Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates are influenced by the prime rate, your credit score, and your debt-to-income ratio.
• Shop around and compare offers from different lenders to find the best rates.
• You’ll need at least 20% equity in your home to qualify for a home equity loan.
• Fixed interest rates provide a stable and predictable monthly payment.
• The interest you pay may be tax-deductible if you’re using the loan for home improvements.
Welcome to our comprehensive guide to home equity loan rates in Long Island, New York. We will equip you to understand what a home equity loan is and which factors influence the interest rates you’ll be offered. Whether you’re looking to get equity out of your home to finance a large purchase, consolidate high-interest debt, or fund a home improvement project, we’ll help you make the best financial decision for your situation.
First, the basics: A home equity loan is a second mortgage that allows you to use your home as collateral, and provides a lump-sum loan that borrowers can use for a variety of needs. The funds are distributed in full at the start and you will immediately begin to repay what you’ve borrowed in equal monthly installments over a term that can range from 5 to 30 years.
Because the loan is secured by your home, home equity loan rates are typically lower than those of unsecured personal loans. However this also means that if you miss payments, your home could be at risk of foreclosure. To qualify for different types of home equity loans, homeowners typically need to have at least 20% equity in their primary residence. For example, if your home is appraised at $700,000 and you owe $350,000 on the mortgage, you have $350,000 in equity. Many lenders allow borrowing up to 85% of this equity, which in this case would be $297,500. To determine how much you might be able to borrow and what your payments might look like, you can use a home equity loan calculator.
Recommended: HELOC vs. a Home Equity Loan
Home equity loan rates are a product of both economic and individual financial factors. The Federal Reserve’s policy has a significant impact on the lending market. Lenders typically set their base rates by adding a margin to the prime rate, which moves in line with Fed policy. Additionally, a borrower’s credit score and debt-to-income (DTI) ratio are key factors in the interest rate they are offered. Higher credit scores and lower DTI ratios generally lead to more favorable rates.
The interest rate you secure for your home equity loan can make a big difference in the affordability of the loan over time. Even a small difference in the rate can have a big impact on the total cost of the loan. For instance, on a $100,000 loan with a 15-year repayment, the difference between an 8.50% and 9.50% interest rate is a monthly payment of $985 versus $1,044. Over the entire term, the lower interest rate would save you roughly $10,000. The loan term is also a factor in costs, as the chart shows. Generally, longer terms have lower monthly payments but higher interest costs overall.
| 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 |
You can expect Long Island home equity loan rates to be a bit of a moving target, as they often follow the prime rate. But looking at recent trends can provide some insight into whether the rates you’re seeing in the marketplace are high or low. The prime rate hit a low of 3.25% in 2020 and then rose to 8.50% by 2023, as shown below. These fluctuations can make a real difference in your interest rate.
| 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 get the best available home equity loan rate in Long Island, you’ll want to shop around and get quotes from multiple lenders. But before you start this process, take these four steps to ensure you’re putting your best foot forward where your finances are concerned.
As noted above, you need to have at least 20% equity in your home to qualify for a home equity loan. To figure out how much equity you have, simply subtract your mortgage balance from your current home value. Then divide the product by your home value to arrive at a percentage. If you’re close to 20% but not quite there, you can wait until you’ve made additional mortgage payments or make a payment toward the principal to push yourself into the zone.
Lenders generally look for a credit score of 680 or higher when considering home equity loans, with many setting the bar at 700. A robust credit score signals financial prudence and can significantly influence the rates you’re eligible for. By consistently paying your bills on time, keeping credit card balances in check, and steering clear of new debt, you can bolster your number.
Your DTI ratio is an important factor in determining your eligibility for a home equity loan. Lenders generally prefer a DTI of 50% or lower, with 36% or lower being ideal. To see your ratio, add up your monthly debts and divide by your gross monthly income. To improve your DTI, consider paying down existing debts or increasing your monthly income before applying.
Property insurance is a must-have for home equity loans, especially if you live in an area susceptible to natural disasters. This insurance safeguards both you and the lender in the event of damage. Having the right amount of coverage can positively impact the rates you’re offered, as lenders see well-protected properties as a lower risk. It’s wise to ensure your insurance policy is comprehensive, covering all possible risks to your home, not only to meet lender demands but also to secure the most favorable loan terms.
Online tools and calculators can allow you to play around with different numbers and see how they might affect the affordability of your loan and your monthly payment amount, among other things. Here are three you’ll find especially helpful:
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 a home equity loan on Long Island, you can expect closing costs to range from 2% to 5% of the loan amount. These include fees for appraisals, credit reports, and the loan origination process, not to mention title insurance and a title search. Factor these costs in as you’re considering offers from different lenders. Don’t make your decision based purely on the interest rate you’re offered.
Here’s a tip that could save you some money: The interest on your home equity loan might be tax-deductible if you use the funds to improve your home. The current tax guidelines allow married couples filing jointly to deduct interest on up to $750,000 of qualified home equity loans, while single filers can deduct interest on loans up to $375,000. To claim this deduction, you’ll need to itemize your deductions on your tax return. If you’re not sure how to do that, a tax advisor can help you figure it out and keep on top of any changes in tax law in 2026 and beyond.
While home equity loans are a common choice on Long Island, you may want to consider other options, such as a home equity line of credit (HELOC) or a cash-out refinance, which is a special type of mortgage refinance. Each of these options comes with its own set of benefits and risks.
A HELOC is a bit like a credit card, but one that is secured by the equity in your home. Unlike a home equity loan, a HELOC allows you to borrow money as you need it, versus all at once, and you only pay interest on the amount you borrow.
There is a draw period, during which most lenders only require you to pay interest. A HELOC interest-only calculator can help you see what those payments might look like. Then there is a repayment period when you’ll repay the principal plus interest. (A HELOC repayment calculator will come in handy at this point.)
HELOC interest rates are variable, so payment amounts can be unpredictable. To qualify, you’ll need a credit score of at least 680 (but 700 is better) and a debt-to-income ratio of no more than 50% (but less than 36% is ideal).
A cash-out refinance gives you a lump sum based on your home equity. You can use the money to pay off higher-interest debts or cover renovation costs, for example. Lenders typically allow you to borrow up to 80% of your equity, although some may go higher. Most require a minimum credit score of 620 and a maximum DTI ratio of 43%. You can choose between a fixed or adjustable interest rate. When thinking about a cash-out refinance vs. a home equity line of credit, remember that the former is a completely new mortgage — so you’ll want to look carefully at how mortgage interest rates now compare to the rate on your original loan.
If you’re thinking about getting a home equity loan on Long Island, there are a few things you can do to improve your chances of obtaining the best available rate: First, make sure your credit score is in good shape. Lenders will also look at your DTI ratio and equity level. Having the right amount of property insurance can also help you get a better rate. You can use online tools to estimate your payments and compare lenders. Just be sure to take closing costs into account—they can be 2% to 5% of the loan. Don’t hesitate to get quotes from different lenders to pinpoint the loan that’s right 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.
A home equity loan is a versatile financial tool. You can use it to cover the cost of a large purchase, make home improvements, or consolidate high-interest debt. Many homeowners find these loans appealing because they allow you to tap into your home’s value without having to sell. Whether you’re dreaming of a new kitchen, aiming to clear up credit card debt, or have a significant expense on the horizon, a home equity loan could be the solution.
The monthly payment on a $50,000 home equity loan is based on the interest rate and term you select. At an 8.00% interest rate, for instance, a 10-year loan would have you paying $607 a month. Opt for a 20-year term, and that monthly commitment drops to approximately $418. You can use a mortgage payment calculator to get a clearer picture of your payments and how different rates and terms can affect them.
A $100,000 home equity line of credit often comes with a variable interest rate, meaning it can change with the market. During the draw period, you will likely only have to pay interest on the amount you’ve withdrawn. For example, if you take out the full $100,000 at an interest rate of 7.50%, your monthly interest payment would be around $625. Once the draw period ends, you enter the repayment period, which is usually 20 years, and you’ll be paying back both the principal and interest. At that point, if the interest rate is still 7.50%, the monthly payment would be $806.
There are a few things that might stop you from being able to get a home equity loan. Most lenders look for a credit score of at least 700, although some may be open to lower scores. Your debt-to-income (DTI) ratio should not exceed 50% (and ideally be lower than 36%) to ensure you can comfortably handle the additional financial responsibility. And you’ll need to have at least 20% equity in your home.
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*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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