MARYLAND HELOC RATES TODAY
Current HELOC rates in
Maryland.
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 Maryland.
Key Points
• Home equity lines of credit (HELOCs) can be used for home improvements, debt consolidation, education expenses, and more.
• When comparing HELOC lenders in Maryland, consider interest rates, fees, limits, terms, and lender reputation.
• HELOC rates are influenced by the prime interest rate and other economic factors. Maryland lenders’ HELOC rates are generally lower than the national average, but state-specific requirements apply.
• HELOC rates will be significantly impacted by factors including sufficient home equity, strong credit scores, steady income, and a lower combined loan-to-value (CLTV) ratio.
• To qualify for the most favorable Maryland HELOC rates, you may want to prioritize building your best credit score, maintaining a steady source of income, and ensuring that you have a low loan-to-value ratio.
Introduction to HELOC Rates
If you’re looking at HELOC interest rates in Maryland, this guide can help you understand the current landscape and how to secure the best deal. We’ll discuss what is a home equity line of credit (HELOC), where interest rates come from, and the factors that influence them. We’ll also cover the application process and alternatives for leveraging your home equity.
What Is a HELOC?
A HELOC is a revolving credit line, similar to a credit card, that can let you leverage up to 90% of the equity you’ve accumulated in your primary residence. A HELOC has two phases: the draw and the repayment periods. It’s one way to get equity out of your home.
The Draw Period
During a HELOC draw period, typically lasting 10 years, you’ll be able to access funds up to your credit limit. Interest payments are usually required during this period, but principal payments may be optional. You can also choose to make payments to reduce your balance, and then borrow again.
The Repayment Period
Different from when you pay back a home loan, the HELOC repayment period follows the draw period and is usually 10–20 years long. During this phase, borrowing ends and you pay back the principal with interest. You pay interest on the amount you’ve borrowed only, not the entire credit limit. Variable interest rates, however, can fluctuate and make repayment unpredictable.
Recommended: Different Types of Home Equity Loans
Where Do HELOC Interest Rates Come From?
HELOC interest rates are closely tied to the prime rate, the term that describes the benchmark interest rate banks charge customers with the very best credit. Federal Reserve policy decisions influence HELOC rates, too. Understanding these factors will help a borrower anticipate rate fluctuations so they can make fact-based decisions about the best time for a HELOC.
How Interest Rates Impact HELOC Affordability
Interest rates significantly impact the cost of a HELOC for the borrower. The difference in total interest at 6.00% or 7.00% on a $100,000 HELOC is noteworthy — at the higher rate, you’ll pay about $14,000 more over a 20-year term.
HELOC Interest Rate Trends
Fluctuations in the prime rate are likely to drive the trajectory of HELOC rates in Maryland. Staying informed about current HELOC rates empowers you to make the best decisions and choose the right moment to borrow against your home’s equity.
Historical Prime Interest Rate
The prime rate has fluctuated considerably since 2018, from a low of 3.25% in 2020 to a 2023 high of 8.50%. Historical trends can help us glean valuable insights into the possible future for HELOC rates.
| 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
Despite its importance, the prime rate is not the only thing influencing HELOC interest rates in Maryland. Factors specific to the individual borrower often come into play, too. Understanding them may help you attain the most favorable rates for your loan or line of credit.
Home Equity
Having an impressive level of equity in your residential property makes you a safer prospect for lenders. As a homeowner, you typically need a minimum of 15%–20% equity to qualify for a HELOC. The amount of equity you hold can potentially help you get a better interest rate.
Credit Score
If you want to make sure you’ll get a favorable interest rate for your HELOC, maintaining a credit score of 680 or higher is essential. In fact, many lenders prefer a credit score of 700 or higher.
Stable Income
Lenders take a close look at your income in order to evaluate your ability to repay the HELOC, so stability is important.
Loan-to-Value Ratio
Lenders tend to require your combined loan-to-value ratio (CLTV) to be 90% or less. Use this equation to compute your CLTV: Add your existing mortgage balance to your desired amount for a HELOC, then divide by your appraised home value. Here’s an example:
A homeowner’s property is valued at $500,000. They owe $300,000 on the mortgage, and they want a $120,000 HELOC.
$300,000 + $120,000 = $420,000
$420,000 / $500,000 = .84 (which is 84% CLTV)
Variable vs Fixed Interest Rates
As noted above, HELOCs often have variable interest rates, which are subject to change over the course of the loan’s duration. Initially, variable interest rates are lower than a fixed rate, but they generally increase or decrease in accordance with prevailing market conditions. These fluctuations will likely have an impact on your HELOC payments.
Tools & Calculators
Online calculators can be useful as you prepare to borrow against your home’s equity. They can help you get a handle on how much you may be able to borrow and what your monthly payments could be. You can even try plugging in different interest rates to see how a variable-rate loan could change your monthly bills down the road. Here are three helpful calculators:
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 the best HELOC rates in Maryland, you’ll want to make sure your credit score shines, among other things. Do these things before you apply:
Care for Your Credit Score
By keeping up with payments and chipping away at any credit card balances you are carrying, you’re not just tidying up your finances — you are nurturing your credit score. Regularly review your credit reports and correct inaccuracies, too. The higher your credit score, the more attractive a candidate you are for a home equity line of credit.
Assess Your Home Equity
If you plan to apply for a HELOC, go for the best terms by making sure you have 15%–20% equity — or more — in your home. You’ll build equity by making timely monthly mortgage payments or investing in improvements. Equity grows as your home’s value increases.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a simple formula: your total monthly debt payments (car loan, student loan, etc.) divided by your gross monthly income. Some lenders allow a DTI below 50%. Others require 36% or less, but as a rule, lower is better. This number is important in determining your HELOC eligibility and the terms you might be offered.
Application Process for a HELOC in Maryland
The application process for a home equity line of credit involves several steps, including a financial evaluation, a formal application, and a home appraisal. Here’s a step-by-step of the process.
Step 1. Run the Numbers
Before you jump in and apply for a home equity line of credit, it’s crucial to size up your financial standing. Start by compiling your credit score info and DTI ratio. Some lenders offer prequalification for a HELOC online, which can help you suss out whether your stats pass muster.
Step 2. Compare Lenders
Look at posted interest rates. Also check on lenders’ qualification demands, loan limits, fees, and the duration of draw and repayment periods. All these stats will give you a sense of which lenders might be a fit for you.
Step 3: Gather Your Documents
Before you apply, you’ll need to gather the following: recent pay stubs, your last tax return, a recent mortgage statement, and bank statements. Self-employed applicants should have at least two years of tax returns on hand. Having these documents ready will ease the process.
Step 4: Submit Your Application
Once your ducks are in line, it’s time to submit the application. You can likely do this online, over the phone, or in person, depending on the lender and your preference. Double-check everything before you hit “send” or “submit” to avoid any snags going forward.
Step 5: Get an Appraisal
The home appraisal is key to the HELOC process, since your home’s market value is a determinant of how much equity you have and how much credit a lender might offer you.
Step 6: Prepare for Closing
Before you get your hands on the cash, you’ll need to sign paperwork and take care of any fees associated with the HELOC. The good news is, many lenders make funds available quickly — often within around three business days after you sign.
Tax Benefits and Considerations
If you use HELOC funds to buy, build, or significantly improve your home, you may deduct the interest you pay on the first $375,000 borrowed as an individual taxpayer ($750,000 if you’re married and you file jointly). It’s smart to consult with a tax advisor for specifics so you can make the most of any deductions related to your home equity line of credit.
Closing Costs and Fees
HELOC closing costs tend to be less than those you pay when you buy a home. Most significant is typically the appraisal fee, which may range from $300 to $600. You could also encounter application, origination, and administrative fees. Some lenders add annual maintenance fees and other charges.
Alternatives to HELOCs
Financing options other than HELOCs exist, including home equity loans, cash-out refinancing, and personal loans. Each has benefits and drawbacks:
Home Equity Loan
Unlike a HELOC, a home equity loan comes to you in a fixed lump sum. The lowdown on what is a home equity loan: You can often tap into up to 85% of your home’s equity with one of these loans. This is a different type of loan entirely, but the qualification process is similar to that for a HELOC (you’ll need that appraisal!).
Another factor in any HELOC vs. home equity loan comparison is that you repay a home equity loan starting immediately. Since a home equity loan has a fixed interest rate, payments will remain the same over the loan term, ranging from 5 to 30 years. To get a sense of what you could borrow and to compare the two options, use a home equity loan calculator.
Cash-Out Refinance
For homeowners, cash-out refinancing is another good way to leverage your home’s value. This type of mortgage refinance is an option for those who need a large sum of money all at once.
When comparing cash-out refinance vs. a home equity line of credit, note that cash-out refinancing might come with a higher interest rate than that of your current home loan. Look at the monthly payment and total interest you’ll pay on both to determine which makes better sense. Some borrowers prefer a cash-out refi’s one payment to keep track of, instead of two.
Personal Loan
A personal loan is a flexible loan with fixed payments, typically made over 2–7 years. It can be used for most any purpose, and you don’t have to offer your home as collateral to get it. Personal loans do, however, tend to have higher interest rates than HELOCs or home equity loans.
Credit Cards
Credit cards often have steeper interest rates than HELOCs. Those are known to balloon your costs if you’re juggling a hefty balance. While credit cards are handy for everyday buys, HELOCs win when it comes to big-ticket items like home upgrades or debt consolidation.
The Takeaway
When considering a HELOC, carefully weigh the advantages and disadvantages. A home equity line of credit can provide a versatile source of funding for an array of financial needs. It’s essential to understand the interest rates, fees, and repayment terms, though, before you make a decision. Online tools like a HELOC repayment calculator can be really helpful in this process.
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 on a $50,000 HELOC, you can utilize a HELOC monthly payment calculator. For example, if you had a 20-year repayment term and a 6.00% interest rate, your monthly payment would be $358. A 7.00% interest rate would bump your monthly payment to $388.
Is a HELOC a good idea right now?
Whether a HELOC is a good idea depends on your goals. A home equity line of credit can be beneficial for home renovations, debt consolidation, and other significant expenses. Some borrowers find comfort in keeping the line of credit open even if they don’t regularly use it. But it’s important to consider current interest rates, repayment obligations, and the potential impact both can have on your financial stability.
What is the monthly payment on a $100,000 HELOC?
A $100,000 HELOC’s monthly payment depends on how much of the credit line you use. If you draw the maximum and pay it off over 20 years, your monthly payment would range around $700–$900, assuming your interest rate was in the neighborhood of 6.00%–8.50%.
What are the benefits of a HELOC?
A home equity line of credit (HELOC) offers several perks, like flexible access to funds, lower interest rates compared to credit cards, and possible tax advantages if funds are used for remodeling. One big benefit: You pay interest only on the amount you borrow, making a HELOC cost-efficient.
Do you need an appraisal for a HELOC?
Most likely. The appraisal helps determine your home’s value, which is crucial for calculating the amount you can borrow with a home equity line of credit. Some lenders may send an appraiser in person; others use an online model to evaluates data points and determine a home’s estimated value.
What disqualifies you from getting a home equity loan?
Several factors can get in the way of your getting a home equity loan or line of credit, including a low credit score, unstable income, home equity below 15%, or a high debt-to-income ratio. Address these factors and you’ll improve your chances of qualifying.
How difficult is it to get a HELOC?
Challenges in getting a home equity line of credit depend on your financial situation. Lenders consider your credit score, home equity, debt-to-income ratio, and income stability, among other factors. Addressing any problem areas before you apply may make the process smoother.
Does HELOC affect credit score?
Yes, a home equity line of credit can affect your credit score. Applying for a HELOC may result in what is known as a hard inquiry, which can temporarily lower your score. And when you use a significant portion of your credit line, it can increase your credit utilization, which might impact your score. If you make timely payments on your HELOC, it can positively affect your credit score 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