WICHITA HELOC RATES TODAY
Current HELOC rates in
Wichita.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Key Points
• HELOC rates in Wichita are influenced by the prime rate and individual borrower factors.
• HELOCs are like having a credit card with your home equity as the security.
• A HELOC can be a smart way to finance big expenses like home renovations, debt consolidation, or major purchases.
• The interest rate on a HELOC is adjustable, meaning it can go up or down over time.
• You can deduct the interest you pay on a HELOC if you use the funds to significantly improve your residence.
Introduction to HELOC Rates
This guide to what is a home equity line of credit and how to get the best rates will help homeowners in Wichita, Kansas, navigate borrowing smartly. You’ll learn all about HELOC rates, understand what influences them, and come away empowered to find the best options available. Whether you’re dreaming up a home renovation or need financial flexibility for personal expenses, this is your lesson in how to be a savvy borrower.
What Exactly is a HELOC?
A home equity line of credit (HELOC) is a flexible credit line that allows you to borrow against the equity you have built up in your home by making your regular home loan payments. To qualify, you typically need to have at least 15% equity in your home. You can borrow up to 90% of your equity. Once approved, you can borrow money as you need it. The HELOC has two phases:
The Draw Period
During the HELOC’s draw period (usually 10 years), you can access funds as needed. During this time, you’ll have to pay interest on what you borrow, but most lenders won’t require you to pay down the principal — although you can do so if you wish to draw on the credit line again. A HELOC interest-only calculator can help you see how much you might have to pay in 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.
Where Do HELOC Interest Rates Originate?
Lenders peg their HELOC rates to the prime rate, which is heavily influenced by the Federal Reserve’s monetary policies. Each lender then adds a margin to the prime rate. Lenders also take into account individual borrower factors like credit score, debt-to-income (DTI) ratio, income, and the amount of equity you have in the home. Because each lender evaluates your qualifications according to its specific formula, you might get different interest rate quotes from different lenders.
How Interest Rates Impact HELOC Affordability
It pays to take the time to seek out and evaluate quotes from multiple lenders because the interest rate on a HELOC can have a big impact on your monthly payment. 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.
Recommended: What Is a Home Equity Loan?
HELOC Interest Rate Trends
By now you’re probably wondering, what is a good interest rate anyway? This is where looking at the history of the prime rate can provide you with a helpful dose of perspective. Since 2018, the prime rate has fluctuated, from a low of 3.25% in 2020 to a high of 8.50% in 2023. By staying attuned to rate shifts, you may be able to seize the right moment to lock in a HELOC. But even if you need to apply when the prime rate is on the higher side, there are things you can do to present yourself as a good candidate to lenders. More on that below.
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
Variable vs. Fixed Interest Rates
As we’ve seen, HELOCs usually come with variable (also called adjustable) interest rates, which change based on market conditions. Your rate will go up or down with the prime rate, within limits that will be established in the agreement you sign with a lender. There is usually a rate cap as well. So your monthly payments will change over the life of your HELOC.
Helpful Tools & Calculators
Before you take the plunge with a HELOC, consider using online tools to get a sense of what your monthly payments and interest costs might look like. You could try putting the maximum rate you might see into a HELOC payment calculator to see how those monthly payments would affect your budget. Here are three useful calculators for your borrowing journey:
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 secure a competitive HELOC rate, you’ll want to focus on a few key areas. As noted above, you’ll need at least 15% equity in your home. From there, focus on your credit profile and your DTI ratio.
Improve Your Credit Score
You can get a HELOC with a credit score of 640 or more. But a credit score at 700 or above is the key to unlocking the best HELOC rates. The good news is, you have the power to boost your credit score. Paying your debts on time and chipping away at credit card balances can make a world of difference. And here’s a pro tip: Regularly checking your credit report for any errors and getting them fixed can help you maintain a strong score.
Calculate Your Debt-to-Income (DTI) Ratio
Your debt-to-income (DTI) ratio is a simple calculation: Divide your total monthly debt payments by your gross monthly income. When it comes to HELOC applications, lenders typically prefer to see a DTI under 50% — and the lower, the better. Get below 36% if you can. A lower DTI ratio can boost your chances of qualifying for a HELOC and might help you secure a more attractive rate. Reduce your DTI ratio by paying down debt, earning more, or both.
Recommended: HELOCs vs. Home Equity Loans
Application Process for a HELOC in Wichita
Prequalifying online can make the application process for a HELOC in Wichita easy. This preliminary step allows you to view potential HELOC rates and become informed about the terms and conditions before moving forward with a complete application. Prequalification is generally a matter of providing some basic financial details, like your income and credit score, and can give you a good sense of your potential borrowing power. From there, you’ll move to a full application. Follow these steps.
Step 1. Run the Numbers
Before you dive into a HELOC, it’s wise to take a good look at your financial landscape. Start by checking your credit scores from all three major credit bureaus and calculating your debt-to-income (DTI) ratio. Then, consider your home equity, which grows as you make regular mortgage payments and as your home’s value increases over time. Subtract your outstanding mortgage balance from your home’s estimated value. Then divide the answer by your home value to arrive at a percentage. As noted above, you’ll need at least 15% equity to move forward.
Step 2. Compare Lenders
Consider the available HELOC interest rates in Wichita. Carefully compare qualification requirements, credit minimums and maximums, any associated fees, and the length of both the draw and repayment periods. Keep an eye out for lenders that offer competitive rates and flexible terms. Reading customer reviews and thoroughly checking lender reputations can also help you make a more informed decision.
Step 3: Submit Your Application
You’ll need a valid ID, recent pay stubs and W-2 forms, plus your latest tax return. If you are self-employed, you might need additional years of tax returns. You’ll also need to have your homeowners insurance information handy. You can apply for your HELOC online, by phone, or in person. Doublecheck the information you provide for a smoother screening process.
Step 4: Get an Appraisal
After you submit an application and solidify your choice of lender, you’ll likely need an appraisal. Work with the lender to ensure you get the appraisal and documentation the lender requires. The typical cost of having an expert assess the value of your home is usually between $300 and $610. If your home is appraised for more than what you owe, you’ll have cleared a bar necessary for a HELOC.
Step 5: Prepare for Closing
Before you can tap into your HELOC funds, you’ll need to sign the HELOC agreement and pay any associated fees. Most lenders will make the funds available within about three days of the HELOC closing.
Closing Costs and Fees
HELOC closing costs are generally more affordable than the traditional expenses you’d encounter when buying or refinancing a home. In addition to the appraisal fee, you might see a title search fee, an application fee, an origination fee, and administrative charges. Some lenders may implement an annual maintenance fee (up to $250) and transaction fees for withdrawals. It’s important to weigh these costs when you are considering different offers.
Tax Benefits and Considerations
Here’s a little-known fact: Homeowners may be able to deduct HELOC interest on their federal taxes if the borrowed funds are used for making significant improvements to their primary residence. How this deduction works can change periodically, so keep in touch with a tax advisor. You may need one anyway, as you’ll need to itemize your return to capture this federal deduction.
Alternatives to HELOCs
A HELOC isn’t the only way to get equity out of your home. There are different types of home equity loans or even a personal loan to consider. Here are the details:
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 see how much you might be able to borrow.
Cash-Out Refinance
A cash-out mortgage refinance lets you refinance your mortgage for more than you owe and pocket the difference. It’s a solid solution when you need a lump sum, provided the current interest rates are as good or better than the rate you have with your current 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 you’re mulling over a HELOC, it’s crucial to consider the perks and the potential pitfalls. On one hand, you’ve got the flexibility of borrowing money as you need it. On the other hand, you are putting your home at risk if you can’t make the payments dictated by a variable interest rate. Before you decide on a HELOC, make sure you look at rates and terms from multiple lenders. Securing a good interest rate is a critical step in the HELOC process.
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