RALEIGH HELOC RATES TODAY
Current HELOC rates in
Raleigh, NC.
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 Raleigh.
Key Points
• The prime rate has an important effect on home equity line of credit interest rates in Raleigh.
• HELOCs typically offer a 10-year draw period and a 10- to 20-year repayment period.
• The rates you’ll be offered depend on things like your credit score and debt-to-income ratio.
• The interest you pay on a HELOC may be tax-deductible if you’re using it for home improvements.
• A home appraisal is usually needed to determine the value of and equity in your home.
Introduction to HELOC Rates
This article will give you a good understanding of home equity line of credit (HELOC) rates in Raleigh, North Carolina, and how to qualify for the best terms. You’ll learn about the benefits and risks of HELOCs, how to compare different lenders, and the tools you can use to estimate costs. By the end, you’ll have all the information you need to decide whether a HELOC is right for you, plus advice on how to make your application as strong as possible.
What Exactly Is a HELOC?
A HELOC is a revolving credit line that is secured by your home equity (the market value of your home, less the amount you owe on any home loan you still have). To qualify, you’ll typically need at least 15% equity in your home. With a HELOC, you can borrow up to 90% of your equity. Because the HELOC uses your home as collateral, the lender has the ability to foreclose if you fail to make your HELOC payments. There will be a draw period and a repayment period, and the payments are different in each, so it’s important to understand them.
The Draw Period
In the HELOC’s initial draw phase, typically 10 years, you can borrow money as you need it, up to whatever credit line your lender has established. Most lenders only require you to pay interest on what you have borrowed during this time. HELOCs have variable interest rates, and a HELOC interest-only calculator is a useful tool at this time.
The Repayment Period
As you hit the repayment period, you’ll stop borrowing and start making monthly payments of both principal and interest. The interest rate continues to be variable, so payments aren’t always predictable. A HELOC monthly payment calculator can help you estimate what you might owe depending on the amount you’ve borrowed and your current rate.
Recommended: HELOC vs. Home Equity Loan
The Origin of HELOC Interest Rates
HELOC interest rates are tied to the prime rate, which is affected by the Federal Reserve’s actions. Lenders tack on a margin to the prime rate, which is why you’ll see different HELOC rates coming from different lenders. To determine your specific rate, a lender will consider factors like your credit score, debt-to-income (DTI) ratio, and equity level. You’ll learn more on how to make sure your stats are as strong as possible below.
How Interest Rates Impact HELOC Affordability
Interest rates play a big role in what you’ll pay each month and over the life of your loan, so it’s important to shop around and compare offers from multiple lenders on your path to a HELOC. A small increase in the rate can mean a big increase in what you pay.
Imagine that you borrowed $100,000 with a HELOC that had a 20-year repayment term. If your interest rate was 7.00%, you’d pay $775 per month and total interest of $86,072. But if your rate was 8.00%, your monthly payment would be $836 and your total interest would climb to $100,746. Of course, HELOCs’ variable rates mean your real-world results would vary, but the fact that a lower initial rate is better holds true.
Recommended: Different Types of Home Equity Lending
HELOC Interest Rate Trends
As you think about how to get equity out of your home, you may start paying more attention to the prime rate. While we can’t peek into a crystal ball for future interest rates, keeping an eye on the prime rate can give you a sense of where HELOC rates are headed. Over the past few years, we’ve seen the prime rate fluctuate from a low of 3.25% in 2020 to a high of 8.50% in 2023. Understanding this historical data can help you see where current rates fall on the spectrum and comprehend how a variable interest rate might affect your payments should you decide to move forward with a HELOC.
| 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
Let’s dig into exactly what it means to have a variable-rate HELOC. You may find it reassuring that your rate wouldn’t be entirely unpredictable. The HELOC agreement you sign with a lender would include details about how often your rate can change and how much. There would be a rate cap spelled out. Your job is to make sure your budget can accommodate both the current rate you’re being offered and whatever the highest imaginable rate on your HELOC might be, as spelled out in the agreement. If you can’t get comfy with those numbers, a HELOC may not be for you.
Helpful Tools and Calculators
Before you apply for a HELOC, you can use online tools to help you estimate monthly HELOC payments at various interest rates, both during the draw (interest-only) and repayment phases. The calculators below will be useful as you make your decision.
Run the numbers on your HELOC.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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 available HELOC rate, you’ll need to meet some requirements beyond the baseline criteria for HELOC lenders, which is 15% equity, a credit score of 640 or better, and a DTI ratio of no more than 50%. Here’s what you can do:
Improve Your Credit Score
To snag the best HELOC rates in Raleigh, you’ll want a credit score of 700 or higher. Simply making on-time payments and chipping away at credit card balances can give your score a healthy boost. It’s also wise to give your credit report a once-over to catch any errors and set the record straight. Avoid closing old credit accounts or opening new ones in the months leading up to your HELOC application. With time, you can get to 700 or beyond.
Calculate Your Debt-to-Income (DTI) Ratio
Your DTI ratio is a simple formula: your total monthly debt payments divided by your gross monthly income. Achieving a DTI under 36% can boost your chances of securing the best HELOC rates in Raleigh. Do this by paying down your debts, increasing your income, or both.
Application Process for a HELOC in Raleigh
The application process for a HELOC in Raleigh can be streamlined by prequalifying online with multiple lenders. This step helps you understand the HELOC rates available and the terms you might qualify for. After prequalification, you can decide whether or not to move on to the full application process.
Step 1: Run the Numbers
Before you file a HELOC application, make sure you have at least 15% equity: Subtract your current mortgage balance from your home’s estimated value. Then divide the answer by your home value to get a percentage of equity. You’ll also want to make sure your credit score and DTI ratio at least meet the minimums spelled out above (640 for the former, 50% for the latter).
Step 2: Compare Lenders
Scrutinize the estimates you obtained during prequalification, or seek out offers now. Don’t just compare interest rates. Also look at qualification requirements, minimum and maximum credit lines, fees, and the length of the draw and repayment periods. Each lender will have different terms, so it’s important to examine all of these factors to make sure you choose the best fit for your financial situation and needs.
Step 3: Submit Your Application
Gather your papers, including your ID, proof of income, and details about the property you’re using as collateral. For income, you’ll usually need to show your most recent pay stubs, W-2s, and tax returns. If you’re self-employed, you might need to provide a profit-and-loss statement and your tax returns from the last two years. For your property, you’ll need a homeowners insurance declaration page. Once you’ve got everything together, you can start your application online, over the phone, or in person.
Step 4: Get an Appraisal
It’s likely that the lender you apply to will require this step, in which a pro comes to give your home a good look and then crunches the numbers to see what it’s worth in today’s market. The cost? Usually between $300 and $600. If your home’s value comes in higher than what you owe, to the point that you meet the minimum equity needed for a HELOC, your lender could give you the green light. This step is key in nailing down how much equity you can tap into and the terms you’ll score.
Step 5: Prepare for Closing
Before you can start using your HELOC, you’ll need to sign the HELOC documents and take care of any fees. The good news is that many lenders can get you access to your funds in as little as three days after closing. But before you sign on the dotted line, make sure you understand all the terms and conditions in the agreement.
Closing Costs and Fees
Closing costs for HELOCs are generally more affordable than what you’d encounter with a home purchase or a refinance. The appraisal fee is often the most significant cost. You might also come across an application fee, an origination fee, and administrative fees. Some lenders may tack on a yearly maintenance fee and transaction fees for withdrawals.
Tax Benefits and Considerations
If you’re planning to use your HELOC for renovations, you’ll be pleased to know that you can deduct HELOC interest from your taxes, provided the funds are used for the significant improvement of your primary residence. This tax benefit is currently set to last through 2025. A tax advisor can help you understand the specific tax implications and confirm your eligibility for any HELOC-related deductions in 2025 and beyond.
Alternatives to HELOCs
If you’re not entirely sure about a HELOC, or just want to explore all your borrowing options, there are other ways to benefit from your home’s equity, each with its own pros and cons. You might also consider an unsecured personal loan. Here are the details on these alternatives:
Home Equity Loan
Unlike HELOCs, home equity loans provide a lump-sum amount and are paid back at a fixed interest rate. You can usually access up to 85% of the equity you’ve built in your home. Lenders like to see a credit score of 680 or higher, and, as with a HELOC, many prefer 700+ for the best rates. The monthly payments on these loans are predictable. A home equity loan calculator can help you see how much you might be able to borrow with this loan type.
Cash-Out Refinance
A cash-out mortgage refinance is another way for homeowners to make the most of their equity. In this case, you would refinance your mortgage for more than you currently owe and pocket the difference. Typically, you’ll need a credit score of 620 or higher and a DTI ratio below 43%. If you are thinking about a cash-out refinance vs. home equity line of credit, one difference is that with a refi, you can choose a fixed or variable interest rate.
Personal Loan
A personal loan is typically unsecured and repaid in regular, fixed installments over a period of two to seven years, a shorter time horizon than the other options. The key benefit here is that your home is not at risk of foreclosure should you encounter financial challenges. Most lenders look for a credit score of 610 or higher. While the process is relatively swift, interest rates are often higher than those of HELOCs or home equity loans.
The Takeaway
If you’re considering a HELOC, it’s important to weigh the benefits and risks. On the plus side, HELOCs offer flexibility and potentially lower interest rates than other borrowing methods. Plus, the interest you pay might be tax-deductible if you use the money to make home improvements. But on the downside, your home is on the line and could be foreclosed on if you don’t make your payments. If you’re in Raleigh, comparing HELOC rates from different lenders can help you find the best deal and make borrowing as affordable as possible.
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
What can a HELOC be used for?
A HELOC is very versatile. You can use the funds for any type of expenses, from home improvements to education costs to debt consolidation. It provides a flexible line of credit, allowing you to withdraw funds as needed during the draw period, typically 10 years, and initially make only interest payments. The withdraw-as-needed approach makes it useful for managing ongoing expenses or large projects that have unpredictable costs.
What would the monthly payments be on a $50,000 HELOC?
Your monthly payment on a $50,000 HELOC will vary according to the rates and terms of your agreement. During the draw period, you might only need to pay interest, which can be quite manageable. For instance, at a 7.00% interest rate, your monthly interest-only payment would be approximately $292. But keep in mind, once the repayment period kicks in, you’ll be paying both principal and interest, so your monthly expense will increase.
Do you need an appraisal for a HELOC?
You will likely need a home appraisal to get a HELOC because the appraisal helps a lender determine the current market value of your home, which is used to calculate the amount of equity you can access. Lenders use this information to set your credit limit.
How tough is it to get a HELOC?
It shouldn’t be hard to get a HELOC if you can meet the minimum requirements: You’ll need 15% equity in your home, a credit score of at least 640, and a debt-to-income ratio under 50%.
You’ll have to fill out an application, which will likely be online, and you will probably have to admit an appraiser to your home to evaluate its worth. It’s not as easy to get a HELOC as it is to get a personal loan, but HELOC interest rates are usually more favorable.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOHL-Q225-449
More HELOC resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare