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Compare HELOC rates in Salem.
Key Points
• Home equity line of credit interest rates in Salem are influenced by the prime rate and individual financial metrics.
• HELOCs generally have lower interest rates than personal loans or credit cards.
• With a HELOC, you have a draw period and a repayment period, each with different payment structures.
• During the draw period, you’ll likely only have to make interest payments, which can keep costs down.
• Homeowners should compare multiple lenders to find the best terms and rates.
Introduction to HELOC Rates
This is your go-to guide for understanding home equity line of credit (HELOC) rates in Salem, Oregon. We’ll walk you through the factors that influence these rates and how to position yourself for the best rate and terms. Plus, we’ll introduce you to some handy tools for estimating your costs. Whether you’re dreaming of a home makeover or have other big expenses on the horizon, you can feel confident knowing you have all the information you need about HELOCs and are making a savvy financial choice.
What Exactly Is a HELOC?
A HELOC is a revolving credit line that uses your home’s equity (the difference between your property’s value and whatever you still owe on your home loan) as collateral. To qualify, you typically need at least 15% equity in your home. You can borrow up to 90% of that equity. Of course, this means that if you don’t repay what you have borrowed (with interest) you could find yourself in foreclosure. A HELOC has two phases, and the payment structure is different in each. The details:
The Draw Period
During the HELOC’s draw period (usually 10 years), you can access funds as needed, using the credit line much as you would a credit card. You’ll have to pay interest on what you borrow, but most lenders won’t require you to repay the principal, though you can do so if you wish to draw on the full credit line again. A HELOC interest-only calculator can compute monthly interest.
The Repayment Period
After the draw period ends, the repayment period of 10 to 20 years begins. Monthly payments will increase as you begin to repay the principal plus interest. HELOC interest rates are usually variable, which means the amount you pay each month may go up or down as rates change. A HELOC monthly payment calculator is useful at this stage in your borrowing experience.
Recommended: Different Types of Home Equity Lending
How HELOC Interest Rates Are Determined
HELOC interest rates are tied to the prime rate, which is affected by the Federal Reserve’s actions. Lenders then add a margin to the prime rate, which is why you might see different rates when shopping around — and why it’s imperative to seek out rate quotes from multiple lenders. Before you’re approved for a HELOC, lenders will also consider your credit score, debt-to-income (DTI) ratio, and the amount of equity you have in your home.
How Interest Rates Impact HELOC Affordability
The interest rate on your HELOC can make a big difference in how much you pay each month. Even a small increase in the rate can cause your monthly payment to go up and the total amount of interest you pay over the life of the loan to increase. 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 may 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
While we can’t gaze into a crystal ball, keeping an eye on the prime interest rate can shed light on the direction of HELOC rates in Salem. And having a sense of the history of the rate can give you perspective on the rates you’re seeing in the current market. Over the years, we’ve seen the prime rate swing from a low of 3.25% in 2020 to a high of 8.50% in 2023.
| 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, as we’ve noted, come with variable (also called adjustable) interest rates, which means they can change based on the market. There are typically some built-in guardrails, so borrowers aren’t entirely at the mercy of the market. A HELOC agreement will spell out how frequently rates can change and how great the swing can be. A rate cap is included as well.
But it is important to be prepared for the fact that your monthly payments could go up (or down).
Helpful Tools and Calculators
Before you apply for a HELOC, online tools can help you get an estimate of what your monthly payments and interest costs will be. These tools can help you understand the impact of HELOC rates on your budget and plan accordingly.
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.
Recommended: HELOCs vs. Home Equity Loans
How to Qualify for a Competitive HELOC Rate
To qualify for a competitive HELOC rate, you’ll want to take these steps before you apply:
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. By making payments on time and chipping away at credit card balances, you can give your credit score a lift. Setting up automatic payments is a good idea. Keep an eye on your credit report for any errors, too. 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 Salem
The application process for a HELOC in Salem is straightforward. It may help to prequalify online, which involves putting in a little information about yourself and getting a preliminary idea of what rate you may qualify for. Doing so can help you determine if you are ready to file a full application, following these steps:
Step 1. Run the Numbers
Check your credit score to be sure it’s at least 640 and calculate your DTI ratio to verify it’s under 50%. Then, assess your home equity: Subtract your current mortgage balance from your home’s estimated value; divide the answer by your home value to arrive at your percentage of equity. As noted above, you need at least 15% equity to move forward.
Step 2. Compare Lenders
Research different lenders to find the best HELOC rates in Salem. Look at interest rates, qualification requirements, credit line 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 read the fine print.
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
HELOC closing costs are generally lower than those for buying or refinancing a home. The appraisal fee is often the most significant expense. You may also encounter title search fees, application, origination, and administrative fees. Some lenders charge annual maintenance fees, which can be up to $250, as well as withdrawal transaction fees. Early termination fees may also apply.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest for the 2025 tax year if the funds are used to improve their primary residence. You may want to consult a tax advisor to confirm your eligibility — you’ll need to itemize on your return to capture this deduction. A tax advisor can also help you keep up with tax policy changes in 2026 and beyond.
Alternatives to HELOCs
There are a few other ways to get equity out of your home in Salem, including home equity loans and cash-out refinancing. If you’re at all unsure about a HELOC, or just curious about alternatives, check out these details:
Home Equity Loan
With a home equity loan, funds come in a lump sum and you start paying them back, with interest, immediately. The repayment term might be 10, 20, or 30 years and the interest rate is fixed, not variable. Usually, you can tap into 85% of your home equity. Lenders often look for a credit score of 680 or more, but as with a HELOC, better rates often go to those with a score of 700 or above. A home equity loan calculator can show you what you might be able to borrow.
Cash-Out Refinance
A cash-out refinance trades your old mortgage in for a new, larger one; you take the difference as cash. This mortgage refinance might be right for you if you can score an interest rate that is an improvement on your current one (remember to factor in closing costs). To qualify, you’ll need a 620 credit score and a DTI ratio of under 43%. When comparing a cash-out refinance vs. a home equity line of credit, the more forgiving credit and DTI numbers on a refi may be attractive.
Personal Loan
A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed installments over two to seven years. The key advantage here is that your home is not on the line should you face financial challenges. Many lenders look for a credit score of 610 or more for a personal loan. While these loans can be relatively quick to secure, do note that they often come with higher interest rates than either a HELOC or a home equity loan.
The Takeaway
HELOC rates in Salem are influenced by various factors, including the prime rate and your individual financial metrics, such as home equity and credit score — so you can score a better rate with some preparation and by securing rate quotes from multiple lenders. While HELOCs offer borrowing flexibility, it’s essential to be aware that interest costs can change with the market, and be mindful of the risk of foreclosure if payments are not met.
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FAQ
What’s the monthly payment 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.
Would I need an appraisal for a HELOC?
An appraisal is typically required for a HELOC. 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.
How tough is it to secure a HELOC?
Gaining approval for a HELOC isn’t hard if you meet the lender’s criteria. Lender requirements vary, but the bottom-line prerequisites are a credit score of at least 640, a debt-to-income ratio below 50%, and a home equity level of 15%. The best interest rates go to those with a credit score of at least 700 and a DTI ratio under 36%. The application process has some hoops to jump through: You’ll need to submit some financial records and arrange for a home appraisal.
Will a HELOC impact your credit score?
Just opening a HELOC can cause a slight dip in your credit score due to the necessary hard credit inquiry by your lender. But make timely HELOC payments and keep balances in check (don’t live right up to the edge of your credit line), and you may actually see an improvement in your score. On the flip side, missing payments or maxing out your HELOC can be detrimental.
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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