Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates in Albany are influenced by the prime rate and the personal finances of each borrower.
• Elevating your credit score and maintaining a healthy debt-to-income ratio can be your ticket to lower rates.
• Home equity loan rates can vary widely, so it’s wise to compare offers from multiple lenders.
• Use a home equity loan calculator to get a sense of what your monthly payments and total interest costs might be.
• Explore other options, like a home equity line of credit and a cash-out refinance, to ensure you find the one that best suits your needs.
Home equity loan rates are a key consideration when you’re thinking about how to get equity out of your home in Albany. We’ll help you understand what they are, how they can affect your finances, and how to find the best rate and loan type for your personal situation as a homeowner. First step? Make sure you understand what is a home equity loan and how it differs from other ways of borrowing against your home’s equity.
A home equity loan is a second mortgage (assuming you’re still paying off your first home loan). It uses your home as collateral and provides you with a lump sum of money. You’ll begin repaying the loan as soon as you receive it, with interest, and pay it back over a predetermined period — typically five to 30 years.
Because home equity loans usually have a fixed rate, your monthly payments will be consistent and predictable. Your home secures the loan, so the interest rates are often lower than those of unsecured personal loans. To qualify, you generally need at least 20% equity in your home.
Recommended: HELOC Monthly Payment Calculator
Home equity loan rates change over time and even from borrower to borrower. They are influenced by a variety of factors, including the economy and your own financial picture. One big factor is the prime rate, which is influenced by the Federal Reserve’s policies. But once a lender sets its own rate, with the prime rate providing direction, the lender can adjust its rate based on the specific borrower. Your credit score, debt-to-income ratio, loan amount, and loan term can all impact the interest rate you receive.
Now, let’s talk about how interest rates can tip the scales when it comes to home equity loan affordability. What might seem like a small interest rate variance can result in a hefty interest payment over time. Need proof? Take a look at the chart below, which shows you how different loan terms and rates affect monthly payments for varying loan amounts.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
Predicting interest rate movements with absolute certainty is no easy task, but history can be a helpful guide as to what is a “high” or “low” rate. The prime rate, which as we’ve noted is a key influencer of home equity loan rates, has its ups and downs.
Since 2018, the prime rate has seen its share of ups and downs, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. Take a look at the history of the prime rate to get a sense of how high or low it may go this year.
Source: TradingView.comSince 2018, the prime rate has seen its share of ups and downs, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. Take a look at the history of the prime rate to get a sense of how high or low it may go this year.
| Date | Prime 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 | 5.50% |
| 9/27/2018 | 5.25% |
To snag the most favorable home equity loan rates, there are a few things you can focus on before submitting your applications. By ticking these boxes, you’re not just qualifying for a loan—you’re setting yourself up for the best deal out there.
As noted above, you’ll want to maintain at least 20% equity in your home. Crunch the numbers by subtracting your outstanding mortgage balance from your home’s current value. (Find the latter on an online real estate site.) Let’s say your mortgage balance is $300,000 and your home’s value is $550,000. That leaves you with $250,000 in home equity. Divide your equity number by the home value to arrive at a percentage. You can also use a home equity loan calculator to assess your borrowing power.
Lenders usually look for a credit score of 680 or higher when considering home equity loans, and many prefer a score of 700 or above. A strong credit score demonstrates financial responsibility and can lead to more favorable rates. To improve your credit score, focus on making timely payments, keeping credit card balances low, and avoiding new debt. Regularly check your credit report for errors and dispute any inaccuracies.
Your debt-to-income (DTI) ratio is a critical piece of the home equity loan puzzle. To determine yours, divide your monthly debts (car loan, student loan, credit card debt, etc.) by your gross monthly income. Lenders typically look for a ratio under 50%, but the sweet spot is 36% or less. The lower your DTI, the better your chances of securing a more competitive rate. To enhance your DTI, consider paying down existing debts and exploring opportunities to boost your income.
Property insurance is often a must-have for home equity loans. Lenders want to be sure that your property, which is the collateral for the loan, is protected. Before you apply, make sure to check with your insurance provider to ensure that your coverage is up to date.
Using a home equity loan calculator is a smart way to get a handle on the financial side of things. You can estimate your monthly payments by plugging in your loan amount, interest rate, and term. Here are three calculators you’ll find useful during your loan search:
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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.
The closing costs for a home equity loan typically fall between 2% and 5% of the loan amount. An appraisal and credit report will be required and will be included in your costs. Other costs relate to document preparation, loan origination, a title search, and title insurance, for example. While no-closing-cost loans are an option, they generally come with higher rates.
Here’s a tip: The interest on home equity loans can be tax-deductible if you use the funds to buy, build, or improve your home. As of 2025, couples filing jointly can deduct interest on up to $750,000 of qualified home equity loans, and single filers can claim interest on up to $375,000 in loans. To benefit from this, you’ll need to itemize your deductions when filing your tax return. Discuss this with a tax advisor; tax-deductibility rules can change year-to-year.
Recommended: Different Types of Home Equity Loans
While home equity loans are a common choice in Albany, you may want to consider other options, such as a home equity line of credit (HELOC) or a cash-out refinance, which is a special type of mortgage refinance. Each of these options comes with its own set of benefits and risks.
A HELOC is a bit like a credit card, but one that is secured by the equity in your home. As you consider a HELOC vs. a home equity loan, here are some points of difference: HELOCs allow you to borrow money as you need it, vs. all at once, and you only pay interest on the amount you borrow.
There is a draw period, during which most lenders only require you to pay interest. A HELOC interest-only calculator can help you see what those payments might look like. Then there is a repayment period when you’ll repay the principal plus interest. HELOC interest rates are variable, so payment amounts can be unpredictable. To qualify, you’ll need a credit score of at least 680 (but 700 is better) and a debt-to-income ratio of no more than 50% (but 36% is ideal).
A cash-out refinance gives you a lump sum based on your home equity. You can use the money to pay off higher-interest debts or cover renovation costs, for example. Lenders typically allow you to borrow up to 80% of your equity, although some may go higher. Most require a minimum credit score of 620 and a maximum DTI ratio of 43%. You can choose between a fixed or adjustable interest rate. When thinking about a cash-out refinance vs. a home equity line of credit, remember that the former is a completely new mortgage — so you’ll want to look carefully at how mortgage interest rates now compare to the rate on your original loan.
Here’s a quick reference guide to the three options:
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| Borrowing Limit | Up to 85% of borrower’s equity | Up to 90% of borrower’s equity | 80% of borrower’s equity for most loans |
| Interest Rate | Fixed | Generally variable | May be fixed or variable |
| Type of Credit | Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments. | Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest, followed by a repayment period (10-20 years) to repay the principal plus interest. | Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms. |
| Repayment Term | Generally 5-30 years | A draw period of 5-10 years, followed by a repayment period of 10-20 years | Generally 15-30 years |
| Fees | Closing costs (typically 2-5% of the loan amount) | Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees) | Closing costs (typically 2-5% of the loan amount) |
As you’re thinking about a home equity loan, it’s important to build a strong credit score, manage your debt-to-income ratio, and obtain adequate property insurance. These factors can significantly impact the home equity loan rates you are offered and your overall eligibility. It’s a good idea to explore alternatives like a HELOC and a cash-out refinance and compare rates and terms to find the best financial solution for your needs.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
Home equity loans are a versatile financial tool you can use to cover large purchases, home improvements, and to consolidate high-interest debt. Their flexibility makes them an attractive option for significant expenses.
The beauty of a home equity line of credit (HELOC) is its flexibility. During the draw period, which can last 5, 10, or even 20 years, you may only need to pay interest on the amount you’ve borrowed, which isn’t necessarily going to be the full $100,000. If you did use the entire credit line of $100,000, your interest rate for repayment would likely be a variable one. But at an average of 8.00% and a repayment term of 20 years, you would pay $836 per month.
The payment on a $30,000 home equity loan is determined by the interest rate and loan term. For a 20-year fixed-rate loan at 8.00%, for example, the monthly payment would be approximately $251.
There are a few things that might prevent you from getting a home equity loan, such as not having enough equity in your home, having a low credit score, or having a high debt-to-income (DTI) ratio. Most lenders will want you to have at least 20% equity in your home, and a credit score of 680 or higher. A DTI ratio over 50% can also make it hard to get a loan. Additionally, not having enough property insurance or having a history of missed credit or loan payments can be a red flag for lenders.
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
