SPOKANE HELOC RATES TODAY
Current HELOC rates in
Spokane, WA.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Key Points
• Spokane’s HELOC interest rates are tied to the prime rate and the financial record of the homeowner.
• To qualify for the most attractive rates on a HELOC, you’ll generally need a credit score of 700 or more.
• You’ll typically have to have at least 15% home equity to qualify for a HELOC.
• A debt-to-income ratio under 36% is needed to secure the most competitive HELOC rates.
• While HELOCs offer financial flexibility and lower interest rates than many loans, their variable interest rate can make your payments unpredictable.
Introduction to HELOC Rates
Welcome to your guide to HELOC rates in Spokane, Washington. If you’re a homeowner who has been paying down your home loan and has built up some equity, you may be wondering whether it’s a good idea to tap it with a home equity line of credit (HELOC). Here, we’ll delve into the advantages and potential pitfalls of these financial tools, the factors that influence Spokane’s HELOC rates, and what it takes to secure the most favorable terms. Whether you’re looking for funds to spruce up your property, invest in education, or consolidate higher-interest debt, this guide will equip you to make a solid financial decision for your situation.
What Is a HELOC?
First, let’s define just what a home equity line of crest is. A HELOC is a revolving line of credit that lets you take out money if and when you need it, up to a ceiling determined by your lender. A HELOC is secured with your home’s equity (the value of your home minus what you still owe on your mortgage). That means that you may get a lower interest rate on a HELOC than you would for an unsecured loan, but also that your home could be foreclosed on if you can’t make your payments. Lenders will typically want you to have a minimum of 15% equity in your home to qualify for a HELOC, and you can usually borrow up to 90% of that amount. HELOCs are divided into two distinct time periods.
The Draw Period
When you take out a HELOC, the initial span (usually 10 years) is called the draw period. During this time you can borrow funds as you need them, up to the limit your lender sets. You pay interest on whatever you borrow, but most lenders won’t require you to pay back the principal until you reach the next phase of the HELOC.
The Repayment Period
After the draw period, the repayment period begins. Typically 10 to 20 years, this phase is when you repay the principal you’ve borrowed plus interest, so your monthly payments will rise. HELOCs most often have a variable interest rate, so your payments may also be less predictable during this time.
Where Do HELOC Interest Rates Come From?
Lenders calculate HELOC rates by taking the prime rate, which is largely dictated by the actions of the Federal Reserve, and adding their own margin. This is why you’ll find varying rates among different lenders. Lenders will also assess a homeowner’s individual financial factors, such as credit score, debt-to-income (DTI) ratio, income, and amount of home equity. Being aware of these components can help you be strategic about getting a competitive HELOC rate.
How Interest Rates Impact HELOC Affordability
The interest rate on your HELOC has a major effect on how much you’ll end up paying. Even an apparently small difference in your rate can dramatically increase the amount of interest you’ll pay over the life of your HELOC. For example, take a $50,000 HELOC with a 10-year term. At 7.00%, you’d pay $581 per month, and your interest over the life of the HELOC would total $19,665. But if your rate were 8.00%, your monthly bill would be $607 and your total interest would rise to $22,797, more than $3,000 higher than you’d pay at 7.00%.
Variable vs. Fixed Interest Rates
A HELOC usually comes with a variable interest rate, which means it can change over your HELOC term. These rates often start lower than fixed rates, which can make your initial borrowing more affordable. But because they’re tied to market conditions, variable rates can rise or fall, unlike fixed rates, which don’t change. For example, if the prime rate goes up, your variable HELOC rate is likely to do the same. This can make your payments unpredictable. If you’re more comfortable knowing what you’ll have to pay every month, you might prefer a home equity loan, which we’ll explain later in this guide.
HELOC Interest Rate Trends
While it’s impossible to know exactly what the future holds, keeping an eye on the movements of the prime interest rate can provide you with insights into the potential direction of HELOC rates. Since 2018, the prime rate has fluctuated, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023 and, as we’ve mentioned, it’s closely tied to HELOC rates. Seeing this historical data and watching current trends may help you anticipate the ebb and flow of HELOC rates and make more informed decisions for your financial future.
| 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
Helpful Tools and Calculators
As you’re assessing whether to take out a HELOC, you’ll want information about what monthly costs you can expect. Use our online tools to help you estimate your payments so you can compare different options.
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 offer you attractive HELOC rates, lenders will want to see that your credit score, debt-to-income (DTI) ratio, and level of home equity are up to their standards. The following steps can help you get your finances ready to present to potential lenders.
Improve Your Credit Score
To secure the most attractive HELOC rates, you’ll want to show lenders a credit score of 700 or higher. If your score isn’t quite there yet, making payments on time and keeping your credit card balances low can give it a Be sure to significant boost over time. Check your credit report for any inaccuracies, and dispute them with the credit reporting agencies to make sure your record is accurate.
Calculate Your Debt-to-Income Ratio (DTI)
Determining your DTI ratio is simple: Just add up all your monthly debt obligations — mortgage, car loans, credit cards, and the like — and divide that sum by your gross monthly income. To score the most favorable HELOC rates, you’ll want to aim for a DTI ratio below 36%. A low DTI ratio gives lenders a sense of how burdened you are by debt and how easily you may be able to handle HELOC payments.
Application Process for a HELOC in Spokane
Many lenders offer you the convenience of prequalifying for a HELOC online, which can save you time and streamline the application process. This initial step can provide you with an idea of the Spokane HELOC rates you might qualify for and the amount of equity you can access. Once you’re prequalified, you can proceed with a full application, which will require detailed financial information and property details.
Run the Numbers
First, you’ll want to get a handle on your financial situation. As mentioned above, this is a good time to check your credit scores and calculate your DTI ratio. You’ll also want to assess your home equity — the difference between your home’s value and your outstanding mortgage balance — and be sure that you’ve got at least 15%, which is usually the minimum requirement. If your timeframe is flexible, regular mortgage payments and extra payments to principal can help build home equity over time, as can renovations that boost your property’s value.
Compare Lenders
Next, it’s time to look at your options for lenders. You’ll want to consider HELOC rates, of course, but also compare other factors, such as qualification requirements, HELOC minimums and maximums, fees, and the length of the draw and repayment periods. Look for lenders that offer competitive rates and terms that work for you. You may even want to consider factors like customer service, online application processes, and any additional benefits provided.
Submit Your Application
As you prepare to submit your application, you’ll need to gather some documents, including your official ID, proof of income, and details about the property you’re using as collateral. Income verification could involve recent pay stubs, W-2s, and tax returns, or, if you’re your own boss, probably a profit-and-loss statement and a couple of years’ worth of tax returns. Don’t forget to include a copy of your homeowners insurance declarations page. Once you’ve got everything together, you can usually submit your application online, over the phone, or in person.
Get an Appraisal
A home appraisal is a vital part of the process, as it’s necessary to establish how much equity you have and how much money you can borrow. An appraisal is an objective professional analysis of your home’s value, and it will typically cost you between $300 and $600. If your home appraises for more than your outstanding mortgage balance, you’re one step closer to approval for your HELOC. Be sure to check with your lender to find out about any appraisal requirements it may have.
Prepare for Closing
Before you can receive your HELOC funds, you’ll need to sign loan documents and pay any fees. Be sure to read everything carefully to be sure you understand the terms and conditions. Your closing costs can include an appraisal fee, title search costs, loan origination fees, and administrative expenses. Be prepared to pay for these so you can close on your HELOC and start drawing your funds. Some lenders will make your credit line available within three days of closing your HELOC; others may take longer.
Closing Costs and Fees
HELOC closing costs are generally more affordable than those associated with a home loan or cash-out refinancing. Frequently, the most significant expense is the appraisal. You might also encounter application, origination, title search, and administrative fees. Some lenders also charge annual maintenance fees that can be as much as $250. Transaction, inactivity, or early termination fees may also be part of your HELOC package.
Recommended: HELOC vs. Home Equity Loan
Tax Benefits and Considerations
As a homeowner, you may be able to deduct some or all of your HELOC interest payments from your taxes if you’re spending the funds you’ve borrowed on significantly improving your primary residence. There are rules for what constitutes a significant improvement as well as amount limits, so it’s smart to ask a tax professional for advice on your specific situation and eligibility. Plus, while you’re still deciding about a HELOC, they can help you evaluate whether these tax benefits would make a HELOC a smart move, especially if you’re looking at a hefty home improvement project.
Alternatives to HELOCs
If you’re trying to figure out how to get equity out of your home, a HELOC may be an appealing option. But before you submit your application, it’s a good idea to examine other ways you can tap your equity, as well as another popular borrowing option, the personal loan, to assess which form of financing would work best for you. Let’s take a look at each.
Home Equity Loan
What is a home equity loan? Like a HELOC, it’s a way to draw on your home’s equity, but rather than a line of credit, it gives you a lump sum, which you repay in monthly installments at a fixed rate. You can generally access up to 85% of your home’s equity. Some lenders look for a credit score of 680 or more; others may require 700 or higher. If you need a lump sum and like the stability of unchanging payments, this may be a good fit.
Cash-Out Refinance
A cash-out mortgage refinance allows you to borrow more than you currently owe on your mortgage and take the overage in cash. Lenders typically require a credit score of 620 or higher and a DTI ratio less than 43% for a cash-out refi, which can have either a fixed or variable rate. To decide on a cash-out refinance vs. home equity line of credit, consider whether a refi makes sense for you, given current refinancing rates.
Personal Loan
A personal loan doesn’t tap your home equity, which means that your home isn’t in danger of foreclosure if you default. You typically pay back your personal loan in regular, fixed payments over a period of two to seven years. Many lenders want to see a credit score of 610 or more for personal loans. While they’re comparatively fast to obtain, these loans usually have higher interest rates than HELOCs or home equity loans.
Recommended: Different Types of Home Equity Lending
The Takeaway
When you’re considering a HELOC, it’s important to know the benefits and the risks. HELOCs provide flexible access to funds and competitive interest rates, making them useful for expenses that extend through time, like home renovations or education costs. However, they do potentially put your home at risk if you default on your payments. Understanding what factors can convince lenders to grant favorable rates and what types of alternative funding are available should help you make the right decision for your unique financial circumstances.
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 a versatile financial tool that can be used for a wide variety of purposes, including home renovations, debt consolidation, and educational expenses, among many others. The flexibility of a HELOC allows you to access funds as needed during the draw period, usually 10 years, which can make it particularly useful for managing ongoing expenses.
Is a HELOC a smart move at this time?
Whether a HELOC is a good idea for you right now depends on your circumstances, as well as on current Spokane HELOC rates. If you’ve got a credit score above 700 and a debt-to-interest ratio below 36%, as well as a hefty chunk of home equity, you may qualify for an attractive interest rate. Since HELOCs let you withdraw money throughout the draw period (typically 10 years), they’re particularly useful for projects that require funding over time, like college costs or extensive home improvements.
What are the benefits of a HELOC?
Home equity lines of credit (HELOCs) offer a variety of benefits, including flexible access to your funds, competitive interest rates compared to many other types of financing, and often the option to make interest-only payments during the initial draw period. In some cases you may be able to take a tax deduction on HELOC interest. But don’t forget: They come with the risk of losing your home if you can’t make your payments.
Will a HELOC affect my credit score?
Opening a HELOC can affect your credit score. When you apply for a HELOC, your lender will run a hard inquiry on your credit report, which may cause a slight drop in your credit score. However, once you have your HELOC, making on-time payments can help improve your credit score, while missing payments and maxing out your credit line can hurt it.
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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