NASHVILLE HELOC RATES TODAY
Current HELOC rates in
Nashville, TN.
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 Nashville.
Key Points
• Home equity line of credit (HELOC) rates in Nashville are determined by the prime rate and by individual borrower characteristics.
• HELOCs are a flexible way to borrow because you can utilize funds as needed, up to your personal credit limit.
• In the first phase of a HELOC, interest is charged only on the amount you borrow, not the full credit line.
• Variable interest rates can mean unpredictable monthly bills.
• The interest on a HELOC is sometimes deductible on federal taxes.
Introduction to HELOC Rates
Home equity line of credit (HELOC) interest rates in Nashville, Tennessee, are an important consideration if you’re thinking about how to get equity out of your home to pay for a large expense. This article will help you grasp how these rates are set and what variables can impact them. You’ll discover the advantages and potential pitfalls of HELOCs, and how to use the tools at your disposal to estimate your expenses. Whether you’re eyeing a HELOC for home upgrades, big purchases, or debt management, this guide will empower you to make a savvy choice.
What Is a HELOC?
A HELOC is a revolving credit line that uses your home’s equity (the difference between the value of your home and the amount you owe on the mortgage) as collateral. To qualify, you typically need to have at least 15% equity, as well as meet credit score thresholds and hit other marks. You can borrow up to 90% of your equity. HELOCs have two phases:
The Draw Period
HELOCs begin with a draw period, usually of 10 years, during which you can use the credit line as needed, up to whatever limit you have. Most lenders don’t require that you pay down the principal now — you just have to make monthly interest payments. A HELOC interest-only calculator can help you see what these payments might amount to. Your house is the collateral for the HELOC, so make sure you only borrow what you think you can comfortably repay.
The Repayment Period
After the draw period ends come the repayment phase, which can be 10 to 20 years in length. Your payments may increase as you begin to repay the principal while also paying interest. Because HELOCs have variable rates, your interest rate and thus the size of your monthly payments can change periodically. A HELOC monthly payment calculator can help you estimate payments, which you’ll want to make on time in order to protect yourself from foreclosure.
Recommended: Different Types of Home Equity Loans
The Origins of HELOC Interest Rates
HELOC interest rates are tied to the prime rate, which is influenced by the Federal Reserve’s actions. Lenders add a margin to the prime rate, which is why rates vary between lenders — and consequently why it is so important to seek out quotes from multiple lenders when you are shopping for a HELOC. Before you’re offered a rate, lenders will take into account your credit score, debt-to-income (DTI) ratio, income, and the amount of equity in your home.
How Interest Rates Impact HELOC Affordability
As you likely learned when you got your original home loan, even a small difference in interest rates, up or down, can add up to significant additional interest costs or savings. The same is true for a HELOC. For instance, if you have a $50,000 HELOC and borrow the full amount at 8.50%, repaying it over 15 years, you would have monthly payments of $492 during the repayment period and total interest of $38,627. At 9.50%, the monthly payments would be $522 and the total interest would be $43,980. HELOC rates are variable, so your precise results may differ. But there’s no arguing with the fact that a lower interest rate is a good thing.
HELOC Interest Rate Trends
Keeping an eye on the prime rate can give you a sense of where HELOC rates in Nashville might be headed. And having a sense of the history of the rate can help you understand whether the rates you are seeing in the market are lower or higher than what borrowers have enjoyed in the past. It would be unusual, for example, to see a rate as low as 2020’s 3.25%.
| 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 adjustable interest rates, which means your rate (and thus your monthly bill) can go up or down in response to the market. While these rates often kick off lower than fixed rates, they do have the potential to increase, albeit within some built-in controls that are usually spelled out in the HELOC agreement. Typically, there will be a limit to how much your rate can change and a cap on the rate overall. Make sure you read the fine print for these limits before signing on to a HELOC.
Helpful Tools & Calculators
Before you apply for a HELOC, you can use online tools to help you estimate your monthly payment and interest costs. Here are a few of the most popular tools:
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 get the best available HELOC rate, you’ll need to meet a few requirements. You already know you’ll need to have 15% equity in your home. Here are other ways to prepare to apply for a HELOC in Nashville.
Improve Your Credit Score
Keeping your credit score at 700 or above is key to the best HELOC rates. To get there, make payments on time and try to pay down credit card balances. Also check your credit report for inaccuracies so that you can request a correction. It’s a smart move to keep old credit accounts open and use them responsibly, and to avoid opening new accounts in the months leading up to your HELOC application. You can get a HELOC with a score as low as 640, but it pays to aim for 700.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a matter of simple division: your total monthly debt payments divided by your gross monthly income. Most HELOC lenders prefer a DTI under 50%, but the closer you are to 36% mark (or less), the lower the rate you could unlock.
Application Process for a HELOC in Nashville
The application process for a HELOC in Nashville should be a breeze. Start by prequalifying online to get a feel for the rates and terms that could be yours. Once you’re prequalified and have a sense of which lender you wish to apply to, you can submit your full application online, over the phone, or in person, depending on the lender.
Step 1. Run the Numbers
Hopefully you have already checked your credit scores and calculated your DTI ratio as detailed above. Also make sure your home equity is at 15% or more: Subtract what you owe on your mortgage from your home’s estimated value; then divide the answer by your home value and you’ll get a percentage of equity.
Step 2. Compare Lenders
Look closely at the quotes you get from different lenders to find the best HELOC rate you can in Nashville. Yes, you want to look at interest rates. But you can also review qualification requirements, minimums and maximums, fees, and the length of the draw and repayment periods. Each lender may have unique terms and conditions, so it’s important to take the time to study them.
Step 3: Submit Your Application
Gather your ID, proof of income (pay stubs, W-2, tax filing), and details about the property you’re using as collateral, including your home insurance information. If you’re self-employed, a lender might ask for a profit-and-loss statement and a couple years’ worth of tax returns. Once you’ve got everything together, doublecheck everything you record on the application so that your approval process isn’t hung up by a typo.
Step 4: Get an Appraisal
A home appraisal is a professional and objective assessment of your property’s value. The cost of this service ranges from $300 to $610. The lender will provide you with appraisal instructions based on your application. This crucial step determines the maximum amount you can borrow and the HELOC rates you may qualify for.
Step 5: Prepare for Closing
Before you can use your HELOC, you’ll need to sign documents and pay any fees. Some lenders can get the funds to you within three days of closing. Make sure to review all documents thoroughly and don’t hesitate to ask questions to ensure you’re clear on the terms and conditions of your HELOC.
Closing Costs and Fees
Some good news: HELOC closing costs are generally more wallet-friendly than what you’d face when buying or refinancing a home. The appraisal fee is often the steepest cost. You might also encounter expenses for a title search, application, origination, and administrative fees, along with the possibility of annual maintenance or withdrawal fees.
Recommended: HELOC vs. Home Equity Loan
Tax Benefits and Considerations
For the 2025 tax year, you can deduct the interest on your HELOC if you’re using the funds to significantly improve your primary residence. You’ll need to itemize your return to claim this deduction, and the rules could change after 2025 (so work with a tax advisor).
Alternatives to HELOCs
If a HELOC doesn’t quite fit the bill, there are other financing options to explore. Some are based on your home equity, but a personal loan is not. Get the details:
Home Equity Loan
Unlike HELOCs, a home equity loan provides a lump sum with a fixed interest rate. This type of loan has no draw and repayment phase. You’ll begin repaying the loan monthly right after you get it. Lenders typically require a credit score of 680 or higher, but for the best rate you may need to hit 700 or above. Home equity loans are best for large, upfront expenses and for people who do best with predictable monthly payments, as the interest rate is fixed. A home equity loan calculator can help you determine what you might borrow.
Cash-Out Refinance
A cash-out mortgage refinance lets you refinance your mortgage for more than you currently owe and pocket the difference to use as you wish. Like a home equity loan, it’s a good option if you need a large lump sum. To qualify, a credit score of 620 or above and a debt-to-income ratio under 43% are typically the magic numbers. When you compare a cash-out refinance vs. a home equity line of credit, remember that with a refi you can choose between fixed or variable rates. A refinance also leaves you with a single monthly payment.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in fixed monthly installments over a period of two to seven years. The key advantage here is the separation of your home from the loan, ensuring your home is safe from foreclosure in times of financial difficulty. Many lenders seek a credit score of 610 or higher for personal loans. While these loans are relatively quick to secure, their interest rates are often higher than those of either a HELOC or a home equity loan.
The Takeaway
When you’re pondering a HELOC, it’s crucial to consider the pros and cons. These lines of credit offer flexibility and potentially lower interest rates than unsecured loans, making them a smart choice for ongoing expenses like home improvements or medical bills. However, they do come with the risk of losing your home if payments are not made. Before deciding, compare HELOC rates in Nashville and from different lenders, and ensure you have a solid plan for using the funds as well as making your monthly payments.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.
FAQ
Is a HELOC a smart move at this point?
Whether a HELOC is a good idea right now depends on your financial situation and needs. If you need funds for home improvements, personal expenses, or debt consolidation, a HELOC can provide a lower interest rate compared to other loans. However, consider the risks, such as the potential for variable interest rates and the possibility of losing your home if payments are not made.
What would the monthly payment be on a $100,000 HELOC?
The monthly payments on a $100,000 HELOC can fluctuate based on the interest rate, the terms of repayment, and how much of the credit line you have actually used. If you borrow the full $100,000 and have an 8.00% rate, you might only pay around $667 per month in interest during the draw period. Once the repayment phase arrives, you would start paying down the principal, and your monthly payment would be over $1,200. HELOCs have variable interest rates so your exact results may vary.
Do you need an appraisal for a HELOC?
An appraisal is a common requirement for a HELOC. Your best bet is to await your potential lender’s instructions as to exactly how your home should be appraised. An appraisal allows lenders to accurately determine your home’s current market value and the amount you can borrow. It also plays a role in how lenders set the interest rate you’ll be offered.
How does a HELOC affect my credit score?
When you apply for a HELOC, the lender will perform a hard inquiry on your credit report, which will cause a small, temporary drop in your credit score. After you open a HELOC, managing it responsibly can help improve your credit score. Making on-time payments will help your credit score, while missing payments will hurt your credit 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