the prime rate (the rate that banks give their most creditworthy customers) and Federal Reserve decisions, as well as the borrower’s financial profile and the property itself. Understanding these factors can help borrowers stay tuned to updates on interest rates and make more informed decisions about the best time for a HELOC.
How Interest Rates Impact HELOC Affordability
Interest rates significantly impact the affordability of HELOCs and other home loans. Over the life of a HELOC, a difference of $50 or $100 in the monthly payment could equal more than $10,000 in extra interest paid. This underlines the importance of securing competitive rates.
The chart below shows what it would be like to enter the repayment phase of a HELOC owing $25,000; $50,000; or $100,000 and how different terms and interest rates would affect your monthly payments and total interest paid.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
HELOC Interest Rate Trends
Since HELOC interest rates tend to follow the prime interest rate, an overview of its historical fluctuations can be enlightening. This data might even allow you to predict where HELOC rates in Indiana are headed.
As you can see below, the prime rate has dipped to a low of 3.25% in 2020 and risen to a high of 8.50% in 2023. Below that, the graphic shows the prime rate’s ups and downs over the last 50 years.
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
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
While the prime rate is important, it’s not the only factor influencing HELOC interest rates. A borrower’s credit history and the deal on the table also nudge the interest rate offered up or down.
Home Equity
Having substantial equity in your home makes you appear less risky to lenders, which can lead to lower interest rates. Homeowners typically need at least 15% equity in their property to qualify for a HELOC. A home equity loan calculator can help homeowners determine their equity before they apply.
Credit Score
A credit score of 680 or higher is needed to qualify for a HELOC. Some lenders prefer a credit score of 700 or higher, because a higher credit score is an indicator of lower risk.
Stable Income
Lenders assess your income to determine your ability to repay the HELOC. A steady income stream is indicative of a lower risk of default. As a result, you may be asked to document not just your salary, but how long you’ve held your current job.
Loan-to-Value Ratio
Lenders usually require a combined loan-to-value ratio of 85% or less. If your home is worth $500,000 and you have a $300,000 mortgage and $100,000 HELOC loan, your CLTV ratio is 80%. The math is simple: Mortgage balance plus desired HELOC, divided by your home’s value.Variable vs Fixed Interest Rates
HELOC loans feature variable interest rates, which are subject to change throughout the loan term. These rates initially start lower than typical fixed rates but are subject to adjustments based on market conditions. That means your monthly payment won’t stay the same throughout the repayment period; it can increase or decrease depending on what’s happening with interest rates.
Tools & Calculators
SoFi offers a suite of financial calculators, including a HELOC interest-only calculator, a HELOC interest-only calculator, and a home equity loan calculator. These tools can assist you in estimating your payments and seeing how different variables impact your monthly payment and total interest paid.
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 secure a competitive interest rate for a HELOC, it’s recommended that borrowers focus on improving their credit score, maintaining a consistent income, and ensuring a low loan-to-value ratio. We’ll explain what each of these things are in just enough — but not too much — detail.
Cultivate to Your Credit Score
Make regular and timely payments on all your bills. Get your credit card balances as low as you can. And check your credit report on a regular basis for errors, and then dispute them online. If you play your cards right, you can nudge your credit score to a better level over time. A higher credit score enhances your attractiveness as a HELOC candidate.
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 be enhanced through renovations that increase the property’s value. To calculate, subtract your mortgage balance from your home’s current value (not what you paid for it). A fatter home equity stake 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 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. This ratio is crucial for determining your eligibility for HELOC loans and the rates offered on your home equity line of credit.
Application Process for a HELOC in Indiana
The application process for a HELOC in Indiana entails a thorough review of your financial well-being and a professional home appraisal. We lay it out step by step so you know what to expect and can be prepared for anything the process throws at you.
Step 1. Run the Numbers
Check your credit scores, calculate your DTI, and get a good estimate of your home equity before you apply for a HELOC. Some lenders offer online prequalification for a home equity line of credit, simplifying the process.
Step 2. Compare Lenders
Shop around online to see what interest rates you might qualify for, but also compare lenders’ qualification requirements, loan minimums and maximums, fees, and the length of the draw and repayment periods they’re offering.
Step 3: Gather Your Documents
Now it’s time to prepare the documentation for your HELOC application. This typically includes proof of income (pay stubs and W2s), a detailed employment history going back several years (a resume will suffice), and property details. Having these documents readily available will expedite the process.
Step 4: Submit Your Application
Submitting your HELOC application takes place online, by phone, or in person.
Step 5: Get an Appraisal
A home appraisal plays a pivotal role in determining the eligibility and maximum borrowing limit for a HELOCs. If the appraised value of your home surpasses the outstanding balance of your mortgage, you may qualify.
Step 6: Prepare for Closing
Before accessing your home equity line of credit loans funds, complete the closing process by signing loan documents and paying any required fees. Some lenders make funds available within three business days following the closing of the HELOC.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest if the 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). Consult a tax advisor to confirm the eligibility of your deductions — you’ll have to itemize deductions too.
Closing Costs and Fees
HELOC closing costs are lower than traditional home-buying or mortgage refinance costs. The appraisal is usually the highest fee, ranging from $150 to $500. Other fees may include application, origination, and administrative fees. Some lenders charge transaction fees for withdrawals, inactivity fees for infrequent use, or early termination fees. Lenders may reduce or waive closing costs but may increase the interest rate.
Alternatives to HELOCs
In addition to HELOC loans, there are different types of home equity loans and mortgage refis. Carefully consider the advantages and disadvantages of each option to make the best choice for your financial situation.
Home Equity Loan
Even if you’re leaning toward a HELOC, it’s good to know what is a home equity loan. Home equity loans provide a lump sum amount and are paid back at a fixed interest rate, so your monthly payment never changes. Borrowers can usually access up to 85% of the equity built in their home.
Check out our HELOC vs home equity loan comparison chart for more on this option.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need. | Lump sum |
Cash-Out Refinance
A cash-out refinance is a mortgage refinance with a twist: Homeowners can refinance their mortgage for more than they owe. They pay off their first mortgage and then take the cash that remains and use it for any purpose. Accessing up to 85% of a home’s value is common, requiring at least 15% equity post-refinance.
Two things to think about when considering a cash-out refinance vs. a home equity line of credit: A cash-out refi leaves you with one monthly payment, as opposed to two. However, it also leaves you with a brand-new interest rate. And if that rate is not as favorable as the rate on your initial mortgage, this method may not be the best choice for you.
Personal Loan
A personal loan is a flexible, typically unsecured loan. You repay the lump sum with regular monthly payments over a set term of 2-7 years. Some borrowers like the idea of having a loan that is not secured by their home. However, personal loan interest rates are usually higher than HELOC or home equity loan rates, so if you are comfortable using your home as collateral, you might find it to be a more affordable way to borrow.
Credit Cards
While credit cards are well suited to making everyday purchases, they have higher interest rates than HELOCs, making them a more expensive way to carry a large balance.
The Takeaway
HELOC loans offer a flexible way to access the equity in your home. With competitive interest rates, a home equity line of credit can be a valuable financial tool for paying off big-ticket items or consolidating high-interest credit card debt. However, it’s important for homeowners to understand the drawbacks, including variable interest rates, fees, and the risk of foreclosure if you default.
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?
The monthly payment on a $50,000 HELOC is influenced by the interest rate and repayment terms. With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. The same 8.00% interest rate over a 20-year term will cost you $418 per month, although you’ll pay more total interest with the 20-year term.
Is a HELOC a good idea right now?
Whether a HELOC is a good idea right now depends on your financial situation and goals. HELOCs offer competitive interest rates and flexible repayment terms, making them suitable for home improvements, debt consolidation, or other significant expenses. However, it’s crucial to consider the potential risks, such as variable interest rates and the possibility of losing your home if you default on the loan.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC varies based on the interest rate and repayment terms. Let’s assume you draw the full $100,000. At a 6.00% interest rate over 20 years, the payment would be $716 per month. An interest rate of 8.00% and the same term means a payment of $836. To estimate your monthly payments, you can use a HELOC repayment calculator.
What are the benefits of a HELOC?
HELOC loans offer several benefits, including flexible access to funds, competitive interest rates, and the potential for tax deductions on interest payments. A home equity line of credit can be used for various purposes, such as home improvements, debt consolidation, or education expenses.
Do you need an appraisal for a HELOC?
Yes, you typically need an appraisal for a HELOC. Lenders require an appraisal to determine the current value of your home, which helps them calculate the amount of equity you have available.
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, insufficient home equity, high debt-to-income ratio, and unstable income. Lenders also consider the loan-to-value ratio, which compares the loan amount to the value of your home.
How difficult is it to get a HELOC?
The difficulty of getting a HELOC depends on your financial situation and the lender’s requirements. Lenders typically consider factors such as credit score, home equity, debt-to-income ratio, and stable income. HELOC loans may have stricter qualification criteria compared to other types of loans. However, if you meet the lender’s requirements, the process of obtaining a home equity line of credit can be straightforward.
Does HELOC affect credit score?
HELOC can affect your credit score. Applying for one may lower it temporarily. Responsible use, including timely payments and maintaining a low balance, can help maintain or improve your score.
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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