PENNSYLVANIA HELOC RATES TODAY
Current HELOC rates in
Pennsylvania.
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 Pennsylvania.
Key Points
• Pennsylvania homeowners have excellent home equity line of credit (HELOC) options, with online lenders offering digital applications and quick funding.
• To secure the best HELOC rates in Pennsylvania, borrowers should know their home equity level, maintain a good credit score, and compare multiple lenders.
• The approval process for HELOCs involves verifying income, assets, and property details, and usually includes a home appraisal.
• Comparing current HELOC rates in Pennsylvania is crucial for finding the best deal.
• HELOCs offer flexibility and can be used for various purposes, such as home improvements or debt consolidation.
Introduction to HELOC Rates
If you’re thinking about how to get equity out of your home in Pennsylvania and starting to look at interest rates for a home equity line of credit (HELOC), this guide is for you. We’ll help you understand what is a home equity line of credit and how it’s different from other borrowing methods. And we’ll equip you with the information you need to submit an application for a HELOC that will help you get the best possible interest rate. You’ll learn how to meet eligibility requirements and what credit score and debt-to-income stats will get you in the lender’s door. Ready? Let’s start with HELOC 101.
What Is a HELOC?
A HELOC is like a credit card with a credit limit that’s based on your home equity. HELOCs are secured by your home, so they often offer lower interest rates than unsecured personal loans. And because they have a variable interest rate, the entry level rate on a HELOC is usually lower than the fixed rate you would get on a home equity loan. From there, though, it can rise or fall according to market conditions.
Qualified borrowers are often able to borrow as much as 90% of their equity with a HELOC. Of course, securing a loan with your home also means that defaulting can lead to foreclosure. It’s important to weigh the pros and cons of the HELOC to determine whether it suits your financial needs.
A HELOC has two phases: draw and repayment. Get to know them better.
The Draw Period
During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit, make payments to pay down your balance, and borrow the money again. The beauty of a HELOC is that if you don’t want to borrow your full credit line, you don’t have to. And you only pay interest on the amount of the credit line that you are using.
The borrower is usually required to make interest payments during the draw period, but payments toward the principal may be optional. This flexibility makes HELOCs attractive to many borrowers.
The Repayment Period
During the repayment period (usually 10 to 20 years), borrowers repay what they have borrowed with interest. The variable interest rate will fluctuate, but using a HELOC repayment calculator can help you understand what your monthly payments will be.
Where Do HELOC Interest Rates Come From?
HELOC rates track the prime rate, which in turn tends to follow rates set by the Federal Reserve. The prime rate is the benchmark that banks charge their most creditworthy customers.
How Interest Rates Impact HELOC Affordability
Your interest rate can make a big difference in affordability over the course of a HELOC. It’s important to consider current HELOC rates in Pennsylvania when making your decision. A HELOC interest calculator can help you understand the impact of different rates on your payments. If you were to borrow $50,000 with a HELOC and had a 10-year repayment period, the table below shows your payments at different interest rates:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.50% | $620 | $24,391 |
| 8.00% | $607 | $22,797 |
| 7.50% | $594 | $21,221 |
HELOC Interest Rate Trends
Given that HELOC rates are tied to the prime interest rate set by banks and other lenders, getting a sense of the history of the average prime rate (shown in the chart and graphic below) can help you understand where today’s HELOC rates in Pennsylvania fall on the spectrum.
Since 2018, the prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. You’ll want to weigh interest rate variability in any HELOC vs. home equity loan considerations, in part because while HELOC rates are variable, home equity loan rates are typically fixed.
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
The prime rate is a starting point for the HELOC rate you may be offered, but lenders adjust the rates they offer applicants based on several crucial factors, including the presence of sufficient home equity and the maintenance of a favorable credit score. It’s helpful to know what lenders are looking for before filing an application.
Home Equity
Making steady payments on your home loan has helped you build up equity in your property. But how much equity? And do you have enough of a stake to leverage it with a HELOC? Typically, you’ll need at least 15% to 20% equity in your property to qualify for a HELOC, and the more the better.
Credit Score
A credit score of 680 or higher will help you secure a HELOC, and some lenders prefer a credit score of 700 or higher. A higher credit score is a clear indicator of lower risk, which often leads to more favorable terms and rates.
Stable Income
A steady income serves as a reliable indicator of a reduced likelihood of default, which can potentially translate into more favorable HELOC rates. If your income is erratic, you may be asked to provide additional documentation, such as extra tax returns or a profit and loss statement from your business.
Loan-to-Value Ratio
Most lenders require your combined loan-to-value ratio (your mortgage balance plus the amount of credit line you are applying for divided by your appraised home value) to be 90% or less. For example, if your home value is $500,000, your mortgage balance is $300,000, and you want a $100,000 home equity line of credit, then your CLTV ratio is 80%.
Variable vs Fixed Interest Rates
As we’ve seen, HELOCs are characterized by variable interest rates that are subject to change throughout the loan’s duration. Initially, variable interest rates tend to be lower compared to fixed rates, but they can be adjusted upward or downward in accordance with prevailing market conditions. If you feel skittish about a variable rate, you might consider a home equity loan instead.
Tools & Calculators
Online calculators are helpful tools to assist you in understanding how your HELOC or home equity loan interest rate in Pennsylvania might affect your monthly payments and the total amount of interest you’ll pay over the long term. These are three of our favorites.
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
Here are a few steps you can take to increase your chances of obtaining a favorable HELOC rate in Pennsylvania:
Take Good Care of Your Credit Score
Paying your bills on time is key. You’ll also want to avoid maxing out your credit cards. And take a few minutes to check your credit report for errors (and if you find one, correct it). The higher your credit score, the less risky you will appear to lenders.
Assess Your Home Equity
If you’ve made timely mortgage payments, you’ve built up home equity over time. To determine how much equity you have, subtract your mortgage balance from your home’s value, then divide the result by the home value to get a percentage. For this purpose, you can use an online estimate of your home’s value, such as what you see on real estate sites.
Calculate Your Debt-to-Income Ratio (DTI)
Home equity lenders often look for a DTI ratio below 36%, although some allow one as high as 50%. But the lower, the better. To calculate your DTI ratio, take the amount you pay in monthly debt payments (auto loan, student loan, etc.), and divide by your gross monthly income.
Application Process for a HELOC in Pennsylvania
Take the application process a step at a time.
Step 1. Run the Numbers
Check your credit score, determine your DTI ratio, and figure out roughly how much home equity you have before submitting your first HELOC application. Sometimes you can prequalify for a HELOC online, which speeds the application process.
Step 2. Compare Lenders
Look at lender web sites to see what interest rates they have posted. But also compare fees, qualification requirements, and other factors. Does the lender have a minimum and maximum loan amount posted, for example?
Step 3: Gather Your Documents
To apply for a HELOC, you will need personal identification, income verification (pay stubs, W-2 forms) and at least one tax return. If you’re self-employed, lenders may ask for two years’ tax returns. You may also be asked to provide a homeowners insurance declaration page indicating you have adequate coverage.
Step 4: Submit Your Application
Submitting your HELOC application can happen online, by phone, or in person, depending on the lender. Carefully confirm that all of the information provided is accurate and complete, as mistakes slow things down.
Step 5: Get an Appraisal
After you submit your application, the lender will likely request a home appraisal to determine the current market value of your property. If an in-person visit is required, scheduling it quickly will help move along the application process.
Step 6: Prepare for Closing
Before using your HELOC, you’ll need to sign loan documents and pay fees. Some lenders make funds available within three days following this closing process. Make sure that you completely understand all terms and conditions before you finalize the agreement.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest if the borrowed funds are used for buying, building, or significantly improving their primary residence. The deduction is limited to interest on the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consult a tax advisor to help you navigate the specific tax implications and confirm eligibility for deductions related to HELOCs.
Closing Costs and Fees
HELOC closing costs are lower than home-buying or refinancing costs. The appraisal fee, often the highest expense, is in the neighborhood of $300 to $600. Other costs include application, loan origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Lenders who waive closing costs may charge a higher interest rate.
Alternatives to HELOCs
In addition to a HELOC, other types of home equity loans and unsecured loans are available. Consider all your options before you sign any paperwork.
Home Equity Loan
Unlike a HELOC, a home equity loan provides a lump sum and is 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. Here’s a quick look at the HELOC vs. a home equity loan comparison:
| 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
This is a mortgage refinance that lets you take out a new mortgage that will pay off your old one and leave you with a lump sum to use as you wish. This option often suits those needing a large lump sum. And some borrowers like the cash-out refi option because they like rolling everything into one monthly payment.
When comparing a cash-out refinance vs. a home equity line of creditt, one thing to keep in mind is that with a new mortgage, you’ll also have a new interest rate. If current rates are higher than your existing rate, you’ll want to carefully tally the costs to make sure refinancing makes sense.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed payments over a term of two to seven years. Personal loans are preferred by borrowers who don’t want to use their home as collateral. But because they are unsecured, they usually have higher interest rates than a HELOC or home equity loan.
Credit Cards
While credit cards offer flexibility for smaller purchases, they typically come with higher interest rates than HELOCs. This can make them much more expensive if you carry a large balance from month to month. HELOCs are better suited for large expenses such as home renovations or debt consolidation.
The Takeaway
When contemplating a HELOC, it is important to understand whether the distinctive features of a line of credit are right for you. If you want to borrow money in increments and are comfortable weathering the ups and downs of a variable interest rate, a HELOC can be a cost-effective solution for financing substantial expenditures. With research and careful preparation of your application, you can get the best available rate in Pennsylvania for your financial situation.
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’s the monthly payment on a $50,000 HELOC?
With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. But exactly how much you’ll pay depends on your interest rate and loan term. An 8.00% interest rate over a 20-year term would cost $418 per month.
Is a HELOC a good idea right now?
Whether a HELOC is a smart move right now depends on your financial needs. HELOCs can be beneficial for home improvements, debt consolidation, or other large expenses. However, it’s important to consider the interest rates and fees before deciding.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 home equity line of credit is determined by the interest rate and term. If you draw the full amount, have an 8.50% interest rate, and repay what you borrowed (plus interest) over a 20-year term, your monthly payment should be about $868. Utilizing a HELOC monthly payment calculator can provide an estimate based on your rate and term.
What are the benefits of a HELOC?
A home equity line of credit offers flexible access to funds, competitive interest rates, and you may even be able to deduct interest paid on some or all of what you borrow. One of the most significant benefits is that you don’t have to borrow the entire credit line all at once. You can borrow what you need when you need it, and only pay interest on that amount.
Do you need an appraisal for a HELOC?
Yes, you will likely need an appraisal for a HELOC. The appraisal process assists the lender in accurately determining the value of your home and assessing the amount of equity you possess.
What disqualifies you from getting a home equity loan?
Several crucial factors, such as a low credit score, insufficient home equity, and a high debt-to-income ratio, can disqualify you from securing a home equity loan. This is generally true of a home equity line of credit as well.
How difficult is it to get a HELOC?
Every lender has its own requirements, but generally speaking if you have a credit score of at least 680 and have at least 15% equity in your home, with a debt-to-income ratio of at most 50% and a stable income you may be able to obtain a home equity line of credit.
Does HELOC affect credit score?
When you apply for a HELOC, a hard inquiry may be made on your credit report, which could lead to a temporary decrease in your score. Furthermore, the manner in which you manage your HELOC, including your punctuality in making payments, can have a lasting effect on 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