HAWAII HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Hawaii.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current home equity loan rates in
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Key Points
• Home equity loan rates in Hawaii vary based on factors like lender policies, borrower’s credit score, and loan-to-value ratio.
• Home equity loans allow homeowners to borrow against their home’s equity for various expenses like renovations, education, or debt consolidation.
• Home equity loan interest rates are influenced by the prime rate and economic conditions.
• To qualify for the lowest rates, borrowers should prioritize building a strong credit score, managing debt-to-income ratio, obtaining adequate property insurance, and maintaining sufficient home equity.
• Alternatives to home equity loans include HELOCs, HECMs, and cash-out refinances, each with unique features and eligibility criteria.
Introduction to Home Equity Loan Rates
Our guide to Hawaii home equity loan rates will help you understand how these interest rates work and how to find the best rates and terms for your needs. We’ll cover what home equity loan rates are based on, what a home equity loan is, and some alternatives to be aware of. Armed with this information, you’ll be better prepared to make the right financial decisions for you and your home.
How Do Home Equity Loans Work?
A home equity loan is an installment loan that uses your home as collateral, so it usually has a lower interest rate than an unsecured personal loan. If you are currently paying off your primary home loan, the home equity loan would be a second mortgage. The interest rate is typically fixed, which means your payment will be the same every month. Repayment terms range from 5 to 30 years.
To qualify for a home equity loan, you’ll need to have at least 20% equity in your home. By entering your estimated home value and existing mortgage balance into a home equity loan calculator, you can see how large a loan you might qualify for.
Home equity loans can be used for a variety of expenses, such as home improvements, education costs, medical bills, or debt consolidation.
Source of Home Equity Loan Interest Rates
In Hawaii, home equity loan interest rates are a product of several factors, with the prime rate taking center stage. The prime rate is what banks charge their most creditworthy clients. Federal Reserve policy decisions on interest rates can also move home equity loan rates.
You just need a loose understanding of these influences to better anticipate rate changes and make informed decisions about when and how to get equity out of your home in Hawaii.
How Interest Rates Impact Home Equity Loan Affordability
Your interest rate will largely determine how affordable your loan will be over time. For example, a 1% difference in interest rates on a 20-year loan can mean a higher monthly payment and an additional $28,000+ in interest paid over the life of the loan. Check out this example, assuming a homeowner borrows $200,000 with a 20-year term:
• At 6.00% interest, monthly payments would be $1,433 and the total interest paid would be $143,887.
• At 7.00% interest monthly payments would be $1,551 and the total interest paid would be $172,143.
• At 8.00% interest monthly payments would be $1,673 and the total interest paid would be $201,491.
Understanding how interest rates can impact your loan can help you shop around for the best available deal.
Home Equity Loan Rate Trends
As we mentioned, the prime interest rate is a key indicator of home equity loan rates. By following the fluctuations of the prime rate, you can see how the market is moving and make decisions about your home equity loan.
Historical Prime Interest Rates
Since 2018, the prime rate has seen its ups and downs, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023. Below the table, you’ll see a chart that gives an even broader overview of the prime rate over the last 50 years.
| 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
Many elements come into play when determining the interest rate for different types of home equity loans in Hawaii. Lenders consider the housing market and economic climate when adjusting rates, but also the borrower’s financial profile and the property details.
Credit Score
Your credit score is a big deal. It’s like a financial report card that lenders use to gauge your trustworthiness. If you’ve been diligent with your payments, you’re in luck — that could mean better interest rates for you. In Hawaii, a credit score of 680 is a good starting point for a home equity loan, but aiming for 700 or higher could open the door to even more favorable terms.
Home Value
Lenders typically determine the value of a home through an independent appraisal. This helps them understand how much the home is worth so they can determine how much they can loan you. The appraisal is a critical step in the home buying process, and whether you’re getting a mortgage, home equity loan, or home equity line of credit (HELOC), your lender will require one.
Loan-to-Value (LTV) Ratio
The LTV ratio is a key factor in determining the maximum amount lenders will allow for home equity loans. This ratio is calculated by adding the mortgage balance to the hoped for loan amount, then dividing the total by the home’s appraised value. Most lenders cap home equity loans at 85% LTV. Here’s an example of how that looks for a home that appraised for $1,000,000. Let’s say the owner owes $600,000 on the existing mortgage and wants to borrow $200,000 with a home equity loan:
• $600,000 mortgage balance + 250,000 home equity loan = $850,000
• $850,000 / $1,000,000 = 85%
With an LTV of 85%, this owner is in a good position to obtain the desired $250,000 loan. By looking at the LTV, lenders can get a better understanding of your financial situation and whether you can afford to take on more debt.
Home Value Stability
The rise and fall of home values in Hawaii directly impacts the equity you can tap into. When the market is up, lenders tend to be more generous, allowing you to leverage a larger portion of your property’s worth. But when the market takes a dip, lenders get cautious, and you might find yourself facing stricter lending standards and lower loan amounts. This is why it’s crucial to stay informed about the current state of home equity rates in Hawaii.
Property Location
Living in a high-risk area can mean higher interest rates. High-risk areas are often places that are more likely to experience extreme weather or natural disasters, like hurricanes, flooding, and wildfires. These factors can affect the value of your home and your financial stability as a homeowner.
Lender Policies
Lender policies can have a big impact on the interest rate you get. It’s a good idea to compare interest rates, fees, and closing costs among a few different lenders to make sure you’re getting the best deal. This can help you save money and make sure you get a loan that works for you over the long term.
How to Qualify for the Lowest Rates
To qualify for the best home equity loan rates, you’ll need to have a strong credit score, a low debt-to-income ratio, adequate property insurance, and a good amount of home equity. By focusing on these areas, you can set yourself up for the best home equity loans in Hawaii. Here’s your To Do list:
◦ Build a Strong Credit Score
A higher credit score often translates to more attractive interest rates on home equity loans. Plus, a better credit score can lead to lower fees, further reducing your borrowing costs. To build your credit score, make sure to pay your credit card in full and on time every month, don’t max out your cards, and regularly check your credit report for errors that might impact your score.
◦ Manage Debt-to-Income Ratio
When you’re ready to apply for a home equity loan, your debt-to-income (DTI) ratio is a key metric. It’s the number that compares your monthly income to your monthly debt obligations. Most lenders in Hawaii are looking for a DTI ratio that falls below 36%, but some lenders will go as high as 50%. This ratio is a way for them to see if you can manage your current debt and take on the additional monthly payments a home equity loan would require.
◦ Obtain Adequate Property Insurance
Sufficient property insurance is a must-have for home equity loans, particularly in areas prone to flooding. Lenders want to ensure their investment is protected, and may require additional coverage.
◦ Maintain Sufficient Home Equity
In the beautiful state of Hawaii, as elsewhere, homeowners should maintain a minimum of 20% equity in their primary residence to qualify for a home equity loan. To lenders, this means you have a solid financial foundation in your property.
Fixed vs. Variable Interest Rates
Home equity loans in Hawaii usually come with fixed interest rates. This means you’ll have the same monthly payment for the entire term of the loan. Fixed rates can give you peace of mind and make it easier to budget, but they might be a little higher at the beginning than variable rates. With a heloc vs a home equity loan, rates are typically variable; they usually start lower, but they can go up or down over time.
Tools & Calculators
By using the online tools and calculators available to you, you can get a detailed estimate of your home equity loan payments, compare interest rates, and see the impact of different loan terms on your financial well-being. Below, in addition to the home equity loan calculator, you’ll find a HELOC repament calculator and a HELOC interest only calculator.
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
The closing costs for a home equity loan typically range from 2% to 5% of the loan amount. These can include fees for an appraisal, credit report, document preparation, origination, notary, title search, and title insurance. Keep in mind that opting for a no-closing-cost loan may result in a higher interest rate.
Tax Deductibility of Home Equity Loan Interest
Here’s the scoop: The interest on your home equity loan could be tax-deductible if you use it for home improvements. Couples filing joint tax returns can deduct interest paid on up to $750,000 of qualified home equity loans, while single filers may deduct interest paid on loans up to $375,000. To claim this benefit, you’ll need to itemize your deductions. For the nitty-gritty on maximizing your tax benefits, it’s wise to chat with a tax advisor.
Alternatives to Home Equity Loans
In Hawaii, homeowners have access to a variety of home equity products, including home equity lines of credit (HELOCs), home equity conversion mortgages (HECMs), and cash-out refinances. Each of these has its own features and eligibility requirements, so it’s important to carefully consider your options before making a decision.
Home Equity Line of Credit (HELOC)
Now that you know your way around a home equity loan, what is a home equity line of credit? A HELOC is a bit like a credit card with a lower interest rate. It allows you to borrow up to a certain limit, and you pay interest only on the amount you borrow. Unlike a fixed-rate loan, the interest rate on HELOCs is variable. This means it can go up or down based on the market, which impacts how much you pay.
Home Equity Conversion Mortgage (HECM)
An HECM is a government-insured reverse mortgage that empowers homeowners aged 62 and older to receive payments from the lender based on their home’s value. You can choose to receive the proceeds as a lump sum, regular payments, or a line of credit. The beauty of an HECM is that you’re not required to repay it until you leave the home. HECMs may have higher closing costs and longer processing times.
Cash-Out Refinance
A cash-out refinance is a type of mortgage refinance. You take out a new, larger mortgage that pays off your existing one and leaves you with a lump sum of cash. Lenders in Hawaii typically allow you to borrow 85% of your home’s equity.
Recommended: Cash Refinance vs Home Equity Line of Credit
The Takeaway
Understanding Hawaii home equity loan rates and the factors that influence them is key to making smart financial decisions. By comparing lenders, building your credit, and considering financing alternatives, you can find the best rates and terms for your specific needs and financial goals.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would my monthly payment be on a $50,000 loan?
A loan calculator can help you get an accurate estimate of your monthly payments, but you’ll need to enter the interest rate and loan term. For example, a $50,000 loan at an 8.00% interest rate repaid over 10 years would give you a monthly payment of $418.
What would the monthly payment be on a $100,000 HELOC?
The monthly payment on a $100,000 home equity line of credit (HELOC) varies depending on how much you draw, the interest rate, and the repayment term. If you draw the full amount and repay it over 20 years at 8.00%, your monthly payment will start at $836. However, it’s important to note that HELOCs often come with variable interest rates, meaning your monthly payment could change over time.
What would the payment be on a $25,000 home equity loan?
The interest rate and loan term are the main factors that determine your home equity loan payments. For example, a $25,000 loan repaid over 10 years at 8.50% gives you a monthly payment of $310. For a more precise estimate, use a home equity loan calculator. These tools consider your individual circumstances and loan details to give you a more accurate payment estimate.
What would the payment be on a $30,000 home equity loan?
When you’re looking at a $30,000 loan, the interest rate and the length of the loan will determine your monthly payment. An interest rate of 8.50% repaid over 10 years will give you a monthly payment of $372. You can use a loan calculator to see what your payments would be with different interest rates.
What could disqualify you from getting a home equity loan?
There are a few things that could keep you from getting a home equity loan, including: A low credit score, High debt-to-income ratio, low equity in your home, or not enough insurance coverage on the property. These factors can make it harder for you to get the loan you want, but there are ways to work around them and improve your chances of getting approved.
What are the benefits of a HELOC?
HELOCs are a great option for flexible borrowing, often with lower interest rates than credit cards. With a HELOC, you only pay interest on the amount of credit you use. Just be aware that variable interest rates can lead to higher costs if rates go up. Be sure to weigh all the factors before deciding if a HELOC is the right choice for you.
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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.All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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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