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Compare HELOC rates in Stockton.
Key Points
• A home equity line of credit offers competitive interest rates and flexibility but comes with the risk of losing your home if you default.
• Your credit score, debt-to-income ratio, and home equity are all factors that influence your HELOC interest rate.
• Online calculators can help you estimate your monthly payments and total interest costs, though a HELOC’s variable interest rate means real-world results will differ.
• Compare multiple lenders to find the best terms and rates for your HELOC.
• In 2025, homeowners can deduct HELOC interest if the funds are used for home improvements.
Introduction to HELOC Rates
In this article, we’ll provide a comprehensive overview of home equity line of credit (HELOC) rates in Stockton, California, to help you understand the current market, learn how to compare lenders’ offers, and consider the factors that influence rates. You’ll learn about the benefits and risks of HELOCs, the importance of qualifying for a competitive rate, and how to use online tools to estimate your costs. By the end, you’ll be better equipped to decide if a HELOC is the right financial tool for you and to navigate the application process.
What Is a HELOC?
A HELOC is a revolving credit line that’s secured by your home equity, which is the difference between your home’s value and whatever amount you still owe on your home loan. With a HELOC, you can typically borrow up to 90% of your equity. Using your home as collateral means that if you fail to repay what you owe your lender could foreclose, so it’s important to understand the two phases of a HELOC and how payments work at each phase.
The Draw Period
During the draw period, which lasts 10 years, you can access funds as needed, pay interest only (versus principal and interest), and reborrow up to your credit limit if you do repay the principal. You may find it helpful to have a HELOC interest-only calculator on hand to estimate your payments in this phase.
The Repayment Period
Next you hit the repayment period, which lasts up to 20 years and requires you to make monthly principal-plus-interest payments. HELOCs have variable interest rates, so monthly payments can change at regular intervals. A HELOC monthly payment calculator will be handy to compute what you owe.
Recommended: HELOC vs. Home Equity Loan
The Origin of HELOC Interest Rates
HELOC rates are determined by the prime rate, which is influenced by the Federal Reserve’s monetary policy. Lenders then add a margin to the prime rate to determine the interest rate you’ll pay on your HELOC. This means that HELOC rates can vary between lenders. Your personal credit score, debt-to-income (DTI) ratio, income, and the amount of equity you have in your home can also affect the interest rate you’ll pay. Understanding these factors can help you decide whether a HELOC is right for you and when it’s time to apply.
How Interest Rates Impact HELOC Affordability
The interest rate on your HELOC is a crucial factor in determining its affordability. Even a seemingly small difference in rates can translate to significant extra interest 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. Of course, the HELOC rate is variable, so your exact numbers may differ. But the bottom line is that the more you borrow with a HELOC, the greater the effect of a change in interest rate.
HELOC Interest Rate Trends
Monitoring the prime interest rate can certainly provide a glimpse into the potential direction of HELOC rates in Stockton. Since 2018, the prime rate has hit a low of 3.25% in 2020 and a high of 8.50% in 2023. Having this historical perspective can help you brace for the potential ups and downs of a HELOC rate, but it can also give you a sense of whether rates you’re seeing in the current market are relatively low or high.
| 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 tend to come with variable (also known as adjustable) interest rates that change over time. They usually start out lower than fixed rates, which make your initial payments more affordable. But because they rise or fall with the market, your monthly payments can be unpredictable.
It’s not entirely the Wild West. Your HELOC agreement will spell out how often the rate can change, how much it can change, and will likely include a rate cap. If you can get comfortable with potential costs within the range of your agreement, you can probably handle a HELOC.
Helpful Tools & Calculators
One way to assess whether a HELOC fits with your finances is to use an online calculator to check out how much your monthly payments would cost at different interest rates. Here are three useful calendars for those looking to borrow based on their home equity.
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
To snag an attractive HELOC rate, you’ve got to meet a few key criteria. As we’ve noted, the first bar to clear is 15% equity. Check your equity level by subtracting what you owe on your mortgage from your home value. Divide the answer by your home value and you’ll have your percentage of equity. Then tackle these tasks:
Improve Your Credit Score
Many lenders offer the best interest rates to those with a credit score of 700 or more, though you can get a HELOC with a score as low as 640. To nudge your score north, pay your bills on time and keep your credit card balances low. Also check your credit report regularly to make sure it’s accurate. If you spot any errors, be sure to dispute them. Finally, avoid closing credit accounts you’ve had for a long time, or opening new accounts, in the months leading up to your HELOC application.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is a simple equation: your total monthly debt costs divided by your gross monthly income. Most HELOC lenders want to see a DTI under 50%, but getting your DTI ratio below 36% will help you access the best interest rates. Do this by paying down debt, increasing your income, or both.
Application Process for a HELOC in Stockton
Some lenders offer the convenience of prequalifying for a HELOC online, which can save you time and hassle. It’s a great way to get a sense of the rates and credit limits you might be eligible for, without affecting your credit score. From there you can move on to the full application process.
Step 1: Crunch the Numbers
Make sure you have at least 15% equity in your home, a credit score of at least 640 and a DTI ratio below 50%.
Step 2: Compare Lenders
Now, it’s time to roll up your sleeves and get to the nitty-gritty of comparing lenders. You can prequalify online with multiple lenders by sharing some basic information about your finances. This will get you estimates of the rate you might qualify for. But don’t just compare rates. Also look at qualification requirements, HELOC amounts, fees, and the duration of both the draw and repayment periods. This is your chance to pinpoint the lender that offers the most bang for your buck.
Step 3: Submit Your Application
Once you have identified a preferred lander, you’ll need to get your documents together. You’ll need your ID, proof of income, and homeowners insurance information for the property you’re using as collateral. For income, prepare pay stubs, W-2s, and tax returns. If you’re self-employed, a lender might ask for a profit-and-loss statement and a couple years’ worth of tax returns.
Step 4: The Appraisal Process
An appraisal is a crucial part of the HELOC application process. If your home appraises for sufficiently more than your existing mortgage balance, the lender may approve you. This professional assessment also determines the amount of equity you currently have available to borrow against, which is essential for securing the loan. The lender that processes your application will share information about the appraisal requirement.
Step 5: Get Ready to Close
Once your application is given the green light, it’s time to close. You’ll read and sign all the necessary documents and take care of any fees. Some lenders make funds available within three business days of closing. Make sure you’re clear on all the HELOC terms before you seal the deal.
Closing Costs and Fees
The good news is that HELOC closing costs are typically much lower than those associated with a home purchase or a cash-out refinance. The most significant expense is often the appraisal, which can range from $300 to $600. Title searches, if required, can cost between $100 and $450. You might also encounter application, origination, and administrative fees, as well as annual maintenance fees that could go up to $250.
Tax Benefits and Considerations
You may be eligible to deduct HELOC interest if the borrowed funds are used to improve your primary residence. The current tax laws are in effect through 2025. To understand the tax implications and how rules change in 2026 and beyond, consult with a tax advisor. You’ll need to itemize on your tax return in order to claim this deduction.
Recommended: Different Types of Home Equity Lending
Alternatives to HELOCs
There are other ways to get equity out of your home besides a HELOC. You might consider a home equity loan or cash-out refinance. And you could also borrow without involving your home equity by taking out a personal loan. Make sure you understand how these methods differ from a HELOC.
Home Equity Loan
A home equity loan delivers a one-time lump-sum payment. You’ll start repaying the loan immediately, with a fixed interest rate for the duration of the loan (anywhere from 10 to 30 years). Typically, you can borrow up to 85% of your home equity. Lenders often look for a credit score of 680 or above, though here again 700 or more will get you better rates. If you need to borrow a specific amount of money and like the idea of consistent monthly payments, this might be the right choice for you. A home equity loan calculator can help you estimate how much you could borrow.
Cash-Out Refinance
A cash-out mortgage refinance lets you refinance for more than you owe and pocket the difference. It’s a good solution when you need a lump sum, provided the current interest rates are as good or better than the rate you have with your original loan. (Compare costs, including closing costs, directly.) Typically, you need at least a 620 credit score and a DTI ratio under 43%. When considering a cash-out refinance vs. a home equity line of credit, remember that with a refi you can choose between a fixed or variable interest rate. A refinance also leaves you with one monthly payment.
Personal Loan
A personal loan is a versatile, usually unsecured loan that you repay in regular, fixed installments over a term of two to seven years. The key advantage here is that, should financial challenges arise, your home is not in jeopardy of foreclosure. Most lenders will look for a credit score of 610 or higher when considering a personal loan application. While these loans can often be secured quickly, it’s important to note that they often carry higher interest rates than HELOCs or home equity loans.
The Takeaway
When considering a HELOC, it’s wise to weigh the benefits and risks. HELOCs offer flexibility and potentially lower interest rates than personal loans, but they also come with the risk of losing your home if you default. If you need a lump sum, a cash-out refinance or home equity loan might be a better option, while a personal loan is ideal if you prefer not to risk your home. Always shop around for the best HELOC rates, and understand the terms and conditions before making a decision.
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 you use a HELOC for?
A HELOC can be used for a variety of purposes, including paying for medical bills, home renovations, or education costs. It functions like a credit card, allowing you to draw funds up to a maximum limit and pay interest only on the amount of the credit line that is used. This flexibility makes it useful for ongoing expenses, but it’s important to have a solid repayment plan in place.
What’s the monthly payment on a $50,000 HELOC?
Your monthly payment on a $50,000 home equity line of credit will change according to the variable rates and terms of HELOC agreement. During the draw period, you might only 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 remember, once the repayment period kicks in, you’ll be paying both principal and interest, at a variable interest rate, so your monthly expense will increase and will change with time.
What could keep you from getting a home equity loan?
There are a few factors that might disqualify you from getting a home equity loan. These include a low credit score, a high debt-to-income (DTI) ratio, and not enough equity in your home. 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.
How does a HELOC affect my credit score?
Opening a HELOC can have an impact on your credit score because the lender will do a hard credit inquiry that may cause a temporary dip. But here’s the good news: By making timely payments and managing your HELOC responsibly, you can actually see your score improve.
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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