Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• The rates for home equity loans in Olympia are affected by a variety of factors, including Federal Reserve policy and your financial history.
• A fraction of a percentage point change in interest rate can lead to significant savings or costs over the life of your loan.
• To secure the most favorable rates, cultivate a good credit score, manage debts, and ensure your property insurance is sufficient.
• The interest on home equity loans could be tax-deductible if funds are used for significant home improvements.
• To qualify for a home equity loan, you need to have at least 20% equity in your home.
Welcome to our comprehensive guide to home equity loan rates in Olympia, Washington. Get ready to explore current rates in Olympia and — perhaps more importantly — gain an understanding of what a home equity loan is and which factors will influence the interest rate you’re offered. By the end of this guide, you’ll have a clearer understanding of how you can use home equity loans to achieve your financial goals while minimizing costs and potential risks.
A home equity loan is a type of second mortgage that uses your home as collateral, providing a lump sum of money you can use for any purpose. The funds are disbursed all at once and you begin repaying the loan immediately over a term ranging from five to 30 years. Because home equity loans use your home as collateral, they tend to offer lower rates than unsecured personal loans. The interest rate is typically fixed, which is beneficial for borrowers who prefer predictable monthly payments.
To qualify, homeowners should have at least 20% equity in their primary residence. This equity is built up with consistent home loan payments over time. To determine how much you might be able to borrow, use a home equity loan calculator. Remember that you should have a plan to make your monthly payments. If you fall behind, you risk foreclosure.
Recommended: What Is a Home Equity Line of Credit
The interest rates on different types of home equity loans are a product of both the larger economic landscape and your personal financial picture. Lenders typically set their base interest rates by adding a margin to the prime rate, which is closely tied to actions of the Federal Reserve. Your credit score and debt-to-income (DTI) ratio also play a big role in the rates you’re offered. In addition, the amount you’re borrowing and the term of the loan can also affect the rate you’re offered. Because lenders adjust rates according to these qualifying factors, it’s always a good idea to get rate quotes from multiple lenders when you are considering borrowing money.
Why pursue multiple rate quotes? Even a small difference in rates can add up to significant extra interest payments over the life of your loan. For instance, take a $100,000 home equity loan with a 15-year repayment term. At 8.50% interest, your monthly payment would be approximately $984, with total interest of $77,253. But at 9.50%, your monthly payment jumps to around $1,044. A monthly difference of $60 may not seem so substantial, but over the life of the loan, it means paying an additional $10,000-plus in interest costs.
The loan term can also have an impact on monthly payments. Generally speaking, longer terms have lower payments but higher total interest costs over the long haul. Take a look at another example, this time for a $75,000 loan repaid over 20 years:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
It might feel as if interest rates move up and down with as much predictability as the weather. But if you’re in the market for a home equity loan, you can keep your eye on the prime rate to get a sense of where they are going, and to understand whether current rates are high or low based on historical numbers. Some homeowners in Olympia may try to time their home equity loan application to the most favorable rate, but it’s not always possible. Fortunately there are some things you can do to help you get the best available rate, whenever you apply.
| 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 qualify for the best home equity loan rates, you’ll want to keep your credit score high, your debt-to-income ratio low, and your property insurance up to date. The details matter, so let’s look at the important factors one by one.
You need at least 20% equity in your home to be eligible for a home equity loan in the first place. Determine whether you meet this threshold by subtracting your mortgage balance from your current estimated home value (find that on a real estate site). Let’s say your mortgage balance is $400,000, and your home is valued at $550,000. That leaves you with $150,000 in home equity. Divide your equity number by your home value to arrive at your equity percentage.
Many lenders permit borrowing up to 85% of your equity, which in this case would be up to $127,500. Having a healthy amount of equity is key to scoring competitive home equity loan rates.
A solid credit score shows lenders that you’re a responsible borrower and deserving of the best rates. Aim for a credit score of 680 or higher (some lenders look for scores of 700 and beyond). By keeping up with your payments and not maxing out your credit cards, you’re not only being financially savvy, but you’re also potentially giving your credit score a boost and scoring lower home equity loan rates.
Lenders typically look for a DTI below 50%, but the magic number for the best rates and terms is 36% or less. To determine your DTI ratio, add up your monthly debts and divide by your gross monthly income. To improve your DTI, think about paying down some of your existing debts or finding ways to boost your income.
Property insurance is often a must-have from a lender’s point of view. It’s a safeguard for you and the lender, ensuring potential damage will be paid for. Before you get the green light on your loan, your lender might ask for proof of insurance so be prepared.
A home equity loan calculator can help you estimate your monthly payments based on the loan amount, interest rate and term. But it’s not the only useful thing in the toolbox. Here are three you might need during your home equity journey.
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.
Home equity loan closing costs generally hover between 2% and 5% of the loan amount. These fees typically include the cost of an appraisal, credit report, document preparation, origination, notary, title search, and title insurance. You’ll want to factor these costs into your decision when you’re comparing loan offers from different lenders. Some lenders offer “no closing cost” arrangements, but these loans may come with higher overall costs.
You may be pleased to know that the interest on home equity loans can be tax-deductible if the funds are used to purchase, build, or significantly improve your home. For those filing jointly, you can deduct interest on up to $750,000 of qualified home equity loans, and for single filers, the limit is loan amounts up to $375,000. To claim this deduction, you’ll need to itemize your deductions on your tax return, so you may want to speak with a tax preparer.
Home equity loans aren’t the only way to get equity out of your home. Consider these alternatives before making your decision about the best way to borrow.
A HELOC is a bit like having a credit card with a lower interest rate, allowing you to borrow money as you need it up to a certain limit and only paying interest on the amount you actually use. Unlike a home equity loan, which requires you to begin repaying interest and principal immediately, a HELOC has a “draw” period of up to 10 years, during which you can draw against the credit line but only pay interest. (Play around with a HELOC interest-only calculator if you want to get a sense of what payments would be.) After the draw period ends, you enter a repayment period where you pay back principal plus interest. (At that point you could use a HELOC monthly payment calculator.)
When you consider a HELOC vs. a home equity lo, one important difference is that HELOCs typically have a variable interest rate. To obtain a HELOC, most lenders require a minimum credit score of 680 (though 700 is preferred) and a debt-to-income ratio of no more than 50% (though 36% is ideal). HELOCs can be a good option when you’re not sure how much you need to borrow or when you need to borrow it over a period of time.
Here’s a quick look at how the two options stack up:
| 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 |
A cash-out refinance is a type of mortgage refinance that lets you replace your existing mortgage with a new, larger one and pocket the difference to use as you wish. The amount you can cash out is determined by your home equity, with most lenders allowing you to borrow up to 80%. Typically, you’ll need a credit score of 620 or higher and a debt-to-income ratio under 43% to qualify. The beauty of a cash-out refi is that you can choose between fixed or variable rates.
As you’re considering a cash-out refinance vs. a home equity line of credit or a home equity loan, examine your current mortgage rate. If you already have a low rate, you might find it’s better not to refinance.
If you’re considering a home equity loan in Olympia, you’ll need to cultivate a strong credit score, manage your DTI ratio, and secure solid property insurance, all of which can affect the rates you’re offered. Use a home equity loan calculator to estimate how much you might be able to borrow. Get estimates from multiple lenders, and keep in mind that each lender has its own interest rates and fee schedule.
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 provide borrowers with funds to cover major expenses, home improvements, or to pay off high-interest debt. The adaptability of these loans makes them a valuable resource for homeowners who need a substantial sum but who don’t want to sell their property.
The monthly cost of a $50,000 home equity loan depends on the loan term and interest rate. For instance, a 15-year fixed-rate loan at 7.50% would mean a monthly bill of about $464. Opting for a 30-year term at the same rate would lower the monthly payment to roughly $350. The amount of interest paid over the life of the loan is usually higher with a longer term.
A $100,000 home equity line of credit often comes with a variable interest rate. During the draw period, you might only need to pay interest on the funds you use. Once the draw period ends, you’ll pay both the principal and interest. If you were repaying the full $100,000 over 20 years and the interest rate held steady at 8.00%, your monthly payment would be $836. But remember, the variable rate makes it hard to predict payments.
Home equity loans offer a fixed interest rate, which means the monthly payment amount doesn’t change. And because the loan is secured by your home, it will typically have a lower interest rate than a personal loan, which is unsecured. Plus, the interest you pay may be tax-deductible if the funds you borrow are used for major home improvements. Talk to your tax advisor about this deduction.
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.
SOHL-Q225-319
