WASHINGTON HELOC RATES TODAY
Current HELOC rates in
Washington.
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 Washington.
Key Points
• Compare multiple lenders to find the best HELOC rates in Washington, since rates do vary between lenders.
• Washington State’s strong home values may qualify homeowners for larger HELOC amounts.
• HELOCs can be used for home improvements, debt consolidation, and other major expenses.
• To secure the best HELOC rates in Washington, borrowers should have a good credit score (700+), at least 15% home equity, and a low debt-to-income ratio (below 36%).
• The HELOC application process involves reviewing the borrower’s credit history and getting a professional appraisal.
Introduction to HELOC Rates
If you’re considering how to get equity out of your home in Washington State and researching the best HELOC interest rates, you’ve come to the right place. Our goal is to help homeowners understand all the factors influencing interest rates and how to secure the best deal on a home equity line of credit. You’ll learn about the application process, how to use online tools to predict your monthly payments and total interest paid, and alternatives like home equity loans and cash-out refis.
But first, let us explain what is a home equity line of credit so you can make sure this is the right financing option for you.
What Is a HELOC?
A home equity line of credit, or HELOC, is a revolving credit line (similar to a credit card) based on your home equity. Interest rates are typically lower than for unsecured personal loans because your home serves as collateral. However, HELOC interest rates are usually variable, meaning they can rise or fall with the market.
One advantage of a HELOC is that you withdraw from it only what you need at a given time — and you pay interest only on what you withdraw. Homeowners can borrow up to 90% of their equity, which is determined by an appraisal.
A HELOC has two phases: the draw period and the repayment period.
The Draw Period
During the draw period of a home equity line of credit, typically lasting 10 years, you can access funds up to your credit limit, make payments to reduce your balance, and borrow again. Interest-only payments are usually required during this period, but principal payments may be optional. Using a HELOC interest-only calculator can help you predict your minimum monthly payment during the draw period.
The Repayment Period
The repayment period of a HELOC usually lasts 10 to 20 years, during which borrowing ends and the principal is repaid with interest. However, the variable interest rate fluctuates, making repayment somewhat unpredictable. You can use a HELOC repayment calculator to estimate your payments and plan accordingly.
Recommended: HELOC vs Home Equity Loan
Where Do HELOC Interest Rates Come From?
HELOC interest rates are linked to “the prime rate,” which in turn is influenced by Federal Reserve policy decisions. Having a loose understanding of how interest rates are set can help borrowers anticipate rate fluctuations and make well-informed decisions about the optimal time for a HELOC.
How Interest Rates Impact HELOC Affordability
Interest rates can significantly affect the affordability of a HELOC. When it’s time to repay a $60,000 HELOC, having an interest rate of 7.00% would mean a payment of $465. With an 8.00% rate, your payment jumps to $502. Even more important, over the entire term, the customer with the 8.00% rate would pay almost $9,000 more in interest. The more you borrow and the higher the interest rate, the larger these numbers get. This is why it pays to research the best HELOC rates in Washington.
HELOC Interest Rate Trends
Fluctuations in the prime interest rate can give you a sense of where HELOC rates are headed. So it’s helpful to have a sense of the average prime rate’s recent trends. Since 2018, the prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. The chart and graphic below will show you how much the prime rate typically swings.
Historical Prime Interest Rate
| 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
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
Broad economic trends can affect HELOC interest rates, but so can you, the borrower. Your home equity, credit score, income, and loan-to-value (CLTV) ratio significantly influence the HELOC rate you’re offered. By understanding how you factor into the equation, you can position yourself to secure the most competitive rates for your home equity line of credit — and potentially save a lot of money.
Home Equity
Having substantial equity in your home is important with HELOCs and all different types of home equity loans. Homeowners generally need a minimum of 15% equity in their property to qualify for a HELOC. The more equity you have, the better interest rate you may be offered.
Credit Score
Maintaining a credit score of 680 or higher is important when seeking to qualify for a HELOC. And lenders reserve better interest rates for credit scores exceeding 700. As with home equity, the higher the better: A higher credit score serves as a reliable indicator of reduced risk to the lender.
Stable Income
Lenders assess your overall income to determine your ability to honor your HELOC obligations. A steady income stream is indicative of a diminished risk of default. Documenting your income, via pay stubs and W-2s, is an important part of the application process.
Loan-to-Value Ratio
Most lenders require your combined loan-to-value ratio (mortgage balance + desired HELOC amount / appraised home value) to be 90% or less, although some will allow you to borrow 100% of your home’s value. The ratio is a key metric in determining your credit limit. If your home value is $700,000, your mortgage balance is $450,000, and your HELOC balance is $150,000, then your LTV ratio is 86%.
Variable vs Fixed Interest Rates
HELOCs are characterized by variable interest rates, which fluctuate over the course of the repayment term. Initially, variable interest rates are lower compared to typical fixed rates, but they can adjust up or down with prevailing market conditions. For some homeowners, the uncertainty of variable interest rates makes them lean toward a home equity loan, which typically has a fixed interest rate.
Tools & Calculators
SoFi provides a comprehensive suite of financial tools. These can assist you in estimating your payments and gaining a thorough understanding of the financial implications associated with your home equity line of credit. Below you’ll find a home equity loan calculator as well as two HELOC calculators mentioned above.
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 qualify for a competitive home equity line of credit rate in Washington, focus on improving your credit score, maintaining a steady income, and ensuring that your loan-to-value ratio remains low. These factors significantly influence the interest rates offered for your home equity line of credit. Let’s take a closer look:
Improve Your Credit Score
Maintaining timely payments and making an effort to reduce credit card balances can substantially build your credit score. Another thing you can do is check your credit report for errors. They do happen and fixing them can help your score recover. A higher credit score makes you a more desirable candidate for obtaining a HELOC.
Assess Your Home Equity
Regular mortgage payments help in building home equity over time. Home equity can be enhanced through renovations that boost the property’s value. You need at least 15% equity in your home for a HELOC. Take a few minutes to look up your home’s estimated value on a real estate web site. Subtract from that amount whatever you owe on your mortgage. Then divide the result by the estimated value. That’s your home equity percentage.
Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you owe in monthly debt payments (car loan, student loans, etc) divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 36%, but the lower your DTI, the better.
Application Process for a HELOC in Washington
The application process for a HELOC in Washington State entails a series of well-defined steps. By gaining a thorough understanding of this process, you can navigate the application for your HELOC with ease and efficiency.
Step 1. Run the Numbers
Check your credit scores (above 700?), calculate your DTI (below 36%?), and get a good estimate of your home equity (above 15%?) before you apply for a HELOC. Some lenders allow borrowers to prequalify for a HELOC online, streamlining the application process.
Step 2. Compare Lenders
When you shop around, of course pay close attention to interest rates, but also compare their qualification requirements, draw minimums and maximums, fees, the length of the draw and repayment periods they’re offering, and other factors. It’s OK to prequalify with multiple lenders to nail down your top offers.
Step 3: Gather Your Documents
When applying for a HELOC, ensure that all the necessary documents are readily available. These typically include proof of income (pay stubs and W-2s), bank statements, employment history, and detailed property information, including proof of homeowners insurance. Having these organized and easily accessible will ensure a smooth and efficient application process for your HELOC application.
Step 4: Submit Your Application
Submitting your HELOC application takes place online, by phone, or in person. Be sure to attach all requested documents at this stage.
Step 5: Get an Appraisal
A home appraisal is an indispensable step in the HELOC process. If your home appraises for an amount that is higher than your mortgage balance, the lender may approve you for a HELOC loan.
Step 6: Prepare for Closing
Before accessing your HELOC funds, you must sign documents and pay necessary fees. Some lenders are quite prompt in making the funds available, with some even disbursing them within three days of the closing.
Tax Benefits and Considerations
Homeowners can deduct HELOC interest if the borrowed funds are used for buying, building, or significantly improving their primary residence. Interest deductions are limited to the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consult a tax advisor to navigate the specific tax implications and confirm eligibility for deductions related to a HELOC.
Closing Costs and Fees
HELOC closing costs are generally lower than home-buying or cash-out refinance costs. The appraisal fee is usually the highest expense, ranging from $150 to $500. Other costs may include application, origination, and administrative fees. Some lenders charge a maintenance fee, transaction fee, inactivity fee, or early termination fee. Many lenders offer to reduce or waive closing costs but may charge a higher interest rate.
Alternatives to HELOCs
Other financing options besides HELOCs include home equity loans, cash-out refinancing, and personal loans. Consider the pros and cons of each option to determine the best fit for your financial needs.
Home Equity Loan
Unlike HELOCs, home equity loans provide a lump sum amount and are paid back at a fixed interest rate, so your monthly payment never changes. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan.
Cash-Out Refinance
A type of mortgage refinance, a cash-out refi lets homeowners pay off their existing mortgage plus take a lump sum of cash. This option may have higher interest rates than traditional refinancing.
If you’re considering a cash-out refinance vs. a home equity line of credit, you should know that the refinance means you’ll end up with only one monthly payment, as opposed to two if you take on a HELOC while paying off your mortgage. A cash-out refi also means a new interest rate and loan terms. If rates have risen since you initially financed your home, this may not be a good move.
Personal Loan
A personal loan is a flexible, typically unsecured loan that you pay back in regular payments over a term of 2 to 7 years. They can be used for almost anything and do not require collateral. They are a viable alternative to a home loan for those who prefer not to use their home as collateral. However, personal loan interest rates can be significantly higher than HELOCs.
Credit Cards
Because credit cards come with high interest rates, they’re better reserved for smaller purchases that can be paid off before the end of the billing cycle. HELOCs offer significantly lower interest rates than credit cards, making them suitable for larger expenses like home renovations or debt consolidation.
The Takeaway
When searching for the best HELOC rates in Washington State, it’s important to compare multiple lenders and consider factors like repayment terms, fees, and borrowing limits. HELOCs can be a valuable financial tool for homeowners looking to leverage their home equity for various purposes, from home improvements to debt consolidation. However, it’s important to understand the potential drawbacks of variable interest rates, and the consequences if you default.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
FAQ
What is the monthly payment on a $50,000 HELOC?
The monthly payment on a $50,000 HELOC varies based on the interest rate and repayment terms. Assuming you draw the full amount and make interest-only payments during the draw period, your monthly payment over 10 years could range from $581 (at 7.00% interest) to $661 (at 10.00%). A repayment term of 20 years will mean lower monthly payments but significantly more interest paid over the life of the loan.
Is a HELOC a good idea right now?
Whether a HELOC is a good idea right now depends on your financial situation and goals. HELOCs can be beneficial for homeowners looking to fund home improvements, consolidate debt, or cover other large expenses. However, it’s important to consider the current interest rates and your ability to repay the loan.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC is based on how much of the credit line you have used, and on your repayment term and interest rate. If you use the entire $100,000 and pay it back at 8.50% interest over 20 years, your monthly payment would be $868. If you had a 7.00% interest rate, you would pay less: $806.
What are the benefits of a HELOC?
The benefits of a HELOC include financial flexibility, lower interest rates compared to credit cards, and potential tax advantages. HELOCs allow you to borrow and repay as needed during the draw period, making them ideal for ongoing projects or unexpected expenses. Additionally, a HELOC can be used for various purposes, from home improvements to debt consolidation.
Do you need an appraisal for a HELOC?
An appraisal is typically required for a HELOC. The appraisal determines the value of your home, which directly influences the maximum amount you can borrow.
What disqualifies you from getting a home equity loan?
Several factors can disqualify you from getting a home equity loan, including poor credit history, high debt-to-income ratio (above 50%), and insufficient home equity (under 15%).
How difficult is it to get a HELOC?
The difficulty of getting a HELOC depends on your financial situation and the lender’s requirements. HELOCs typically require good credit, sufficient home equity, and a stable income. The application process involves submitting documentation, undergoing a home appraisal, and waiting for approval. A HELOC can be a valuable financial tool, but you’ll need to meet the qualification criteria to secure one.
Does HELOC affect credit score?
Yes, a HELOC can affect your credit score. Applying for a HELOC will result in a hard inquiry on your credit report, which can temporarily lower your score. Additionally, using a large portion of your available credit can increase your credit utilization ratio, potentially impacting your score. However, making timely payments on your home equity line of credit can help improve your credit score over time.
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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