PLANO HELOC RATES TODAY
Current HELOC rates in
Plano, TX.
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 Plano.
Key Points
• Home equity line of credit rates in Plano are influenced by the prime rate and Federal Reserve policies.
• You can borrow up to 90% of your home’s value, minus the balance of your mortgage, with a HELOC.
• The draw period is 10 years, during which you make interest-only payments. After that, you have a 10 to 20-year repayment period.
• To get the most competitive HELOC rates, a credit score of 700 or higher and a debt-to-income ratio below 36% are usually needed.
• HELOCs can be a great option for the savvy borrower, offering flexibility and potentially lower interest rates than personal loans.
Introduction to HELOC Rates
Our guide to home equity line of credit rates in Plano, Texas, lays out the factors that impact interest rates, and offers insider tips on how you can qualify for the lowest available rate. We’ll also cover the benefits and risks of HELOCs, current interest rate trends, and tools you can use to estimate your monthly payments and interest costs. By the end of this guide, you’ll be better equipped to decide if a HELOC is the best way for you to borrow.
What Exactly Is a HELOC?
A HELOC is a revolving credit line that uses your home as collateral. This means that in the event that you don’t repay what you borrow, the lender could foreclose on your home. In practice, using a HELOC is a lot like using a credit card. You borrow when you need funds, and you make monthly payments on the amount of the credit line that you have actually used.
To qualify, you’ll need to have at least 15% equity in your home. Your equity is the market value of your home minus whatever you still owe on your home loan. Some homeowners may be able to borrow up to 90% of their equity. The draw period and repayment period are the two phases of a HELOC, and it’s important to understand how payments will differ in each.
The Draw Period
With a HELOC, you’re given a credit limit and a draw period. The draw period can last up to 10 years, and during this time you can borrow, repay (if you wish), and borrow again. Typically, you are only required to make interest payments during the draw period. A HELOC interest-only calculator can help you compute what you might owe at this time.
The Repayment Period
After the draw period, you’ll enter a repayment period of up to 20 years. You can’t borrow any more, and you’ll need to begin making monthly payments of principal plus interest. A HELOC’s variable interest rate means the amount you owe can fluctuate. Use a HELOC monthly payment calculator to calculate what payments look like when you add principal and interest.
Recommended: Different Types of Home Equity Lending
Where Do HELOC Interest Rates Come From?
HELOC interest rates are a product of the prime rate, which is under the sway of Federal Reserve policies. Each lender tacks on a margin to the prime rate, resulting in a range of HELOC rates. This is why it’s so important to seek out rates from multiple lenders before you decide on a lending partner for your HELOC. It’s especially true because lenders also take into account individual borrower factors such as credit score, debt-to-income (DTI) ratio, and the amount of equity in the home.
How Interest Rates Impact HELOC Affordability
The interest rate on your HELOC can make a big difference in how much it costs you. Even a small difference in the interest rate can mean a lot more interest paid over the life of the loan. For example, on a $50,000 HELOC with a 20-year term, a one-percentage-point rate increase from 7.00% to 8.00% during the repayment phase can raise your monthly payment by $30 and increase the total interest paid by almost $7,000. Your exact numbers will differ due to the HELOC’s variable interest rate. But the bottom line is that you want to start your HELOC with the lowest available rate.
HELOC Interest Rate Trends
You’ll likely begin keeping an eye on the prime rate as you think about how to get equity out of your home. Having a sense of the prime rate’s history can give you some perspective on whether current rates are relatively high or low. Over the years, we’ve seen the prime rate dip to an unusually low 3.25% in 2020 and rise to 8.50% in 2023. Where the rate goes, your HELOC interest rate will likely follow.
| 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
As we’ve noted, HELOCs usually come with adjustable (also called variable) interest rates, which means your rate can go up or down based on market conditions. If you can get comfortable with the possibility of rate increases, you can probably handle a HELOC. One thing to note: Your HELOC agreement would spell out how often your rate can change, and by how much. So there are some guardrails around the rate changes. If you’re someone who can’t rest comfortably without predictability and stable payments, a fixed-rate loan such as a home-equity loan might be more up your alley.
Helpful Tools and Calculators
Before you apply for a HELOC, you can use online calculators to see how much you can expect to pay each month based on the amount you borrow and your current interest rates. You can also learn how much interest you might pay over the life of the HELOC. Here are three useful calculators.
Run the numbers on your HELOC.
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Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment
CalculatorPunch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only
CalculatorUse 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 HELOC rate, you’ll need to have at least 15% equity in your home. Take a few minutes to make sure you’ve hit that benchmark. Subtract what you still owe on your mortgage from your home’s estimated value. Then divide the answer by the home value and you’ll have a percentage. You can move on to the next steps: working on your credit score and DTI ratio.
Improve Your Credit Score
You can get a HELOC with a credit score of 640, but to ensure you’re in a prime position to secure the best available HELOC rates, aim for 700 or higher. Making payments on time and chipping away at credit card balances can give your credit score a lift. Setting up automatic payments is a good idea. Also keep an eye on your credit report so you can fix any errors that crop up. Avoid closing old credit accounts or opening new ones in the months leading up to your HELOC application.
Calculate Your Debt-to-Income (DTI) Ratio
Your DTI ratio is a simple comparison: your monthly debt payments divided by your gross monthly income. For HELOC lenders, a DTI under 50% is the general target, but the lower, the better, and the best interest rates go to those with a DTI ratio of 36% or less. To improve your DTI, focus on paying down debts, increasing your earnings, or both.
Application Process for a HELOC in Plano
For those considering a HELOC in Plano, the application process can be streamlined by prequalifying online. Taking this initial step is helpful because it allows you to understand the current HELOC rates available in Plano and to see what rate and terms you might qualify for. Once prequalified, you can then gather all of the necessary documentation required to formally submit your application, following these steps:
Step 1: Run the Numbers
Before you dive into the application process, it’s wise to give your credit scores a once-over and calculate your debt-to-income (DTI) ratio and home equity level. As long as you have a 640 credit score or better, plus a DTI ratio under 50% and home equity of 15% or better, you’re good to go.
Step 2: Compare Lenders
Next, research and compare different lenders to find the best HELOC rates in Plano. Look at their specific qualification requirements, minimum and maximum credit lines, fees, and the length of the draw and repayment periods. Zero in on the lender that feels like the best fit for you.
Step 3: Submit Your Application
Gather your paperwork. You’ll need recent pay stubs, W-2 forms, and tax returns. If you’re self-employed, you may be asked for a profit-and-loss statement and two years’ worth of tax returns. Have your homeowners insurance policy handy, too. Once you’ve got everything together, you can apply online, over the phone, or in person. Doublecheck the information you provide for accuracy to keep the process moving smoothly.
Step 4: Get an Appraisal
A lender will require a professional and objective analysis of your home’s value, so once you’ve zeroed in on the HELOC offer you find most appealing, you’ll pay between $300 and $600 to secure an appraisal. This step determines the amount of equity you have in your home and is an important part of the HELOC process.
Step 5: Prepare for Closing
Before you can tap into your HELOC funds, you’ll need to sign your HELOC agreement and take care of any fees. Many lenders will have your funds ready within three days of closing. Be sure to review all your documents carefully and ask any questions you have to make sure you’re clear on the terms.
Closing Costs and Fees
The good news is that HELOC closing costs are typically more budget-friendly than what you’d face with a home purchase or refinance. The appraisal fee is often the most significant expense. You might also encounter an application fee, origination fee, and administrative costs. Some lenders may have annual maintenance fees, transaction fees for withdrawals, inactivity fees, or early termination fees. Some lenders are willing to reduce or even waive some of these costs, though this could mean a slightly higher HELOC interest rate, which could cancel out any savings.
Tax Benefits and Considerations
Here’s a nice counterbalance to those fees: Homeowners are eligible to deduct HELOC interest from federal taxes if the funds borrowed are used to significantly improve the primary residence. To make sure you’re getting the most out of your HELOC (and for help itemizing and capturing that deduction), it’s a great idea to chat with a tax advisor. Keep your eyes open for potential changes in how HELOC interest is handled on taxes in 2026 and beyond.
Recommended: HELOC vs. Home Equity Loan
Alternatives to HELOCs
If a HELOC doesn’t feel like the right fit, there are other options to consider. Home equity loans, cash-out refinancing, and personal loans all have their own requirements and benefits.
Home Equity Loan
With a home equity loan, you get a lump-sum loan at a fixed interest rate. You can usually borrow up to 85% of your home equity. Lenders often look for a credit score of 680 or higher, with many leaning toward 700. A difference between a HELOC and a home equity loan is that with the latter, you get the money all at once and begin repaying it, with interest, immediately. A home equity loan calculator can show you what you might be able to borrow.
Cash-Out Refinance
A cash-out mortgage refinance lets you borrow against your home’s equity by trading your current mortgage for a new, larger one. You’ll pocket the difference to use as you wish. To qualify, you’re generally looking at a credit score of 620 or higher, and a debt-to-income ratio under 43%. You can choose fixed or variable rates. A cash-out refinance vs. home equity line of credit point of difference? The former leaves you with just one monthly payment.
Personal Loan
A personal loan is typically unsecured, so you don’t risk foreclosure if you find yourself unable to make payments. It’s typically repaid in regular, fixed installments over a period of two to seven years. Many lenders look for a credit score of 610 or higher for these loans, which is more forgiving than the standard for a HELOC or home equity loan. While they’re relatively speedy to secure, personal loans’ interest rates may be higher than those of HELOCs.
The Takeaway
As you mull over the idea of a HELOC, remember to consider the benefits and potential drawbacks. The flexibility and lower initial costs are attractive, but don’t forget about the variable interest rates and the risk of losing your home if payments are missed. Homeowners in Plano should take the time to compare HELOC offers from different lenders, looking at factors like credit line limits and fees as well as the interest rate. Ensure your financial health is in order, gather the necessary documentation, and be ready for a home appraisal before you apply.
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FAQ
Is a HELOC a smart move at this time?
Whether a HELOC is a good idea for you depends on your unique financial situation and goals. If you need to borrow a large sum of money but don’t need it all at once or aren’t sure exactly how much you might need, a HELOC could be a good way to borrow, because you’ll only pay interest on the portion of the credit line that you are actively using. At a time of some uncertainty regarding interest rates, you might find borrowing with a HELOC to be a way to hedge your bets: If rates drop somewhat, your variable HELOC rate will drop too. Of course the opposite is also true, so make sure you feel you can comfortably cover monthly payments during both the draw and repayment phases before moving forward.
What would the monthly payment be on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC can fluctuate depending on how much of the credit line you have used and the current interest rate. If you borrow the full $100,000 and have an 8.00% rate, you might only pay around $667 per month to cover the interest during the draw period. Once the repayment phase kicks in, you would start paying down the principal, which will adjust your monthly payment upward to $1,213. Due to HELOCs’ variable rates, your exact numbers will vary.
Do I need an appraisal for a HELOC?
An appraisal is required for a HELOC in most cases. This important step determines your home’s current market value, which in turn helps a lender calculate the amount of equity you can borrow against. Getting a professional appraisal according to your lender’s instruction is key to securing the best HELOC terms.
What might disqualify you from getting a home equity loan?
A few factors could potentially disqualify you from securing a home equity loan. Most lenders look for a credit score in the upper 600s, a DTI ratio of 50% or less, and a minimum of 20% equity in your home. If you don’t meet these criteria, you might need to work on improving your financial profile or explore other financing sources.
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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