Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates in Appleton are influenced by the Federal Reserve’s monetary policy, plus the borrower’s creditworthiness.
• Compare offers from multiple lenders to find the best interest rates and terms.
• Work to boost your credit score and reduce your debt-to-income (DTI) ratio, and you may see the interest rates you’re offered drop.
• You will need to have built at least 20% equity in your home if you want to qualify for a home equity loan.
• Choose a loan with a fixed rate for predictable monthly payments, or an adjustable rate for more flexibility.
• Interest on home equity loans might be tax-deductible if you use the funds to pay home-related expenses.
What is a home equity loan? First of all, it’s a great way for Appleton, Wisconsin, homeowners to access the value they’ve built in their homes. But that’s not all. This type of loan is also an option many people use to relieve pressure when they’re in need of cash.
This article covers everything you ought to know about home equity loans. We’ll discuss factors that affect loan rates and give you tips for getting the best rates. We will also explain the different types of home equity loans, including home equity lines of credit (HELOCs) and cash-out refinances, so you’ll know what alternatives are available, and the pros and cons of each.
Whether you have a home renovation planned, are working to consolidate high-interest debt, or are preparing to make a major purchase, understanding home equity loan rates in Appleton can help you make smart financial decisions.
A home equity loan is a second mortgage. You receive a lump sum of cash and then repay it, usually in fixed monthly installments, over five to 30 years. The loan is secured by your home, and that fact means it can help you access lower interest rates than you would get with an unsecured personal loan.
One important thing you need to keep in mind: If you’re going to draw on the equity in your home, you have to actually have equity in your home. Yes, you may still be working to pay off your mortgage, but the amount of money you owe shouldn’t be greater than the house’s value. Typically, lenders want you to have at least 20% equity in your home to qualify.
Looking at a HELOC vs a home equity loan is where many folks begin their comparisons to find the right financing tool for their situations. Here’s how the two loan types compare. You can use either one if you’re trying to figure out how to get equity out of your home.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow plus interest; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need | Lump sum |
If you have been working at paying off your mortgage and are wondering how you can pull some equity from your home, a home equity loan may be the perfect option.
The interest rates offered to borrowers are the product of many influences, including the consumer’s own financial standing and the broad economic landscape.
Federal Reserve policy decisions — including federal funds rate changes — can send ripples through the lending market, causing changes that impact the prime rate. When the prime rate moves up or down, home equity loan rates usually move along with it. If you keep an eye on the prime rate, you can anticipate rate shifts and make confident decisions about when to move on a home equity loan.
On a personal level, your credit score and DTI ratio are also key drivers in the rates you’ll be eligible for as a potential borrower. We’ll get into that later.
The interest rate attached to your home equity loan can make a world of difference in how affordable it is. Even a seemingly small difference in the rate can lead to significant savings or greater costs.
To demonstrate how much an interest rate will impact the cost of your loan, the chart below shows monthly payment amounts and the total interest you’ll pay for a $75,000 home equity loan. We’ve calculated both the monthly payment and the total interest you’ll pay at several rates over a 20-year term.
If you have an 8.00% interest rate, your payment each month is approximately $627; the total interest over the loan’s term adds up to $75,559. If the interest rate is one percentage point lower, or 7.00%, your monthly payment would be about $581, and your total interest would add up to $64,554. That’s right: The lower rate could save you a lot. The difference in interest is more than $11,000.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
Home equity loans tend to have fixed interest rates. But lenders may offer adjustable rates, and different home equity financing, including home equity lines of credit (HELOCs) and cash-out refinances, also offer adjustable rates. It’s a good idea to consider which you might prefer.
A fixed rate never changes during the loan’s life, so you’ll have consistent monthly payments over the repayment term. That predictability is helpful for budgeting and financial planning.
Adjustable rates are different. They tend to start off slightly lower than fixed rates, but change after an initial period in accordance with the market’s movement. That sometimes leads to higher payments, and it can create uncertainty about what to expect over the term of the loan.
When you think about home equity loan rates, it’s smart to consider how fixed versus adjustable rates can affect you, taking into account your financial standing and comfort with risk.
You can try to time your loan application so that you’ll get the lowest possible rate, but honestly, predicting the prime rate is like forecasting the weather — it can be hit or miss. Sometimes the direction things will go is impossible to guess, and that dip you hope for a long wait away.
As you can see from the graphic and the chart below, the prime rate regularly undergoes spikes and drops.
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% |
If you need a loan, spend time comparing offers from different lenders. Also, work on positioning yourself to get the best possible rate. How? By controlling the things you can.
Take these steps before beginning the application process and you’ll be in a better spot to secure a home equity loan with rates and terms that are not only favorable and manageable, but beneficial to your financial situation.
Remember, you’ll need to have at least 20% equity in your home to qualify for a home equity loan. To figure out what your level of equity is, first subtract your outstanding mortgage balance from the estimated value of your home. Next, divide the resulting figure by your home’s estimated value. Your answer will be the percentage of equity you now possess. The higher it is, the better shape you’ll be in.
To land the best available home equity loan rate, having a robust credit score is essential. Appleton lenders are likely to require a score of 680 or higher, and may even want to see a score over 700.
A higher credit score can open doors to more favorable loan terms. To improve yours, submit timely payments and work to steadily reduce credit card balances. Avoid taking on new debt. These moves can help you qualify for a home equity loan with a favorable interest rate.
Your DTI ratio is important when it comes to qualifying for a home equity loan and getting a desirable rate. Lenders prefer to see a DTI ratio of 50% or less — but you need 36% or lower for the lowest rates. To manage your DTI, work to pay down your existing debt, increase your income, or both.
One must-have for a home equity loan is proper insurance coverage on your property. This safety-net protects both you and your lender should something unexpected damage your home or your land. Confirm that your coverages are active, and check annually to be sure they are adequate, especially if you are actively improving the place.
Want to borrow against your home? Run some numbers so you can understand what borrowing opportunities will be available to you, and what you can expect regarding future loan payments. A home equity loan calculator and other online tools can make that math easy for you. Here are the ones we rely on often.
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.
When it comes to home equity loan closing costs, you’ll pay about 2% to 5% of the loan amount. This table details the various closing costs borrowers are usually responsible for.
| Service | Typical Fees |
|---|---|
| Appraisal | $300-$500 |
| Credit report | $30-$50 or more |
| Document prep | $100-$500 (These costs may be billed hourly if an attorney is involved, or they may be built into the loan origination fee.) |
| Loan origination | 0.5%-1.0% of the loan amount |
| Notary | $20-$100 |
| Title insurance | 0.5%-1.0% of the loan amount |
| Title search | $75-$250 or more |
Some lenders offer no-closing-cost loans, but these tend to carry higher interest rates.
The interest you’ll pay on your home equity loan may be tax-deductible — if you put the funds toward improving your home. Single filers are permitted to deduct interest on the first $375,000 of loan debt. Married couples filing jointly can deduct interest on up to $750,000 in debt. Don’t forget, you’ll need to itemize — save your receipts and invoices to take advantage of this option. A tax advisor can help you figure out what will make the most sense for you.
A home equity loan isn’t the only way to truly leverage your property’s value? You can also consider a cash-out refinance and a home equity line of credit (HELOC). With a cash-out refinance, you take out a new mortgage for a larger sum than what you owe on your existing home loan. You receive the difference as a lump sum and can use it however you wish. A HELOC works a bit differently: You apply for a credit limit, secured by your home, that you can borrow against as you need to. You’ll only pay interest on the cash you draw out.
You’ll want to learn more about cash-out refinance vs. home equity line of credit similarities and differences, and understand the options so you can make the best choice.
This is a strategic mortgage refinance. You swap your original mortgage for one that’s larger than what you owe — then receive the difference in a lump sum. Rates on cash-out refis may be fixed or adjustable, and it’s usually easier to qualify for a cash-out refi than it is for a home equity loan or a HELOC. Lenders have different standards, but often cash-out refis require a 620 minimum credit score and a DTI ratio that is 43% or less.
What is a home equity line of credit? A HELOC is a lot like a credit card. It offers homeowners freedom to borrow up to a set limit and then pay interest only on what they use. Usually, you can pull out funds during an initial “draw” period, followed by a repayment period when you must repay both the principal and the interest
Rates on HELOCs are generally adjustable. Unlike a home equity loan, a HELOC is about flexibility. But keep in mind, adjustable interest rates mean your rate and payments can fluctuate, potentially impacting your costs later. Qualifying for a HELOC most often requires a credit score of 680 or higher (700-plus is better) and a DTI ratio below 50% (below 36% is best). With a HELOC, you may be able to borrow up to 90% of the equity you have in your home.
Want to know how much the monthly payments would be on your hypothetical HELOC? You can run figures through a HELOC monthly payment calculator. You can play around with different interest rates and terms to find out how they might affect your payments, and how much of a loan you can afford. And if you’d like to calculate how much interest you’d have to pay during the “draw” period of a HELOC, try out a HELOC interest-only calculator.
Recommended: HELOC Repayment Calculator
If you want to apply for a home equity loan in Appleton, building an understanding of interest rates will help you negotiate the best terms. Your credit score, DTI ratio, and equity level all play a role in the kind of rate you’ll get. Simply shopping around can actually go a long way as you try to get yourself the best rate available. And if a home equity loan isn’t a fit, a HELOC or a cash-out refinance will have its own unique benefits.
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.
A home equity loan is a versatile tool. Some of the popular reasons people use them to borrow are to finance major expenses, pay for home improvements, or consolidate high-interest debt. Remember to use the funds wisely and make sure the loan fits into your bigger financial picture.
Your monthly payment for a $50,000 home equity loan depends on the interest rate and the loan term. For example, if you got your loan at a 7.00% interest rate over 15 years, your monthly payment would be about $449. At a 9.00% rate over 15 years, the payment would be around $507. A loan calculator can help you figure out monthly payments with different variables.
A number of factors could stop you from securing a home equity loan. First of all, lenders typically require a minimum credit score of around 680 or more, and having a lower one could disqualify you. A high debt-to-income (DTI) ratio – usually above 50% – might nix your loan, too. If you have less than 20% equity in your home, that could be a red flag for lenders, and they will also look at how stable your home’s value is and how comprehensive a property insurance plan you carry. Qualifications vary by lender, but these are common disqualifiers.
Home equity loans often come with fixed interest rates. They have predictable monthly payments, which can make budgeting easier. They also usually have lower rates than unsecured personal loans, making them cost effective for significant one-time expenses, such as home improvements or high-interest debt consolidation. Be sure to balance these benefits with the potential risks, like the threat of foreclosure if you fall behind on payments.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*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.Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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