KENTUCKY HELOC RATES TODAY
Current HELOC rates in
Kentucky.
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 Kentucky.
Key Points
• The amount you can borrow with a HELOC depends on your home’s value and outstanding mortgage.
• HELOCs have two phases: the draw and repayment periods; during the draw, you can borrow, repay, and borrow again, or make interest-only payments if you wish.
• Research and compare offers to secure the best HELOC rates in Kentucky, considering interest rates, fees, and repayment terms.
• The rates you’re offered will depend on your home’s equity, credit score, and income, among other factors.
• Alternatives to HELOCs include a home equity loan, cash-out refinance, and unsecured personal loan.
Introduction to HELOC Rates
Curious about HELOC interest rates in Kentucky? We’re here to help homeowners figure out how to get equity out of your home. We’ll walk you through the current HELOC rates, the factors that influence them, and how to compare offers from different lenders. Armed with this knowledge, you can confidently decide how to finance significant expenses, be it home improvements or debt consolidation.
To begin, what is a home equity line of credit, anyway?
What Is a HELOC?
A HELOC, or home equity line of credit, is a revolving credit line that is secured by the equity in your home. You can access the funds, make payments, and borrow again — thus the “revolving” part. You’ll pay interest only on the amount of the credit line that you actually use. And you may be able to borrow up to 90% of your home’s value, minus your mortgage.
HELOC interest rates are typically variable, so the monthly payment can go up or down. But initial rates on a HELOC are often lower than with fixed rates.
A HELOC has two main phases: the draw period and the repayment period.
The Draw Period
The draw period, which is typically 10 years, is your time to access funds up to your credit limit. You can make payments to reduce your balance and borrow again. Interest-only payments are usually required during this period, but principal payments may be optional.
The Repayment Period
The repayment period for a HELOC is typically 10-20 years. During this time, you can no longer borrow and must pay back the principal with interest. However, it’s important to note that the interest rate fluctuates, meaning payments can be somewhat unpredictable. A HELOC repayment calculator can help you estimate how they will change if your rate rises.
Origin of HELOC Interest Rates in Kentucky
Like many home loan interest rates, HELOC rates in Kentucky are tied to the prime rate, economic conditions, and housing market trends. The Federal Reserve’s policies also play a role in determining these rates. By familiarizing yourself with these details, and keeping an eye on news of rate changes, you can make more informed decisions about the best time to take out a HELOC.
How Interest Rates Impact HELOC Affordability
Now for some numbers. Interest rates play a big role in how affordable a HELOC is. Over a 20-year span, a mere 1% difference in interest rates could mean an extra $11,000 in interest payments. That’s no small change.
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. Armed with this knowledge, you can make smart decisions that can save you a bundle and ensure your payments stay well within reach.
| Loan Amount | Loan 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
Now you know that when the prime rate moves, so do the rates for HELOCs. To keep your finger on the pulse of these changes, read up on interest rate news and get familiar with historical prime rate trends.
Historical Prime Interest Rate
The prime interest rate has seen its share of ups and downs over the years. From a low of 3.25% in 2020 to a peak of 8.50% in 2023, the fluctuations have a direct impact on Kentucky HELOC rates. The chart below the table shows a broader view of historical rates over the last 50 years.
| 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
In Kentucky, the prime rate isn’t the only thing influencing HELOC rates. Knowing how the factors below play into your application can help you position yourself for the best rates.
Home Equity
Equity is your home’s value minus what you owe. The more equity you have, the more appealing you are to lenders, which often translates to lower interest rates. Before you apply for a HELOC, you typically need at least 15% equity in your property. So keep building and maintaining that equity — it’s the key to securing competitive HELOC deals in Kentucky.
Credit Score
To get approved for a HELOC, you’ll want to have a credit score of 680 or higher. Some lenders require a minimum score of 700. The higher your credit score, the lower the risk you pose to the lender, which leads to more favorable terms.
Stable Income
Lenders look at your income to see how strong your financial situation is and make sure you can repay the HELOC. A stable income is a good sign that you’re at 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 typically look for a combined loan-to-value ratio of 85% or lower. For instance, if your home is valued at $500,000, and you have a $300,000 mortgage along with a $100,000 HELOC, your CLTV ratio would be 80%.
Variable vs Fixed Interest Rates
HELOCs often come with variable interest rates, which means the rate can change over the life of the loan. While the initial interest rate is typically lower than a fixed rate, it can go up or down based on the market. This is one way that HELOCs differ from home equity loans. The latter usually have a fixed interest rate, which some homeowners feel more comfortable with.
Tools & Calculators
Our financial calculators are here to help you with your financial planning. Each one is designed to help you understand your financial obligations and make informed decisions about your future. For instance, the HELOC interest-only calculator can estimate your payment during the draw phase.
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
So how do you set yourself up for a competitive HELOC rate? You’ll need to have a good credit score, a stable source of income, and a low loan-to-value ratio.
Strengthen to Your Credit Score
By making all your payments on time and reducing your credit card balances, you can build your credit score so it’s comfortably over 700 before you apply. This will help you get the best HELOC rates.
Assess Your Home Equity
Your home equity grows as you pay down your mortgage over time. You can also increase your equity by making improvements that increase your home’s value. Subtract what you owe on your mortgage from your home’s estimated value (use a real estate site to find that), then divide the answer by your home’s value to arrive at a percentage of equity. Ideally, it’s greater than 20%. The more home equity you have, the better the terms you can get on a HELOC and the larger the line of credit you can obtain.
Recommended: Home Equity Loan Calculator
Calculate Your Debt-to-Income Ratio (DTI)
Your debt-to-income ratio (DTI) is an important number for home equity lenders. They calculate it by looking at your monthly debt payments and dividing them by your gross monthly income. Most lenders want to see a DTI of 36% or lower, but the lower your DTI, the better.
Application Process for a HELOC in Kentucky
Applying for a home equity line of credit in Kentucky is a multi-step process. You’ll need to evaluate your financial situation, compare interest rates, gather the necessary documents, apply for the loan, schedule a home appraisal, and then wait for approval.
Step 1. Run the Numbers
Before you apply for a HELOC, check your credit scores (is it 700+?), calculate your DTI ratio (is it below 36%?), and get a rough idea of your home equity (hopefully, over 15%).
Step 2. Compare Lenders
Now, take a look at what various lenders are offering. It’s not just about the interest rates — compare their qualification requirements, loan terms, fees, and other factors to see which one best suits your needs.
Step 3: Gather Your Documents
When you’re gearing up to apply for your HELOC, having your paperwork in order is key. Think proof of income (w2s, pay stubs), employment history (a resume), and property details (including proof of homeowners insurance). So get those documents in a neat pile and within arm’s reach.
Step 4: Submit Your Application
Ready to take the next step? You can submit your application online, over the phone, or in person. To boost your odds of success, send in your application via your lender’s preferred method, be it online, over the phone, or in person.
Step 5: Get an Appraisal
A home appraisal is an important step in determining what your home is worth. If the appraised value is higher than what you owe, you could have access to a line of credit. It’s a big step in getting a HELOC.
Step 6: Prepare for Closing
Before you can draw on your HELOC funds, you’ll need to sign the loan documents and pay any closing costs. Many lenders will have your funds ready within three business days of this final step, but remember, this can vary depending on the lender and the specific terms of your HELOC.
Tax Benefits and Considerations
You may be able to deduct the interest on your HELOC, but only if you’ve used the funds for home improvements. There’s a limit, though. You can deduct interest on the first $375,000 of the mortgage principal for single filers ($750,000 for married couples filing jointly). It’s a good idea to chat with a tax advisor to get the full scoop on how HELOC loans could affect your tax situation.
Closing Costs and Fees
When it comes to HELOC loans, you’ll be pleased to know that closing costs are typically more affordable than those for home purchases or mortgage refinances. You’re looking at appraisal fees ranging from $150 to $500, and potentially application fees, origination fees, or administrative fees. Some lenders might also have maintenance, transaction, inactivity, or early termination fees. But many lenders are open to reducing or even waiving some of these costs.
Alternatives to HELOCs
Alongside HELOCs, there are different types of home equity loans and unsecured loans. It’s wise to carefully weigh the pros and cons of each before you make your decision.
Home Equity Loan
Even if you’re leaning toward a HELOC, it’s good to know what is a home equity loan. It’s a one-time lump sum with a fixed interest rate, so your monthly payment never changes. You can borrow up to 85% of your home’s equity.
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
Cash-out refinancing is an option that allows you to leverage your home equity by refinancing your mortgage for more than you currently owe. You take the difference in a lump sum. Typically, homeowners can access up to 85% of their home’s value.
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, you’ll also have a new interest rate. And if that rate is higher than the rate on your previous mortgage, this method may not be right for you.
Personal Loan
A personal loan is a flexible, usually unsecured loan that you pay back in monthly installments, usually over two to seven years. Personal loan interest rates are usually higher than HELOC or home equity loan rates, but if you are uncomfortable using your home as collateral, you might find a personal loan to be a good alternative.
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
HELOCs are a valuable financial tool for Kentucky homeowners, offering competitive rates and flexible repayment terms. By leveraging your home’s equity, a home equity line of credit can help fund significant expenses while potentially offering tax benefits. Comparing rates and understanding the application process are key to securing the best HELOC for your needs.
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?
The answer to that question is as unique as you are. HELOCs can be a smart move if you’re looking to cover major renovations, consolidate debt, or tackle another big expense. But it’s essential to consider current interest rates and your ability to repay the loan over the long term.
What is the monthly payment on a $100,000 HELOC?
With a $100,000 HELOC, if you have drawn the maximum and are paying it off over a 20-year repayment term, your monthly payment would range from $775 to $900 if your interest rate was between 7.00% and 9.00%.
What are the benefits of a HELOC?
HELOCs offer several benefits, including flexible access to funds, competitive interest rates, and potential tax advantages. A home equity line of credit allows you to borrow as needed, and pay interest only on the amount you draw, not the full credit line. Additionally, HELOCs often come with lower interest rates compared to credit cards and unsecured personal loans.
Do you need an appraisal for a HELOC?
Yes, you do. The appraisal helps to establish the value of your home, a key factor in determining the amount of equity you can borrow. Lenders use this figure to set your credit limit, so a precise appraisal is essential to ensure you can access the full amount of funds available through your home equity line of credit.
What disqualifies you from getting a home equity loan?
There are a few factors that might work against you when applying for a home equity loan, such as a less-than-stellar credit history, a high debt-to-income ratio (more than 50%), or not having enough equity in your home.
How difficult is it to get a HELOC?
The challenge of securing a HELOC varies based on your financial standing. Lenders take into account your credit score, home equity, and income. Boosting your credit score and minimizing your debt-to-income ratio can enhance your eligibility. Familiarizing yourself with the application process and having the required paperwork ready can streamline the journey to securing a home equity line of credit.
Does HELOC affect credit score?
When you apply for a HELOC, there may be a temporary decrease in your credit score due to the hard inquiry. Additionally, if you use a large portion of the available credit, your credit utilization ratio may increase, which can also impact your score. The good news is that by making on-time payments, you can see your credit score improve over time.
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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