Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• The rates for home equity loans in Syracuse are influenced by the prime rate, borrower credit score, and more.
• The higher your credit score and the lower your debt-to-income ratio, the better your rate.
• Home equity loans have fixed interest rates, which give you predictable monthly payments.
• The interest on home equity loans can be tax deductible if used for significant home improvements.
• Closing costs generally fall between 2% and 5% of the loan amount.
When you’re thinking about how to get equity out of your home to use for home improvements or other big expenses, the interest rate on a home equity loan is one of the most important factors. Here, we’ll take you through everything you need to know about home equity loan rates in Syracuse, NY. We’ll start by explaining how home equity loan rates are set, then walk you through the different types of home equity loans, detailing their benefits and the risks involved. Armed with this information, you’ll be better equipped to decide whether a home equity loan is right for you and how to get the best rate.
First things first: Make sure you understand what a home equity loan is, exactly. This loan is a second mortgage that uses your home as collateral, and for that reason it will typically have a lower interest rate than an unsecured personal loan. This also means that if you don’t repay a home equity loan, you are at risk of foreclosure.
If approved for a home equity loan, you’ll receive the total loan amount upfront and then immediately begin to repay it, making fixed monthly payments over a set period of time — typically 5 to 30 years. A home equity loan is different from a home equity line of credit (HELOC), though both use your home as collateral. We’ll get into the differences below.
To qualify for a home equity loan, you’ll generally need to have at least 20% equity in your home. (Equity is the difference between your home’s market value and your remaining home loan balance.) Many lenders will allow you to borrow up to 85% of your equity. A home equity loan calculator can help you see what size home equity loan you might be able to qualify for.
Home equity loan rates are influenced by a variety of factors, including the state of the economy and your personal financial situation. The Federal Reserve, for example, has a significant impact on the lending market. Lender rates are often tied to the prime rate, which is influenced by the Fed. Your credit score and debt-to-income (DTI) ratio also play a role in determining your interest rate. The amount you borrow and the length of your repayment term can also affect your rate.
Interest rates play a pivotal role in the affordability of your home equity loan. Even a seemingly small variation in rates can add up to substantial savings or costs over the life of your loan. Let’s take a $100,000 home equity loan with a 15-year term as an example. The difference in total interest paid between an 8.50% and a 9.50% rate could be more than $10,000. It’s worth your while to weigh your options — which means getting rates from multiple lenders — and aim for the most cost-effective solution.
Here’s 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 |
Once you begin to think about borrowing money, you’ll probably find yourself paying more attention to the prime rate. It hit a low of 3.25% in 2020 and a high of 8.50% in 2023. These numbers underscore how advantageous it could be to time your loan application to take advantage of low rates. But it’s not always possible to do so. Maximizing your own personal financial profile is always doable, however, and it can help you obtain the lowest available rate.
Since 2018, the prime rate has seen its share of ups and downs, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. Take a look at the history of the prime rate to get a sense of how high or low it may go this year.
Source: TradingView.comSince 2018, the prime rate has seen its share of ups and downs, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. Take a look at the history of the prime rate to get a sense of how high or low it may go this year.
| 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 need a good credit score, a manageable DTI ratio, and enough equity in your home. Focusing on these areas before you apply can help you qualify for a home equity loan with the best rates and terms.
To be eligible for a home equity loan, it’s essential to have at least 20% equity in your home. To calculate your equity, deduct your outstanding mortgage balance from your home’s estimated value and then divide the result by the estimated value to arrive at a percentage of equity. For instance, if your mortgage balance is $400,000 and your home’s value is $550,000, then your equity is a solid $150,000 — which is 27%. If you do the math and come up short of 20%, try to hold off on borrowing until you reach that milestone.
When it comes to home equity loans, lenders generally favor credit scores of 680 or higher, with many looking for 700 or more. To bolster your score, make punctual payments, keep credit card balances in check, and steer clear of new debt. Review your credit report for inaccuracies and dispute any errors. By maintaining a solid credit score, you’re setting the stage for a home equity loan with terms that work in your favor and interest rates that are kind to your wallet.
Your DTI ratio is a critical factor in determining loan eligibility. To learn yours, add all your monthly debts and then divide by your gross monthly income. The DTI requirement for a home equity loan is typically below 50%, and ideally below 36%. A lower DTI ratio indicates a better ability to manage monthly payments. To improve your DTI, consider paying down existing debts, increasing your income, or both.
Property insurance is a must when you borrow against your home because it safeguards the lender’s investment in the event of damage. Make sure your insurance coverage aligns with the lender’s requirements, which may include specific types of coverage and policy limits.
By playing around with different scenarios using an online calculator, you get a sense of your borrowing power and what payments might be. Here are three helpful calculators:
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.
When it comes to home equity loan closing costs, you’re looking at paying anywhere from 2% to 5% of the loan amount. Included in the tab are charges for the appraisal, credit report, document preparation, loan origination, notary, title search, and title insurance. You may find no-closing-cost loan options, but they often come with higher rates. Be sure to shop around to compare lenders, as fees can vary.
The interest on your home equity loan could be tax deductible if you’re using it to significantly improve your home. This benefit is currently set to expire in 2025, but there’s talk of extending it. For now, if you’re married and filing jointly, you can deduct interest on loans up to $750,000; for single filers, the loan limit is $375,000. Just remember, you’ll need to itemize your deductions to take advantage of this perk so a talk with a tax advisor may help.
Before you decide whether or not a home equity loan is the right fit, it’s important to understand that there are two other ways to borrow against your home. All three options allow you to tap into the equity you’ve built up, but each has its own features and requirements.
Picture a HELOC as a credit card guaranteed by your home. It’s a flexible way to borrow because during the HELOC’s “draw” period you can borrow in increments and only pay interest on the portion of the credit line that you use. A HELOC interest-only calculator can help you see how much you might owe at any given time based on the portion of the credit line used and your interest rate. After the draw period comes the repayment period. That’s when you’ll pay both interest and principal over a term of up to 30 years. A HELOC repayment calculator is handy at this point. HELOC interest rates are variable, so monthly costs aren’t predictable as they are with a home equity loan. This is one key difference in the HELOC vs. home equity loan equation.
To qualify for a HELOC, you’ll typically need a credit score of 680+ (ideally 700+) and a DTI ratio below 50% (and ideally closer to 36%). HELOCs are a great choice when you’re not sure of the total amount you need or if you want to spread payments over time. You can borrow up to 90% of your home equity with one.
A cash-out mortgage refinance is like hitting the reset button on your home loan, but it allows you to borrow extra money as you go. A cash-out refi replaces your existing mortgage with a larger one, pocketing the difference in cash. Most lenders will let you borrow up to 80% of your home’s value. The typical requirements include a credit score of at least 620, a debt-to-income ratio of 43% or less, and you can choose between fixed or variable rates. One big difference between a cash-out refinance vs. a home equity line of credit or a home equity loan: With a refi, you only have one monthly payment to keep track of.
Before committing to a cash-out refinance, you’ll want to have a hard look at current interest rates in Syracuse vs. the rate you already have on your existing home loan to make sure you aren’t sacrificing a sweet rate with a refinance.
Home equity loans are a powerful financial tool, offering lower interest rates compared to other consumer loans, not to mention the convenience of fixed monthly payments. But they come with the risk of foreclosure if payments are not made. To qualify for the best home equity loan rates, focus on building a strong credit score, a low DTI ratio, and make sure you have adequate property insurance. You’ll be best equipped to obtain a competitive rate with a little preparation.
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 are versatile and can be used for a variety of needs, such as large purchases, home improvements, and debt consolidation. The funds are typically distributed as a lump sum, which can be beneficial if you know how much money you will need and when you will need it. If you aren’t sure, a home equity line of credit might be a better fit.
The monthly payment for a $50,000 home equity loan varies based on the loan term and interest rate you obtain. For instance, a 15-year fixed-rate loan at 7.50% would mean a monthly payment of about $464. Opting for a 30-year term at the same rate would lower the monthly payment to around $350. It’s important to note that the total interest paid over the life of the loan is usually higher with a longer term.
The beauty of a $100,000 HELOC is its flexibility, which also means monthly payments can vary. During the draw period, which is often the first decade, you might only need to pay interest. At an 8.00% interest rate, that could be $667 per month. Once the draw period ends, you’ll start paying both principal and interest. The exact amount will depend on the remaining balance and the interest rate at that time.
There are a few things that might prevent you from securing 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 closer to 36%) to ensure you can comfortably handle the additional financial responsibility. And, you’ll need to have at least 20% equity in your home.
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.
SOHL-Q225-282
