Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan rates tend to follow the prime rate, but also take cues from the borrower’s financial position.
• If you’re set on going for the best rates out there, try to keep your credit score at 700 or above and your debt-to-income ratio below 36%.
• Home equity loans usually offer fixed monthly payments over a term of 5 to 30 years, typically with interest rates that are lower than unsecured loans.
• The risk of foreclosure should be a serious consideration if you are thinking about taking out a home equity loan.
• The interest on your home equity loan may be tax-deductible if funds are used for home improvements.
You’ve found our guide to home equity loan rates in St. Petersburg, Florida. Welcome to our deep dive into home equity loans, where we’ll explain how they work, what factors influence the interest rates they carry, and how you can qualify for the very best rates. Whether you are looking to pay for improvements to your home, consolidate high-interest debt, or cover another major expense, getting an understanding of home equity loan interest rates can help you make the most informed financial decisions.
Before you decide to apply, you should know the basics about what a home equity loan is. It’s a second mortgage with your home as the collateral. Most home equity loans have a fixed interest rate, and therefore payments that are stable and predictable.
A home equity loan provides a lump sum of money you can use for any purpose. You’ll begin repaying it immediately, in monthly installments over a fixed term of five to 30 years. Because your home will secure the loan, you’ll generally get a lower interest rate than you would with an unsecured personal loan. (Keep in mind that this means your home will also be at risk if you miss payments.)
To qualify, you’ll need to have at least 20% equity in your home. Some lenders may allow you to borrow up to 85% of your equity. A home equity loan calculator can help you determine your home equity and how much you might be able to borrow against it.
Interest rates on different types of home equity loans are influenced by both the economic environment and your own financial situation. Federal Reserve policy — specifically changes to the federal funds rate — can send ripples through the lending market, impacting the prime rate. When the prime rate moves up or down, so do home equity loan rates.
As was the case when you qualified for your original home loan in St. Petersburg, your credit score and debt-to-income (DTI) ratio will drive the rates that lenders offer you. The loan amount and repayment term will influence the interest rate you get, too. Competitive pressures among lenders also tend to lead to rate reductions.
Understanding these factors will help you make informed decisions when you look at options for how to get equity out of your home.
Your interest rate can truly be a game-changer when it comes to your loan’s long-term affordability. Let’s say you get a $100,000 home equity loan with a 15-year repayment term. At an 8.50% interest rate, you have a $984 monthly payment and pay $77,253 in total interest by the time the loan closes. Bump the interest rate up to 9.50%, and you’ll be looking at a $1,044 monthly payment and $87,961 in total interest. You’ll give your lender $10,700 in additional interest for a one-percentage-point rate difference!
Here are more examples of how your loan rate and term could affect your payments:
| 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 |
As you give thought to how to tap your home equity, you’ll probably find yourself considering how to time your loan application so you can secure the lowest possible rate. Predicting the prime rate is a bit like forecasting the weekend weather, though — you could be wrong, or it could just turn on a dime.
Don’t beat yourself up if you can’t hold off on applying until rates are at their lowest. If you need a loan, focus on comparing offers from different lenders to find the best possible rate out there.
The answer is, quite a lot, when you look at its movement over decades. The prime rate has seen its fair share of ups and downs, as you can see from the graphic and chart. It is not always predictable, and a drop is not necessarily in the near future at any given moment.
| 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% |
Take a few steps before beginning the application process, and without a doubt, you’ll be better positioned to land a home equity loan with rates and terms that are manageable and beneficial. Here’s what you need to do.
You’ll need to have at least 20% equity in your home to qualify for a home equity loan. You can calculate what you’ve got with a simple equation. Simply subtract your outstanding mortgage balance from the estimated value of your home, and then divide the answer by your home’s estimated value. You’ll arrive at the percentage of equity you now possess. A higher percentage is always better in this case.
An iron-clad credit score is also a key to landing the best home equity loan rate. Lenders look for a score of 680 or higher, and many require one above 700. The higher your credit score, the more easily you’ll find it to access favorable loan terms. To improve your score, focus on making timely payments on your bills, reducing credit card balances, and steering clear of new debt. Your chances of qualifying for a home equity loan with a favorable interest rate will increase.
Another important factor to tune in on and try to improve is your DTI ratio. Lenders typically prefer to see a DTI ratio of 50% or less, and they really love one that’s 36% or lower. Managing your DTI effectively can help you qualify for lower interest rates, so work on paying down your existing debt, increasing your income, or both.
Insurance on your property is a must-have if you want to qualify for a home equity loan. This insurance safety-net will protect both you and your lender should damages to your home occur. Coverage needs to be active and adequate, so be sure to keep it up to date.
Online tools and calculators can be a big help when you’re looking for the best home equity loan rates. Choose among multiple tools, including a home equity loan calculator, which lets you figure out how much loan you are likely to qualify for.
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.
The closing costs on home equity loans are something you need to know about and factor in. As a borrower, you’re looking at paying 2% to 5% of the loan amount at closing. This table shows how typical loan closing costs tend to break down.
| 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 |
Some lenders offer no-closing-cost loans, but these are known to frequently come with higher interest rates, which will be part of your life for the duration of your loan term.
The interest you’ll pay on your home equity loan in St. Petersburg may be tax-deductible if your plan is to use the funds to make improvements on your home. Single filers are able to take deductions on the interest they pay on the first $375,000 of loan debt. Married couples who file jointly can deduct the interest on up to $750,000 of debt. Know that you’ll need to itemize if you want to take advantage of these deductions. A tax advisor can help you with more information.
Not sold on a home equity loan? You could consider a home equity line of credit, or HELOC vs. a home equity loan, as one option. Another choice would be a cash-out refinance.
With a cash-out refinance, you take out a new mortgage for a larger sum than what you already owe on your home loan, then receive the difference as a lump sum. You can use it however you wish. A HELOC works a bit differently. You apply for a credit limit, secured by your home, that you can borrow against as you need the money. You’ll only pay interest on the cash you draw out.
You may want to learn even more about a cash-out refinance vs. home equity line of credit. The two products have similarities and differences. It’s good to know what they are, so you can understand your options and make the best choice.
This option could also be called a strategic . When you do it, you swap your original mortgage for a larger one. Then you receive the difference in a lump sum.
Rates on cash-out refis may be fixed or adjustable, and it tends to be easier to qualify for a cash-out refi than it does for a home equity loan or a HELOC. Lenders’ standards vary, but cash-out refis often require a 620 minimum credit score and a DTI ratio of 43% or less.
What is a home equity line of credit? A HELOC works a lot like a credit card does. It’s a loan, but it can offer a homeowner the freedom to borrow up to a set limit, and pay interest on the money just when they use it. You can usually pull out funds during an initial “draw” period, followed by a repayment period when you’ll have to repay not only the interest, but the principal.
Rates on HELOCs are most often adjustable. Unlike home equity loans, HELOCs are about flexibility, but keep in mind that adjustable interest rates mean your rate and payments may change, potentially impacting your costs later Qualifying for a HELOC usually requires a credit score of 680 or higher (700-plus is even better) and a DTI ratio below 50% (aim for below 36% for the win). With a HELOC, you can often borrow up to 90% of your accrued home equity.
Wondering what your monthly payment would be on a hypothetical HELOC? Try running the variables through a HELOC monthly payment calculator. When you play around with different interest rates and terms, you’ll find out how they might affect your payments, and ultimately how much of a loan you can afford. If you just want to calculate how much interest you’d pay during the HELOC’s “draw” period, try a HELOC interest-only calculator.
To get the best home equity loan rates in St. Petersburg, you’ll want to take good care of your credit score, manage your DTI ratio, and obtain thorough property insurance coverage. When you compare offers from multiple lenders, be sure to consider closing costs and fees as well as interest rates. Taking the time to think about these factors can help you make the best decision for your finances.
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Unlock your home’s value with a home equity loan from SoFi.
A home equity loan is a versatile tool. Some popular reasons people apply for them are to finance major expenses like home improvements, or to consolidate high-interest debt. You will want to plan well to use the funds wisely, and also make sure the loan — and the cost of it — fits into your long-term financial goals.
A monthly payment on a $50,000 home equity loan will heavily depend on both your interest rate and loan term. Get your loan at a 7.00% interest with a 15-year term, and your monthly payment will be around $449. At a 9.00% rate over 15 years, the payment would be about $507. A loan calculator can help you figure out monthly payments using other variables, so you can compare payments with whatever terms you are considering.
A few factors could interfere with your efforts to secure a home equity loan. First, lenders typically require a minimum credit score of 680. If yours is lower, it could disqualify you. A high debt-to-income (DTI) ratio – usually above 50% – might jeopardize your loan, too. If you’ve got less than 20% home equity, that could pose a red flag to lenders. They will most likely look at how stable your home’s value is and how comprehensive a property insurance plan you are carrying. These are all common disqualifiers, although requirements vary from lender to lender.
Home equity loans often come with fixed interest rates. This means they have predictable monthly payments, and these make budgeting easier. Since they often have lower rates than unsecured personal loans, they are cost effective for significant one-time expenses like consolidations of high-interest debt or home improvement costs. But be sure to look at these benefits next to the potential risks, like the threat of foreclosure if you can’t make your payments.
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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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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