GEORGIA HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Georgia.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current home equity loan rates in
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Compare home equity loan rates in Georgia.
Key Points
• Home equity loans allow homeowners to borrow against the equity in their home for purposes such as renovations, education, or debt consolidation.
• Home equity loan rates are influenced by credit scores, loan-to-value ratios, lender policies, and geographical location.
• Fixed-rate home equity loans offer predictable monthly payments, while variable-rate loans may start lower but can fluctuate over time.
• Closing costs and fees for home equity loans can vary from 2% to 5% of the loan amount.
• Home equity loan interest may be tax-deductible if used for home acquisition or substantial improvements.
Introduction to Home Equity Loan Rates
Congratulations. If you’ve been thinking about how to get equity out of your home, then chances are good you’ve been making regular payments on your home loan and have built up some serious equity in your property. The next step? Understanding how home equity loans work and learning about current home equity loan rates in Georgia. Taking the time to learn what lenders are looking for and how to weigh your home equity loan options will be well worth it when you secure the right rate and loan package for your financial situation.
How Do Home Equity Loans Work
Let’s start at the beginning, with what is a home equity loan. A home equity loan is a loan that uses your home as collateral, which allows for lower interest rates than many other types of loans. The interest rate is usually fixed, so it’s a good option if you prefer predictable monthly payments. To qualify for a home equity loan, you’ll need to have at least 20% equity in your home.
Home equity loans can be used for all sorts of expenses, including home improvements, tuition, medical bills, or debt consolidation. If you’re considering a home equity loan vs. a HELOC (home equity line of credit), it’s important to understand what is a home equity line of as well. We’ll get to that below.
Where Do Home Equity Loan Interst Rates Originate From?
Home equity loan interest rates are not arbitrary; they are influenced by a variety of economic factors. Federal Reserve policy decisions regarding interest rates play a role in shaping the prime rate, which is the interest rate that banks charge their most creditworthy customers. But that prime rate is just a starting point. A lender will adjust loan rates and terms up or down based on the individual borrower’s financial profile.
How Interest Rates Impact Home Equity Loan Affordability
The interest rate you secure for your home equity loan can have a significant impact on how much the loan costs over the long term. The table below shows how the interest rate for a $50,000 home equity loan affects the monthly payment and total interest paid over a 10-year term:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.50% | $620 | $24,391 |
| 8.00% | $607 | $22,797 |
| 7.50% | $594 | $21,221 |
Home Equity Loan Rate Trends
The prime interest rate is a key indicator of what kind of rate a lender might offer you. So it helps to have a sense of what kind of prime rates borrowers have seen in recent years. Since 2018, the prime rate has dropped to a low of 3.25% in 2020 and climbed to a high of 8.50% in 2023, as shown in the chart below. Looking back over the last 50 years, as shown in the graphic below, will give you a sense of how much the rate has fluctuated over time.
Historical Prime Interest Rates
| 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
As noted above, the prime rate is only the beginning and lenders might adjust the rate they offer an individual borrower based on a number of other factors — some of which, happily, are within your control. Get to know them here:
Credit Score
Your credit score is a big deal. It’s not just a number; it’s a story of your financial reliability. The better your score, the more favorable your interest rates are likely to be. For Georgia home equity loan rates, as elsewhere in the U.S., most lenders are looking for a credit score of 680 or higher. And if you’re aiming for top-tier rates, you’ll want to set your sights on 700 or above.
Home Value
Lenders typically determine the value of your home by ordering an appraisal from an independent appraiser. The appraisal will establish how much equity you have in the home as well as the maximum loan amount the lender is willing to approve.
Loan-to-Value (LTV) Ratio
Once the appraiser reports on the value of your home, you and your lender can compute the loan-to-value (LTV) ratio. Most home equity loan lenders require your combined loan-to-value ratio (CLTV) to be no more than 85%. To determine your CLTV, you’ll add the balance owed on your first mortgage, if any, to the amount you want to borrow. Then you’ll divide by your home’s appraised value and multiply the answer by 100 to arrive at a percentage. As long as your result is under 85%, you can likely find a lender to work with, provided your other financial metrics are solid.
Home Value Stability
The stability of home values can significantly impact the amount of equity homeowners can potentially access and utilize. When home values are on an upward trend, lenders may be more inclined to approve larger loan amounts. Conversely, if home values decline, the lender’s risk exposure increases, potentially leading to more stringent lending criteria and reduced loan amounts.
Property Location
Living in a place that’s been flagged as high risk can sometimes nudge interest rates up, thanks to the added lending risk lenders take on by loaning money in those areas.
Lender Policies
Lenders’ policies can influence the interest rates offered on home equity loans, and each lender is slightly different. This is why it pays to shop around and compare interest rates, fees, and closing costs among multiple lenders.
How to Qualify for the Lowest Rates
To get the best home equity loan rates, you’ll need to have a great credit score, a low debt-to-income ratio, and a good amount of equity in your home — among other things. Here’s your to-do list:
◦ Build a Strong Credit Score
A stellar credit score can work wonders when you’re seeking a Georgia home equity loan. It’s wise to periodically check your credit report for inaccuracies (and correct any you find). Don’t max out all your credit cards. And pay your bills promptly.
◦ Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a key factor in determining your loan eligibility. It’s calculated by adding up your monthly debt obligations and dividing by your gross monthly income. Typically, the DTI requirement for a home equity loan ranges from 36% to 50%. This means that if your monthly debt payments eat up more than half of your monthly income, you may not qualify for a home equity loan.
◦ Obtain Adequate Property Insurance
If you’re in an area that’s prone to flooding or other natural disasters, it’s especially important to have property insurance in place before you apply for a home equity loan. It’s a smart move that not only safeguards your investment but also gives you peace of mind.
◦ Maintain Sufficient Home Equity
As noted above, you’ll need to keep at least 20% equity in your property to be eligible for a home equity loan. It’s a way to show that you’re in a solid financial position and are likely to be able to repay the money you borrow.
Fixed vs. Variable Interest Rates
Home equity loans typically come with fixed interest rates, which means you can count on having the same monthly payment for the life of the loan. While fixed rates offer stability, they can also come with higher initial rates than variable rates, which start out lower but can increase over time.
Tools & Calculators
As you’re thinking about how much you might want to borrow with a home equity loan (or a home equity line of credit), online tools and calculators can be useful. They’ll help you compare various loan scenarios and see how different loan amounts, terms, and interest rates affect monthly payments. Here are three helpful ones:
Run the numbers on your home equity loan.
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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.
Closing Costs and Fees
Lender policies differ, and that extends to closing costs and fees as well. Home equity loan closing costs typically range from 2% to 5% of the loan amount. A lender might charge for any or all of the following: appraisal, credit report, document preparation, loan origination, notary, title search, and insurance. Make sure you include fees when comparing different offers from lenders.
Tax Deductibility of Home Equity Loan Interest
The interest on your home equity loan is tax-deductible if you use it for home improvements. If you’re married and file jointly, you can deduct the interest on loans up to $750,000. For single filers, the limit is $375,000. To get this tax break, you’ll need to itemize your deductions. We recommend consulting a tax advisor to understand the specific rules and how you can maximize your benefits.
Alternatives to Home Equity Loans
In addition to a standard home equity loan, there are different types of home equity loans that also let you take advantage of the equity you have in your home. These include a home equity line of credit (HELOC), a home equity conversion mortgage (HECM), and a special type of mortgage refinance called a cash-out refinance. Here’s the lowdown on each:
Home Equity Line of Credit (HELOC)
A HELOC is akin to having a credit card that’s guaranteed by your home. A lender will approve you for a certain credit line. You can then draw on that line and — this is key — only pay interest on the amount you draw. As you compare HELOCs vs. home equity loans, one thing to keep in mind is that HELOC interest rates are typically variable, meaning they can change with the market, while home equity loan rates are fixed.
Home Equity Conversion Mortgage (HECM)
An HECM is a government-insured reverse mortgage, exclusively for those 62 and older, that offers a unique way to tap into your home equity. You can receive the funds as a lump sum, regular payments, or a line of credit. The best part? You don’t have to make any payments until you leave the home. This sets it apart from home equity loans and HELOCs, which require monthly payments. While HECMs do have higher closing costs and longer processing times, the benefits are worth considering. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
A cash-out refinance involves getting a brand-new mortgage. You’ll use it to pay off whatever you owe on your original mortgage but you’ll also be borrowing some extra cash to use as you please. When you’re considering a cash-out refinance vs. a home equity line of credit or a home equity loan, one important consideration is that getting a new mortgage means getting a new rate. If you have a low interest rate on your current mortgage, it may not make financial sense to get a new one. Run the numbers to doublecheck.
The Takeaway
For Georgia residents, the key to making the most of your home equity when borrowing against it is to understand home equity loan (or HELOC) rates and the factors that influence them. By comparing rates, exploring your home equity borrowing options, and keeping your finances in good order, you can make sure you’re getting the best deal and setting yourself up for a strong financial future.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payment be on a $50,000 home equity loan?
An 8.00% interest rate and a 10-year term would mean a monthly payment of $607 on a home equity loan of $50,000. If the interest rate was 7.00%, the monthly payment would change to $581.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 home equity line of credit (HELOC) can vary depending on the interest rate and how much you have drawn on the account. You can use a HELOC payment calculator to estimate your payments. Try adjusting the interest rate and the loan amount to see different scenarios and find the right plan for you.
What is the payment on a $25,000 home equity loan?
The monthly payment on a $25,000 home equity loan varies based on a number of factors, including the interest rate and the loan term. Assuming a 10-year term, an interest rate of 6.00% would mean a $278 monthly payment. For the most accurate estimate, it’s a good idea to use a loan calculator.
What would the payment be on a $30,000 home equity loan?
A $30,000 home equity loan with a rate of 7.50% and a 20-year term would cost you $242 each month. Changing the rate or loan term will alter the monthly payment amount.
What could disqualify you from getting a home equity loan?
A poor credit history, not enough equity in your home, a high debt-to-income ratio, and not having enough insurance on your property could all disqualify you from getting a home equity loan or a HELOC.
What are the benefits of a HELOC?
HELOCs have a number of benefits but the biggest one is that you only pay interest on the amount of the credit line that you actually use. They also have lower interest rates than most credit cards.
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More home equity 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