Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Bend’s home equity loan rates are influenced by your credit score and debt-to-income (DTI) ratio, among other factors.
• Even a small difference in interest rates can translate to substantial savings or costs over the long term.
• To compare loans easily, it can be helpful to use an online loan payment calculator.
• The interest on your home equity loan might be tax-deductible if you’re using it to build, buy, or improve a property.
• Home equity loans usually come with fixed interest rates, so your monthly payments will stay the same over the life of the loan.
A home equity loan can be a powerful financial tool for a homeowner, enabling them to borrow against the equity in their homes instead of taking out a higher-interest personal loan.
In this article, we’ll explore Bend home equity loan rates and examine the factors that can influence them. We’ll look at different types of home equity loans, like home equity lines of credit (HELOCs) and cash-out refinances. We’ll also discuss the advantages and potential pitfalls of these loans and offer guidance on how to qualify for the most favorable rates.
Whether you’re gearing up for a home improvement project, trying to consolidate debt, or looking to fund a major purchase, this guide will equip you to navigate the world of home equity loans confidently.
What is a home equity loan? It’s a type of second mortgage that uses your home equity as collateral for a lump sum of cash. You repay it in monthly installments, usually at a fixed rate, over a period of five to 30 years.
Because a home equity loan is secured by your home’s equity, these loans typically offer lower rates than unsecured personal loans. The loan usually has fixed rates, providing you with a predictable payment amount and schedule.
To qualify for a loan, you’ll need at least 20% equity in your home, which is the difference between your home’s market value and your current mortgage balance. Many lenders allow loans for up to 85% of your equity. If you’ve been wondering how to get equity out of your home, a home equity loan is worth consideration.
Home equity loan interest rates are influenced by a variety of factors, some of which relate to the economy and some to your personal financial situation. For example, the Federal Reserve’s policies play a big role in the lending market, since many lenders base their rates on the prime rate. When the prime rate rises, you can expect home equity loan rates to follow suit.
Your credit score and debt-to-income (DTI) ratio are also key players in determining the rates you’ll be offered. As a general rule, higher loan amounts and longer repayment terms will likely result in higher rates, too, due to the increased risk for the lender. Understanding these factors can help you anticipate changes and make more informed decisions.
The interest rate on your home equity loan can make a world of difference in how affordable the loan will be for you over time. Even a seemingly small increase in the rate can add up to significant extra interest you’ll need to pay.
For instance, perhaps you get a $100,000 home equity loan with a 15-year repayment term. At an 8.50% interest rate, your monthly payment would be about $986, and the total interest you’d pay over the life of the loan would be $77,253. But with a 9.50% interest rate, your monthly payment would be around $1,044, and the interest would be about $87,960. The higher rate would mean that you’d pay approximately $10,700 more.
This chart shows more examples of how changes in your loan amount, interest rate, and term interact to result in different monthly payments.
| 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 |
Fixed rates are a hallmark of home equity loans, but some lenders do offer adjustable rates, and they’re common with home equity lines of credit (HELOCs) and cash-out refinances. So it’s a good idea to think about which kind of interest rate might work better for you.
The advantage of a fixed rate is that it never changes, meaning that you’ll be charged the same amount for all your monthly payments. This predictability can be helpful as you budget and plan ahead – you always know what to expect.
On the other hand, adjustable rates often begin at a lower rate than fixed rates, but after that initial period, they adjust to reflect the market. That could mean that your payments will go up or down, so you’ll need to be comfortable with that kind of potential change. Consider what suits your budget flexibility and how much risk you’re comfortable with as you make your decision.
Predicting the future moves of interest rates is a tricky business at best — there are many variables at play. Looking at just one, the prime rate, we can see it’s been on quite a rollercoaster over the years. In 2020, it was a mere 3.25%, but by 2023, it had risen to 8.50%.
| 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% |
These ups and downs have a direct impact on home equity loan rates in Bend and beyond. Staying in the know about economic shifts and what the prime rate is may help you time your application to catch a more favorable rate.
If you want to be offered the most attractive home equity loan rates in Bend, or anywhere, you’ll need to present good evidence of your financial responsibility. Lenders will want to inspect your credit score (which should be high), your debt-to-income (DTI) ratio (which should be low), and the amount of equity you have in your home, which must be at least 20%. The good news is that there are ways to work on improving some of the metrics lenders most commonly look at.
Even if you’re still considering a HELOC vs. a home equity loan or a cash-out refinance, you can follow these strategies to secure the most competitive interest rates and loan terms.
To snag those favorable rates, you need to keep at least 20% equity in your home. You can calculate your equity by subtracting your mortgage balance from your home’s current value. For example, if your mortgage balance is $400,000 and your home is now valued at $750,000, you’re sitting on $350,000 in equity. Since lenders may be willing to lend you up to 85% of your home equity, you may be able to access as much as $297,500. (To explore what size loan you might be eligible for with a different amount of equity, try a home equity loan calculator.)
If you’re contemplating a home equity loan down the line, regularly checking in on your home’s worth is a good idea, as many properties appreciate in value. To help boost your equity, stay on top of mortgage payments and, if you can, make extra ones. Home improvements that add value may also help.
Lenders typically favor credit scores of at least 680 or higher for home equity loan applicants, with many preferring 700 or more. A robust credit score is a testament to your financial prudence, which is why it can lead lenders to offer more attractive home equity loan rates.
To elevate your credit score, concentrate on making your payments punctually, keeping credit card balances in check, and avoiding new debt. Regularly monitoring your credit report for inaccuracies and addressing them promptly can also contribute to a healthier score.
Your debt-to-income (DTI) ratio, which compares your monthly debt payments to your monthly income, is a key factor in determining your loan eligibility. Lenders typically look for a DTI ratio below 50% for a home equity loan, and ideally below 36%. A lower DTI ratio shows that you have a better ability to manage your monthly payments, which may influence lenders to offer you more competitive home equity loan rates.
If your DTI ratio could use some work, consider paying down some of your existing debts, increasing your income, or both. This can shift your ratio and make you a more attractive borrower.
Property insurance is a must-have for home equity loans, particularly In a place like Bend, Oregon, where the elements and wildfires are real concerns. This insurance protects both the lender’s investment and your financial security. Lenders will want to see proof of insurance before they greenlight your loan, and it’s vital to keep that coverage throughout the loan term to steer clear of possible problems.
Utilizing online tools and calculators empowers you to make well-informed decisions about home equity loans. By making use of these resources, you can effectively budget and select the loan that best aligns with your needs.
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.
For home equity loans, closing costs typically range between 2% and 5% of the loan amount. These can include many different fees. Here are some of the most common.
• Appraisal fee: $300-$500
• Credit report fee: $30-$50 or more
• Document preparation: $100-$500 (may also be billed on an hourly basis if an attorney is involved or be built into the loan origination fee)
• Loan origination fee: 0.5%-1.0% of the loan amount
• Notary fee: $20-$100
• Title insurance fee: 0.5%-1.0% of the loan amount
• Title search fee: $75-$250 or more
While no-closing-cost options are sometimes available, they generally come with higher interest rates. Be sure to compare lenders to find the most favorable terms, as fees can differ.
The interest on your home equity loan might just be tax deductible if you’re using it to buy, build, or improve your home. For single filers, interest is deductible on the first $375,000 of loan debt. Spouses filing together can deduct the interest on up to $750,000 of debt. Don’t forget: To use this deduction, you’ll need to itemize. Talk to your tax advisor to get the most up-to-date information and advice.
There are other ways to tap your home equity, including home equity lines of credit (HELOCs) and cash-out refinances (a type of mortgage refinance). These options have different features, and one of them could be a good match, depending on your financial needs and goals.
What is a home equity line of credit? A HELOC works a lot like a credit card, but it’s secured by your home equity. In the initial “draw” period, you can borrow money up to a set limit, with interest charges only on what you use. Then there’s a repayment period of several years, during which you pay back the principal and any remaining interest. Most HELOCs come with variable interest rates, which can mean unpredictable payment amounts. Lenders may let you borrow up to 90% of your equity in a HELOC.
For a HELOC, lenders would generally like you to have a credit score of 680 or higher (700+ is even better) and a debt-to-income ratio below 50% (though less than 36% is optimal). If you’re willing and able to cope with the potential uncertainties of variable rates, a HELOC could be a good choice.
To find out how much HELOC monthly payments would be, try a HELOC monthly payment calculator. And to ascertain how much interest you’d pay during the “draw” period, try a HELOC interest-only calculator.
This is a way to replace your existing mortgage with a new and larger home loan and receive a lump sum of cash by drawing on your home’s equity. Lenders will generally allow you to borrow up to 80% of your home’s equity.
If you’re comparing the advantages of a cash-out refinance vs. a home equity line of credit, note that requirements for borrowing can be different. It’s generally easier to qualify for a cash-out refi: You’ll typically need a credit score of 620 or higher and a debt-to-income ratio of 43% or lower. You can get a fixed or a variable interest rate, with variable rates potentially allowing access to more equity.
If you’re considering a home equity loan in Bend, Oregon, there are a few things you should know. First, having a good credit score and a healthy debt-to-income ratio can help you secure the best rates – which is important for the affordability of the loan. Use online calculators to get an estimate of your monthly payments and total interest for different loans. Shopping around and comparing offers from different lenders with the information you now have can help you find the best financial option for you.
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 can be used for many different reasons, including home renovations, large purchases, and debt consolidation. They’re flexible, but it’s important to be sure you can afford the payments, since your home secures the loan.
Payments vary, depending on the interest rate and loan term. At a 7.00% interest rate over 15 years, you’re looking at approximately $225 per month. With an 8.00% interest rate over 20 years, it’s about $209. To see what the payment would be with different mortgage conditions, try a mortgage payment calculator.
What you’d pay monthly on a $30,000 home equity loan varies, depending on your specific loan term and interest rate. At 7.00% over 15 years, you’re looking at around $270 per month. With an 8.00% rate over 20 years, it’s about $251. You can use an online mortgage payment calculator to find out what the payment would be with different variables.
A lender might deny you a home equity loan for many different reasons, including insufficient home equity, a low credit score, a high debt-to-income ratio, or inadequate property insurance. It can be a good idea to look at these areas and work on any weaknesses before you apply to boost your eligibility and, with luck, improve your chances of being offered a good interest rate.
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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 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.
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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