Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates in Lincoln, Nebraska, are influenced by economic factors as well as the borrower’s creditworthiness.
• Take time to compare offers from multiple lenders to find the lowest interest rates and terms.
• By boosting your credit score and reducing your debt-to-income (DTI) ratio, you may see the interest rates you’re offered drop.
• If you want to qualify for a home equity loan, you will need to have built at least 20% equity in your home.
• Choose a loan with a fixed rate for predictable monthly payments, or an adjustable rate for more flexibility.
• The interest you pay on home equity loans may 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 you, a Lincoln homeowner, to access the value you’ve built in your home. But that is not all. This type of loan is a useful option that many people use to relieve pressure when they need cash.
This guide will cover everything you ought to know about home equity loans. We’ll discuss factors that affect loan rates and offer you tips for getting the best rates. We will also explain the different types of home equity loans, including a home equity line of credit (HELOC) and a cash-out refinance, so you will know the alternatives, and the pros and cons of each.
Whether you have a home renovation project planned, you’re working to consolidate high-interest debt, or you are preparing to make a major purchase, an understanding of home equity loan rates in Lincoln can help you make smart financial decisions.
A home equity loan is a second mortgage. You secure a new mortgage that is bigger than what you currently owe on your home, then receive the difference as a lump sum of cash. You then repay the new mortgage, usually in fixed monthly installments, over a period of five to 30 years. The loan is secured by your home, and that may help you access lower interest rates than you would get with an unsecured personal loan.
One important thing you ought to keep in mind: To draw on the equity in your home, you have to actually have equity in your home. Yes, you may be working to pay off your mortgage, but the total money you owe shouldn’t be greater than the house’s current value. Typically, lenders want you to have built up 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 as they search for the right financing tool for their situations. Here’s how these two loan types compare. If you are trying to figure out how to get equity out of your home, either one of them will help you achieve your goal.
| 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 |
The rates that are offered to borrowers by lenders 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 interest rates usually move along with it. If you watch the prime rate, you can anticipate rate shifts and make confident decisions about when to move on a home equity loan.
As was the case when you qualified for your original home loan in Lincoln, your credit score and DTI ratio are also key drivers of the rates you’ll be eligible for as a potential borrower. But we’ll get into that later.
The interest rate you get for your home equity loan can make a world of difference in how affordable it is, in both the short- and long-term. Even a seemingly small difference in the rate can lead to significant savings or greater costs down the road.
To demonstrate how much an interest rate can impact your loan’s total cost, the chart below shows expected monthly payments and the total interest you’ll pay for a $75,000 home equity loan. We have calculated both your monthly payment and the total interest you’ll pay at several rates, assuming you’ve secured a 20-year term.
If you have an 8.00% interest rate, your payment each month is approximately $627; total interest over the 20-year term adds up to $75,559. If the interest rate is just one percentage point lower, or 7.00%, your payment would be reduced to about $581, and your total interest would add up to $64,554. That’s right: The difference in interest is more than $11,000. That lower rate could really save you a lot.
| 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 for the most part have fixed interest rates. But lenders may offer adjustable rates, and different types of home equity financing, including HELOCs and cash-out refinances, also offer adjustable rates. It’s a good idea to really consider which you might prefer.
A fixed rate never changes during the loan’s life, so with that option, you’ll have consistent monthly payments over the repayment term. That predictability is helpful for everything from short-term budgeting and long-view financial planning.
Adjustable rates work differently. They will often start off slightly lower than fixed rates, but change after an initial period in accordance with the market. That sometimes leads to higher payments, and it can also create uncertainty about what to expect over the loan’s term.
When you stop to ponder home equity loan rates, it’s smart to consider just how fixed versus adjustable scenarios could affect you, taking into account your financial standing and comfort with risk.
If you’re thinking about how to draw equity from your home, you may be hoping you can time your loan application to achieve the lowest possible rate. You can try! Unfortunately, predicting the prime rate is a little like playing a slot machine: Lucky hits are elusive.
Not all borrowers have endless time to wait for a dip in the prime rate — even though it’s true it has seen its fair share of ups and downs, as you can see from the graphic. If you need a loan, focus on comparing offers from different lenders in search of the best rates. And work on positioning yourself to get the lowest possible rate by staying in control of your own financial profile.
| 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 secure the most competitive home equity loan rates in Lincoln, keep these few factors in mind, regardless of what type of loan you decide to shop for. Take the following steps before you begin the application process, and you’ll be in a position to land a home equity loan with a favorable and manageable interest rate and term.
You’ll need at least 20% equity in your home before you try to qualify for a home equity loan. You can easily figure out what percentage of equity you’ve accrued: First, subtract your outstanding mortgage balance from your home’s estimated value. Next, divide the answer you get by that estimated home value from the last step to arrive at a percentage of equity. A higher percentage is always better when we’re talking about equity.
To get the very best home equity loan rate out there, you’ll want to have an impressive credit score. Lenders tend to seek a score of 680 or higher, with many preferring a score above 700. Higher credit scores are a relied-upon sign of financial savvy — they can open doors to more favorable loan terms for borrowers. To improve yours, focus on timely payments, reducing credit card balances, and avoiding new debt. You’ll boost your chance to qualify for a lower interest rate.
Your DTI ratio is an important factor when you want to qualify for a home equity loan and are hoping to get a good rate. Lenders typically want to see your DTI ratio somewhere around 50% or less — and if it’s 36% or lower, it will help you qualify for the lowest rates. Manage your DTI effectively by paying down your existing debt and increasing your income. If you can achieve some combination of the two, even better.
Property insurance is a must-have when you’re trying to qualify for a home equity loan. Homeowners’ insurance is a safety net for both you and the lender should damage to the home occur. Make sure your coverage is comprehensive and up-to-date.
Before you begin taking steps to borrow against your home, consider doing some math so you can fully understand the borrowing opportunities available to you. It’s important to know how much you will spend over the life of your loan, since there is a cost for the convenience of having the money you need now.
Look to a home equity loan calculator to help you figure out just how much of a loan you’ll qualify for. Other online tools and calculators can help you determine what your home equity loan payments will be each month, and how much interest you’ll pay at the best rates you qualify for. These useful calculators make crunching the numbers a cinch.
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.
If you are wondering what the closing costs might be on your home equity loan, they typically total 2% to 5% of the loan amount. The table below lists some common closing costs and tells you about how much they will add to your out-of-pocket for the loan.
| Service | Typical Fees |
|---|---|
| Appraisal | $300-$500 |
| Credit report | $30-$50 or more |
| Document preparation | $100-$500 (may be billed on an hourly basis if attorney involvement is required, or 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 |
Note that some lenders may offer no-closing-cost loans, but they frequently come with higher rates that offset the suggested discount. This deal will generally be less desirable over the loan’s life.
The interest you’ll pay on your home equity loan could be tax-deductible if you use the funds to improve your home. Single tax filers can deduct the first $375,000 of loan debt. Married couples who file jointly can deduct up to $750,000 of debt. You’ll have to itemize your writeoffs. A tax advisor can help you figure out just what is allowable.
Home equity loans are a desirable option for many homeowners, but other ways to borrow against your equity are available, too. Before you decide, take a quick look at some other popular options, including a home equity line of credit and a cash-out refi.
What is a home equity line of credit? Also known by its acronym, HELOC, it’s a bit like a special credit card for homeowners who’ve built strong equity. A HELOC offers you the freedom to borrow up to a set amount and pay interest just on the money you use.
There’s often an initial “draw” period during which you can withdraw funds, followed by a repayment period in which you repay both principal and interest. Rates are generally adjustable. Unlike a home equity loan, a HELOC is about flexibility — but keep in mind that adjustable interest rates may mean that your payments will fluctuate.
To qualify for a HELOC, you’ll generally need a credit score of 680 or higher (700 is that much better) and a DTI ratio that is under 50% (ideally below 36%). A HELOC may permit you to borrow up to 90% of your accrued home equity.
Check out our HELOC repayment calculator for an idea of how the loan would look as you pay it down. To calculate the interest you’ll have to pay during the “draw” period of a HELOC, give our HELOC interest-only calculator a try.
The special mortgage refinance often referred to as a “cash-out refi” lets you replace your existing mortgage with a new, larger one, and pocket the difference to use as you desire. The amount you can cash out will be determined by the home equity you’ve built, with most lenders allowing you to borrow about 80% of it. Typically, you’ll need a credit score of 620 or above and a debt-to-income ratio under 43% to qualify.
One perk of a cash-out refi is that you often get to choose between a fixed rate and a variable one. This quick guide can help you compare the three — a home equity loan vs a home equity line of credit vs. a cash-out refinance
| 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) |
If you’re thinking about a home equity loan in Lincoln, you’ll benefit from studying up on the key factors driving loan rates. Your credit score, DTI ratio, and equity level will all play a role in the interest rate you get. And shopping around can help you get the best rate available. If you decide that a home equity loan isn’t the right fit for you, remember that HELOCs and cash-out refinances have their own 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 and useful tool, and many individuals choose them to borrow cash so they can pay for home improvements, finance other major expenses, or consolidate high-interest debt. You’ll want to use the funds in the smartest way possible and consider how the loan complements your bigger financial picture.
Your monthly payment amount on a $50,000 home equity loan will depend on both the interest rate and the loan term. If you get 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 will be close to $507. A loan calculator can help you figure out payments easily, with different variables and terms.
Different factors could interfere with your efforts to secure a home equity loan. One might be that you don’t have the minimum credit score of 680 or more, typically required by lenders. A higher debt-to-income (DTI) ratio – often above 50% – might get in your way, too. If you’ve got less than 20% equity in your home, that will very likely put off lenders, as could signs that your home’s value is unstable or that your property insurance isn’t up to snuff. Qualifications vary by lender, but these are common dealbreakers.
Home equity loans often have fixed interest rates, and that means borrowers have predictable monthly payments to make budgeting easier. These loans usually have lower rates than unsecured personal loans, so they are cost effective for big, one-off expenses like home improvements or high-interest debt consolidations. You should balance these benefits with potential risks, such as the threat of foreclosure if you happen to 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.
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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