Compare HELOC rates in New Hampshire.

Introduction to HELOC Rates

A HELOC is a revolving line of credit that works like a credit card, but is secured by your home’s equity. HELOC interest rates are influenced by an array of factors, including economic conditions, the prime rate, and your financial profile as the borrower. Understanding each of these factors can help you navigate the market and get the best available terms on your home equity line of credit.

What Is a HELOC?

A HELOC, or what is known as a home equity line of credit, enables a homeowner to borrow against the equity they have built in their home. With a HELOC, you can borrow up to 90% of your home’s value, minus what you owe on your mortgage.

Because a HELOC works something like a credit card, you don’t need to borrow the entire amount at once. You can take money in increments, as you need it. The HELOC is secured by your home, and so offers you a better interest rate than a credit card or a personal loan.

A HELOC has two phases: the draw period and the repayment period. It’s important to understand the difference between them.

The Draw Period

During the HELOC’s draw period, which usually lasts 10 years, you can access funds up to your credit limit, make payments on your balance, and borrow the money all over again. You will usually make interest-only payments during the draw period. Payments toward the principal are often optional.

The Repayment Period

During the repayment period, lasting 10–20 years, borrowers must repay the principal with interest. A HELOC repayment calculator can help you understand what your potential monthly payments might look like, and the overall interest you’ll pay.

Where Do HELOC Interest Rates Come From?

HELOC rates start with lenders’ prime rates, the benchmark interest rate a lender will offer its most creditworthy customers. Not every borrower is offered this rate, and other factors also influence the terms of your HELOC.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on the cost of a HELOC. The difference in total interest that you’ll pay on a $100,000 HELOC at rates of 6.00% and 7.00% is about $14,000 over a 20-year term. A HELOC interest-only calculator can help you determine the total interest you might pay. This chart includes additional examples, with different principals, terms, and interest rates:

HELOC Interest Rate Trends

Interest rates on HELOCs closely follow a lender’s prime rate. Understanding and anticipating potential interest rate fluctuations can help you make the most informed decisions when applying for a HELOC.

Historical Prime Interest Rate

The prime rate fluctuates, and in recent years has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. This rate has a direct influence on New Hampshire HELOC rates.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Despite its importance, the prime rate isn’t the only thing influencing HELOC interest rates in New Hampshire. Factors specific to you as a borrower often come into play. Understanding these variables may help you land the most favorable rates for your line of credit.

Home Equity

If you have an impressive level of equity in your residential property, it will make you a safer prospect for lenders. Homeowners typically need 15%–20% equity, at a minimum, to qualify for a HELOC. The amount of equity you hold may also help you get a better interest rate.

Credit Score

To make sure you’ll get a favorable interest rate on your HELOC, you’ll want to maintain a credit score of 680 or higher. In fact, many lenders prefer a credit score of 700 or higher.

Stable Income

Lenders take a close look at your income in order to evaluate your ability to repay the HELOC. Demonstrating a steady income stream and financial stability is essential.

Loan-to-Value Ratio

Lenders tend to require that your combined loan-to-value ratio (CLTV) is 90% or less. You can use this equation to compute your CLTV: Take your existing mortgage balance and add it to the desired amount of your HELOC, then divide that sum by your home value. Here is an example:

   A homeowner owes $300,000 on their mortgage, and they want a $120,000 HELOC. Their property is valued at $500,000.

   $300,000 + $120,000 = $420,000

   $420,000 / $500,000 = .84 (or an 84% CLTV)

Variable vs Fixed Interest Rates

HELOCs often have variable interest rates, as noted above, and that means they are subject to change over the duration of the loan. Variable interest rates initially tend to be lower than fixed rates, but they increase or decrease with market conditions. The fluctuations are likely to have an impact on your HELOC payments, so spend some time plugging different rates into a HELOC monthly payment calculator to see how they could change if rates increase.

Tools & Calculators

Online calculators can be useful as you prepare to borrow against your home equity. They can help you get an idea of how much you may be able to borrow, and what your monthly payments might be. Try plugging different interest rates into the home equity loan calculator to see how a variable-rate loan could change your monthly bills down the road. You’ll find it here along with two other helpful calculators:

How to Qualify for a Competitive HELOC Rate

To secure the best HELOC rates in New Hampshire, you’ll want to make sure your credit score shines. Other things are important to consider, too. Here are some things you may want to do before you apply:

Take Care for Your Credit Score

Keep up with payments and chip away at credit card balances you may be carrying. You’ll not just tidy up your finances — you will nurture your credit score. Regularly review your credit reports for inaccuracies, and correct any you find. The higher your credit score, the more attractive a candidate you will be for a home equity line of credit.

Assess Your Home Equity

Make sure you have 15%–20% equity (or more) in your home. You can keep building equity by making timely mortgage payments, as well as by investing in improvements. Equity grows when your home’s value increases.

Calculate Your Debt-to-Income Ratio (DTI)

You can find your DTI ratio using a simple formula: your total monthly debt payments (car loan, student loan, etc.) divided by your gross monthly income. Many lenders look for a DTI that’s below 36%. Others require 50% or less. Lower is always better. This number is important in determining your HELOC eligibility and the terms you might be offered.

Application Process for a HELOC in New Hampshire

Applying for a HELOC in New Hampshire involves several steps. If you understand the process, your journey to an approval will be smooth and hopefully fruitful.

Step 1. Run the Numbers

Check your credit score, crunch your DTI ratio, and estimate your home equity before you begin applying for a HELOC. Some lenders allow you to prequalify for a HELOC online, streamlining the application process.

Step 2. Compare Lenders

Look at multiple lenders’ interest rates and compare qualification requirements, minimums and maximums, fees, and the lengths of the draw and repayment periods.

Step 3: Gather Your Documents

Pulling together your paperwork or digital documentation is a crucial step in applying for a HELOC. Typically, you’ll need to present proof of income like pay stubs and tax returns, documentation of your home’s value, and statements that verify your mortgage balance. Lenders may ask you for proof of your homeowner’s insurance policy, and a list of your current debts and assets, too.

A lender may ask self-employed applicants for a profit-and-loss statement, as well as two years’ worth of tax returns. Have these documents prepared. It can make the application process go faster and boost your chances of grabbing a competitive HELOC rate.

Step 4: Submit Your Application

If your potential HELOC lender offers an online application portal, it will make the process much more efficient. You can also likely submit by phone, or in person if the lender has a brick-and-mortar branch.

Step 5: Get an Appraisal

After you submit an application, the lender will most likely schedule a home appraisal. This is to determine your property’s current value. If your home appraises at a value higher than your outstanding mortgage balance, the lender may approve your HELOC. The appraisal process can take a few weeks.

Step 6: Prepare for Closing

Before you’ll be able to access and spend your HELOC funds, you will need to sign loan documents and pay some fees. Your lender may make funds available as quickly as three days after you close. Make sure you understand all of your loan’s terms and conditions before signing.

Tax Benefits and Considerations

Homeowners can deduct interest on a HELOC if they use the funds they borrow to buy, build, or significantly improve their primary residence. You can deduct interest on the first $375,000 of the HELOC principal for an individual taxpayer, or $750,000 for a married couple filing jointly. Ask a tax advisor to help you navigate specific tax implications, and confirm the eligibility of HELOC-related Interest deductions.

How Much Does a HELOC Cost?

HELOC costs tend to be lower than those of a typical home loan or mortgage refinance. With a HELOC, the appraisal fee can reach $500, and is the biggest line item. Application and administrative fees may be added. Some lenders bill for annual maintenance, as well as transaction, inactivity, and early termination fees. Alternatively, lenders may reduce or waive fees but charge a higher interest rate.

Alternatives to HELOCs

Every option for how to get equity out of your home offers advantages and disadvantages, so it’s wise to think through your financial objectives.

Below we take a closer look at different types of home equity loans, refinances, and unsecured loans.

Home Equity Loan

What is a home equity loan? Unlike a HELOC, it offers a lump sum of money at a fixed interest rate. Homeowners can borrow up to 85% of their home’s equity with this loan type, and interest rates are usually comparable to those on HELOCs.

Carefully consider the differences between a HELOC vs. a home equity loan:

Cash-Out Refinance

One option that differs a little from a typical mortgage refinance is cash-out refinancing. This lets homeowners tap into their home equity by refinancing their existing mortgage for more than they currently owe, making extra cash available that they can use for any purpose.

Understanding the differences between a cash-out refinance vs. a home equity line of credit can help homeowners make the smartest decisions about their financial options. A cash-out refi will leave you with one monthly payment (a new mortgage) versus the two you’d have when choosing to carry both a mortgage and a HELOC or home equity loan.

It means, too, that you’ll have a new interest rate. If your current home loan provides a favorable rate, look closely at how much more you’ll end up paying in interest if you go with a refi.

Personal Loan

Personal loans are typically unsecured and so carry a higher interest rate than a HELOC or home equity loan. You repay this type of loan in regular payments over a 2- to 7-year period. You can use this option for almost any purpose and, unlike a home loan, it doesn’t require you to use your house as collateral.

Credit Card

Like a personal loan, a credit card comes with a higher interest rate. That aspect can make them much more expensive than HELOCs, especially if you need to carry a large balance from month to month. Credit cards do offer you flexibility for smaller purchases, but a HELOC can be a more suitable choice for larger expenses, including home improvements.

The Takeaway

A home equity line of credit can be a valuable financial tool for any homeowner seeking to capitalize on equity they’ve accumulated in their home. HELOCs provide competitive interest rates and flexible repayment options. Remember, though, that with a HELOC’s variable interest rate, monthly payments can increase unexpectedly. If you aren’t sure how much you’ll need for a major project, a HELOC is a good option to consider.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What is the monthly payment on a $50,000 HELOC?

It depends on the interest rate and loan term, but you can use a HELOC monthly payment calculator to easily determine the monthly payment. Just plug in the rate and term, along with the maximum amount you plan to draw with the HELOC. For example, if you borrow the max on a $50,000 credit line at an interest rate of 7.50%, and your term is 20 years, your monthly payment would be $403.

Is a HELOC a good idea right now?

To determine if a home equity line of credit is a sound financial move, consider your specific circumstances. A HELOC is a flexible way to borrow since you take only what you need at the given moment, up to your approved credit line. You won’t pay interest on the portion of the credit line you don’t use. But HELOCs typically have variable interest rates, so if you prefer a steady monthly payment amount with no changes or surprises, a home equity loan might be more appealing to you. To see how the two might compare, you can play with a home equity loan calculator.

What is the monthly payment on a $100,000 HELOC?

The monthly payment on a $100,000 HELOC will depend on the interest rate and repayment term, plus how much of the credit line you use. If you’ve drawn just $30,000 of your $100,000 limit, the payment might only be a few hundred dollars. If you’ve cashed out the entire $100,000 credit line and are paying 8.00% interest over 20 years, the monthly payment would be $836.

What are the benefits of a HELOC?

A home equity line of credit is flexible. You withdraw only the amount of the credit line needed at any given time, and only pay interest on the amount you borrow. Because it’s secured by your property, a HELOC has a lower interest rate than a personal loan or a credit card. You are able to use the funds you borrow for almost anything. For many homeowners, an open credit line is a financial security blanket in case unexpected costs, such as big-ticket home repairs, come up.

Do you need an appraisal for a HELOC?

Yes. Appraisals are customarily required for HELOCs. Since it is a determination of value for your home, it will be a factor for the lender in deciding your eligibility to borrow, along with your maximum credit line for your home equity line of credit.

What disqualifies you from getting a home equity loan?

A poor credit history, insufficient home equity, or a high debt-to-income ratio can all knock you out of the running for a home equity loan.

How difficult is it to get a HELOC?

Assuming you have your financial ducks in a row and can easily gather the necessary documents (including tax returns, pay stubs, etc.), and that you meet all of the lender’s qualifications, it shouldn’t be hard to get a HELOC. The whole process takes 1–2 months, and it will move faster if you’re organized. Be efficient when deciding which lender you’d like to apply with, and swiftly allow access for the appraiser if a home visit is required.

Does HELOC affect credit score?

It can. Applying for a HELOC entails a hard inquiry, which can temporarily impact your credit score. Your score is also influenced by how you manage your debt, so make punctual payments, and stay on schedule. Otherwise, you really shouldn’t have anything to worry about.

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-Q424-039

Compare HELOC rates in Nebraska.

Introduction to HELOC Rates

What is known as a home equity line of credit, or HELOC, is a revolving line of credit that works like a credit card but is secured by your home’s equity. Factors like economic conditions, the federal funds rate, and the borrower’s financial profile influence HELOC rates. If you understand these factors, it can help you navigate the market and get the best available HELOC deal.

What Is a HELOC?

A home equity line of credit enables homeowners to borrow against the equity they’ve built in their home. You can borrow as much as 90% of your home’s value, minus what you still owe on your mortgage. Because a HELOC works like a credit card, you don’t have to borrow the entire amount at once. You can withdraw money in increments as you need it. HELOCs are secured by your home and generally have a better interest rate than credit cards or personal loans.

A HELOC has two phases. The first is the draw period, and the second is the repayment period. It’s important to understand the difference between the two.

The Draw Period

During the HELOC’s draw period, which is usually 10 years, you can access funds up to your credit limit. You may make payments on your balance and borrow the money again. You’ll most likely be required to make interest payments during the draw period, but paying down the principal may be optional. This flexibility allows you as a homeowner to manage your finances effectively during the HELOC draw period.

The Repayment Period

The repayment period tends to last 10 to 20 years. During this phase, borrowers must repay the principal as well as interest. Plugging possible rates and terms into a HELOC repayment calculator can help you understand monthly payments and the overall interest you might be responsible for.

Where Do HELOC Interest Rates Come From?

HELOC rates are based on the prime rate, the benchmark interest rate for a lender’s most creditworthy customers. Not every borrower gets a lender’s best rate. Other factors also influence what applicants may have access to.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on a home loan. A 1% fluctuation in the interest rate may result in a borrower paying thousands of dollars in additional interest over the loan’s life. Here’s an example. A $50,000 HELOC, if repaid over 20 years, will result in different payments at different interest rates:

•   At 6.00%: monthly payment $358, total interest paid $35,972

•   At 7.00%: monthly payment $388, total interest paid $43,036

•   At 8.00%: monthly payment $418, total interest paid $50,373

HELOC Interest Rate Trends

Interest rates on HELOCs closely follow the prime rate. Anticipating potential rate fluctuations can help you make an informed decision about when to apply for a HELOC.

Historical Prime Interest Rate

The prime rate has ranged in recent history from a low of 3.25% in 2020 to a high of 8.50% in 2023.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Other variables besides the prime rate also impact HELOC rates in Nebraska. If you are a borrower, those variables will include your home equity position, credit score, income, and combined loan-to-value (CLTV) ratio. Get savvy about these influences, and you’re more likely to succeed at securing the most competitive HELOC rate.

Home Equity

Having a lot of equity in your home can make you a less risky borrower to lenders, allowing you to secure better interest rates. Homeowners usually need 15% equity, at least, in their property to qualify for a HELOC. Building equity ups your financial flexibility and borrowing power.

Credit Score

Maintaining a credit score of 680 or higher will help you secure a HELOC, and some lenders look for a credit score of 700 or above. To any lender, a higher score is a strong indicator of reduced risk. It increases your chances of scoring competitive rates and terms.

Stable Income

To determine your capacity to repay a HELOC, lenders will evaluate your income. A steady flow of income assures them that you’re less likely to default, and will potentially result in more favorable HELOC rates. If you can present evidence of continuous employment and consistent earnings, your application will be stronger.

Loan-to-Value Ratio

Most lenders require you to show a combined loan-to-value ratio (mortgage balance plus HELOC amount / appraised home value) of 90% or less. Some will allow you to borrow 100% of your home’s value, however.

This ratio is key when lenders determine your credit limit. Assume your home value is $500,000, your mortgage balance is $300,000, and your HELOC balance is $100,000. Your LTV ratio would then be 80%: $300,000 + $100,000 / $500,000.

Variable vs Fixed Interest Rates

HELOCs usually feature variable interest rates. That means the interest rate on your home equity line of credit can change over the life of the loan. Variable rates often start lower than fixed rates. They will then fluctuate with the market. Variable rates can be unpredictable and will jump if the market does. If that stresses you out, you may want to look at different types of home equity loans, since they typically carry fixed rates.

Tools & Calculators

One way to understand how your interest rate will affect your monthly payments and the total cost of borrowing is to use an online calculator. You can plug different interest rates into one of these, including the home equity loan calculator, to get an idea of how rates impact payment amounts.

How to Qualify for a Competitive HELOC Rate

To secure the best HELOC rates possible in Nebraska, you’ll need to make sure your credit score is at its best, among other things. Here’s what to do before you apply:

Take Care of Your Credit Score

By keeping up with monthly payments and chipping away at any credit card balances you’re carrying, you’ll not just tidy up your finances, you’ll also nurture your credit score. And guess what? A higher credit score means you’re a more attractive candidate for a home equity line of credit. Take time to review your credit reports and correct any inaccuracies as you go.

Assess Your Home Equity

A necessary step in applying for a HELOC is making sure you have at least 15% equity in your home. You build equity by making your monthly mortgage payments on time as well as by making home improvements. Equity grows too, if the market value of your home increases. The more equity you’ve got, the better terms you may get on a HELOC.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio isn’t difficult to figure out: It is your total monthly debt payments (car loan, student loan, etc.) divided by your gross monthly income. Some lenders will allow a DTI below 50%, while others require 36% or less. Generally, the lower the better. This number will be a key player in a lender’s determination of your eligibility for a HELOC, as well as the terms you’re offered.

Application Process for a HELOC in Nebraska

Applying for a home equity line of credit involves several steps, from an initial evaluation of your financial situation to a formal application, a home appraisal, and more. Here’s a step-by-step.

Step 1. Crunch the Numbers

Before you take the plunge and apply, it’s crucial to size up your financial standing by compiling your credit score and DTI ratio info. Some home equity line of credit lenders offer a convenient online prequalification process for a HELOC. That can help you figure out if your stats are good enough to win you a stamp of approval. A HELOC monthly calculator can also be helpful as you consider whether you can comfortably navigate the repayment phase.

Step 2. Compare Lenders

You should look at posted interest rates and also check on lenders’ qualification demands, credit line limits, fees, and the durations of their draw and repayment periods. Plug different interest rates and loan terms into a HELOC monthly calculator. This will help you get a sense of which lenders might be a good fit for you.

Step 3: Gather Your Documents

Before you apply for a HELOC, you’ll need to gather the following documents: your last few pay stubs, your most recent tax return, a recent mortgage statement, and a few bank statements. If you’re self-employed, have at least two years of tax returns on hand. Having these documents when you apply should help the process go smoothly.

Step 4: Submit Your Application

Once you’ve got everything sorted, it’s time to submit your application. You can do this online, over the phone, or in person — it depends on the lender and your preference. Make sure you double-check everything before you hit “send” or “submit” to avoid any snafus going forward.

Step 5: Get an Appraisal

The home appraisal is central to the HELOC process, since your property’s market value helps determine how much equity you have and how much credit a lender might be willing to extend.

Step 6: Prepare for Closing

Before you get your hands on the cash, you’ll need to sign the paperwork and take care of any fees the lender charges. The good news is, many are quick to get the funds to you — often within three business days of the signing.

Tax Benefits and Considerations

If you use HELOC funds to buy, build, or make a significant improvements to your home, you may be able to deduct the interest you pay on the first $375,000 borrowed as an individual taxpayer ($750,000 if you’re married and filing jointly). A smart thing to do is to consult with a tax advisor for specifics — that way you can make the most of deductions related to your home equity line of credit.

Closing Costs and Fees

HELOC closing costs may be less than those you’d pay when you buy a home. One larger expense is typically the appraisal fee, which may range from $300 to $600. You may also encounter application, origination, and administrative costs. Some lenders add annual maintenance fees and other charges.

Alternatives to HELOCs

You can find alternatives when researching how to get equity out of your home. Financing options other than HELOCs include home equity loans, cash-out refinancing, and personal loans. Each has its own benefits and drawbacks:

Home Equity Loan

Unlike a HELOC, a home equity loan comes to you in a lump sum. The lowdown on what is a home equity loan: You can often tap into 85% of your home’s equity with one of these fixed-rate loans. This is a different type of loan entirely, but the qualification process is similar to that for a HELOC (you’ll need that appraisal!).

Another factor in any HELOC vs. home equity loan comparison is that you begin repaying a home equity loan immediately. Since it has a fixed interest rate, payments remain the same over the loan term, which may range from 5 to 30 years. To get a sense of what you could borrow and to compare the two options, use a home equity loan calculator.

Cash-Out Refinance

For homeowners, cash-out refinancing is another good way to leverage your home’s value. This type of mortgage refinance is an option for those who need a large sum of money all at once.

When comparing a cash-out refinance vs. a home equity line of credit, note that cash-out refinancing might come with a higher interest rate than that of your current home loan. Look at the monthly payment and total interest you’ll pay on both to help you determine which makes better sense.

Personal Loan

A personal loan is a lump sum loan with fixed payments made over 2–7 years. This loan can be used for almost any purpose, and you don’t have to offer your home as collateral to get it. Personal loans, however, often have higher interest rates than HELOCs or home equity loans.

Credit Cards

Not surprisingly, credit cards often have steeper interest rates than HELOCs. Cards are known to balloon your costs if you’re juggling a hefty balance. While they are handy for everyday buys, HELOCs beat credit cards when it comes to big-ticket items like home upgrades or debt consolidation.

The Takeaway

When considering a HELOC, carefully weigh the advantages and disadvantages. A home equity line of credit can provide a versatile source of funding for a variety of financial needs. But it’s essential to understand the interest rate, fees, and repayment terms before making a decision.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What’s the monthly payment on a $50,000 HELOC?

If you have an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. The same 8.00% interest rate over a 20-year term would cost you $418 monthly, but you would pay more total interest during the 20-year term. In every case, exactly how much you’ll pay will depend on your interest rate and repayment term.

Is a HELOC a smart move for you?

Whether a HELOC is a brilliant idea right now depends on your financial situation and goals. HELOCs can be beneficial for making home improvements, consolidating debt, or covering other large expenses. It’s important, however, to consider the interest rates, fees, and any potential impact on your home equity before you make a decision.

What’s the monthly payment on a $100,000 HELOC?

The monthly payment on a $100,000 HELOC depends on the interest rate and how long a term you’ve chosen. At a 6.00% interest rate over 20 years, the payment would be $716 per month. An interest rate of 8.00% and the same term would require a payment of $836.

What are the benefits of a HELOC?

A HELOC is flexible. Rather than drawing a lump sum, you can borrow in increments according to your needs, and at a rate that is typically lower than you’d get with a credit card. And you only pay interest on what you borrow at any given time.

Do you need an appraisal for a HELOC?

Yes, you need the appraisal. It’s a crucial step in the process, as it helps to establish your home’s value, which helps determine the amount you can borrow. Lenders want to be sure your loan can be secured by equity in your home. Your lender will provide details about the type of appraisal required.

What might prevent you from qualifying for a home equity loan?

Several factors can disqualify you from getting a home equity loan, including bad credit, not enough home equity, and a high level of debt relative to your income.

How hard is it to get a HELOC?

Assuming you meet lenders’ requirements — healthy credit score, manageable debt levels, and a minimum of 15% equity — it shouldn’t be hard to get a HELOC. The most difficult part for many would-be borrowers is compiling the financial documents for the application. But taking the time to do that thoroughly and accurately will help move the application process along more quickly.

How does a HELOC affect your credit score?

When you apply for a HELOC, the lender will perform a hard inquiry on your credit report, and that may cause a small, temporary decrease in your credit score. Carrying a large balance on your HELOC could also negatively impact your credit utilization ratio, lowering your credit score. But if you make regular payments toward your HELOC, you will show that you can use credit responsibly and that should coax your score up again.

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-Q424-037

Compare HELOC rates in Delaware.

Introduction to HELOC Rates

If you’re investigating how to get equity out of your home and what the going rates are for HELOCs in Delaware, you’ve come to the right place. This guide aims to help homeowners understand how to secure the best available rates on HELOCs and other home loans in the First State. We’ll walk you through the HELOC application process, and share tricks for building your credit score before you apply.

But first, let’s make sure we’re all on the same page regarding what is a home equity line of credit.

What Is a HELOC?

A HELOC is a revolving credit line based on your home’s equity. You can typically borrow up to 90% of your home’s value, minus your mortgage, though some lenders will allow you to borrow 100% of your equity. Because a HELOC works something like a credit card, you can take the money in increments, as you need it. And because you put up your home as collateral, you get a much lower interest rate than with a credit card or unsecured personal loan. The HELOC’s flexibility and lower rates are what make them so popular.

A HELOC has two phases: draw and repayment. Here’s a look at each stage.

The Draw Period

During the draw period, which is usually 10 years, you can access funds up to your credit limit. Interest-only payments are typically required, but principal payments may be optional. If you do choose to pay down your principal, you can borrow that money again, over and over. For some homeowners, a HELOC serves as a supplemental emergency fund, there to cover larger expenses at a lower interest rate than a credit card.

A HELOC interest-only calculator can show you what your minimum payment might be, based on your HELOC amount and your interest rate.

The Repayment Period

During the repayment period, which is typically 10 to 20 years, borrowing ends and the principal is paid back with interest. You pay interest only on the amount borrowed, not the full credit line. You should be prepared for variable interest rates to fluctuate during the repayment period. As a result, your monthly payment could rise unexpectedly.

A HELOC repayment calculator can help you predict the upper limit your monthly payment might reach, so you can budget accordingly.

Where Do HELOC Interest Rates Come From?

Each bank sets its own HELOC interest rates. They do that based on the prime rate and a variety of economic and housing market factors. The prime rate is the benchmark interest rate for a bank’s most creditworthy customers. Understanding these factors can help borrowers in Delaware search out the best available rate for their financial profile, anticipate rate fluctuations, and make more informed financial decisions.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on the overall affordability of a HELOC. Over a 20-year repayment term, even a 1% difference in interest rate can result in thousands of dollars in additional interest. See the chart below for how different draw amounts, interest rates, and repayment terms affect monthly payments (a little) and total interest paid (sometimes a lot!):

HELOC Interest Rate Trends

As we mentioned, interest rates on HELOCs closely follow a lender’s prime rate. Familiarizing yourself with the prime rate and its regular ups and downs can be helpful when investigating the best available rates on HELOCs in Delaware.

Historical Prime Interest Rate

Since 2018, the prime rate has fluctuated significantly, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023. You can assume that HELOC rates in Delaware will be in the same ballpark, and that changes in the prime rate will be followed by similar adjustments in HELOC rates.

Below the table, the chart shows you the average prime rate over the last 50 years. It has rarely dropped below 4.00% or risen above 10.00%.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Now for Part 2 of Where Do HELOC Rates Come From? The prime rate is only half the story. The other half comes down to you, the borrower. When you apply for different types of home equity loans, including HELOCs, the lender examines your financial profile and sets your rate according to how big a risk you pose. Here’s what lenders are looking at:

Home Equity

Typically, homeowners need at least 15% equity to qualify for a home equity line of credit. But higher is better, and will determine how much you’re able to borrow through your credit line.

Credit Score

Maintaining a credit score of 680 will help your HELOC application get approved. A score over 700 will secure you a better interest rate. In fact, the higher your score, the better the rates you’ll be offered. Lenders tend to reserve their best, or prime, rates for borrowers in the Excellent credit score range of 800 to 850.

Stable Income

Lenders evaluate your income to determine your ability to repay the HELOC. That means not just the amount you earn, but how long you’ve been in your current role, which indicates financial stability.

Loan-to-Value Ratio

When you apply for a HELOC, lenders will take your desired HELOC amount and plug it into a simple formula to determine your loan-to-value ratio. Many lenders require a combined loan-to-value ratio of 85% or less. Let’s say you applied for a $100,000 HELOC to cover major home renovations. If your home value is $500,000 and your mortgage balance is $300,000, your LTV ratio is 80%. Here’s the formula:

•  HELOC amount + mortgage balance / home value

•  $100,000 + $300,000 / $500,000 = 80%

Variable vs Fixed Interest Rates

HELOCs feature variable interest rates, which fluctuate throughout the loan term. Variable rates have pros and cons. One pro is that variable rates typically start out lower than fixed rates. Another pro: If rates go down after you close on your HELOC, your interest will likely go down too! You can probably guess the main con here. If interest rates go up, so will your HELOC rate, meaning you’ll have higher payments than you anticipated.

Tools & Calculators

SoFi’s suite of tools includes a home equity loan calculator and several HELOC calculators. These can help borrowers anticipate their monthly payments in different phases of the HELOC. That way, your variable interest rate won’t pose any surprises down the road.

Tips to Secure a Competitive HELOC Rate

Now you know what goes into HELOC interest rates in Delaware. But can you really do anything to optimize those variables before you apply? The answer is a resounding yes! Here’s your To Do list:

Assess Your Home Equity

The first thing is to assess your home equity. This will tell you if you even qualify for a HELOC, and what your maximum credit line might be. Locate your home’s current estimated price on a real estate web site. Subtract what you still owe on your mortgage from your home price. Then divide the result by your home’s estimated price. This will give you a percentage of equity. Remember, you need at least 15% equity to qualify, but you’ll need much more if you want a large credit line.

Build Your Credit Score

Making timely bill payments and reducing credit card balances can significantly enhance your credit score. That means no late payments. And whenever possible, make more than the minimum payment on hyour credit card bills.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is how much you owe in monthly debt payments divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 36%, but the lower your DTI, the better.

Let’s say you make $8,000 a month before taxes. You have a $500 student loan, a $700 car payment, and a $1,400 mortgage payment. Here’s the formula:

•  Monthly debt payments / Gross monthly income

•  $500 + $700 + $1,400 / $8,000 = 32.5%

With a DTI of 32.5%, you’re in the clear to apply for a HELOC.

Application Process for a HELOC in Delaware

The application process for obtaining a home equity line of credit (HELOC) in Delaware involves several steps, including a thorough evaluation of your financial situation and the compilation of all necessary documentation. Let’s take a closer look at each step:

Step 1. Run the Numbers

Check your credit scores, calculate your DTI, and get a good estimate of your home equity before you apply for a HELOC. (If you’ve been following our recommendations thus far, you may already be ahead on this step.) Some lenders offer online prequalification, simplifying the process.

Step 2. Compare Lenders

See what offers you might qualify for from multiple lenders. But don’t just compare interest rates. Also check out qualification requirements, credit line minimums and maximums, fees, the length of the draw and repayment periods they’re offering, and other factors.

Step 3: Gather Your Documents

HELOC applications require that you back up your numbers with the proper documentation. This typically includes proof of income (W-2s, pay stubs), a detailed account of your employment history, and homeownership status (mortgage statements, proof of insurance). By having these documents readily available, you can significantly expedite the process.

Step 4: Submit Your Application

Submitting your HELOC application can take place online, by phone, or in person. Choose the method that works best for you—whether you prefer the convenience of online applications, the personal touch of a phone call, or the face-to-face interaction of an in-person meeting.

Step 5: Get an Appraisal

An appraisal is an integral part of the HELOC process. This might be an in-person appraisal, or a lender may use an automated valuation model (AVM), where a home’s estimated value is computed based on available data.

Step 6: Prepare for Closing

Before accessing your HELOC funds, you must sign loan documents and pay necessary fees. Certain lenders make funds available within three business days following the closing of the HELOC. Ensure you fully comprehend all terms and conditions before finalizing the loan agreement.

Tax Benefits and Considerations

Homeowners may be able to deduct HELOC interest if the borrowed funds are used for buying, building, or significantly improving their primary residence. Interest deductions are limited to the first $375,000 of the principal for individual taxpayers ($750,000 for married couples filing jointly). Consult a tax advisor to navigate the specific tax implications and confirm eligibility for deductions.

Closing Costs and Fees

HELOC closing costs are lower than home-buying or cash-out refinance costs. The appraisal fee ($150-$500) is usually the highest expense. Other costs may include application, origination, and administrative fees. An annual maintenance fee may apply. Some lenders charge transaction, inactivity, or early termination fees.

Alternatives to HELOCs

Even if you have your heart set on a HELOC, it’s important to understand what is a home equity loan (and vice versa). How else will you know that you’ve chosen the best option for your needs and financial profile?

Other financing options include home equity loans, mortgage refinance, and personal loans. Each one has its advantages and considerations.

Home Equity Loan

Home equity loans provide a lump sum amount and are paid back at a fixed interest rate, so your monthly payment always stays the same. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. This option is most suitable for those who need a specific amount of money for a one-time expense. Here’s a HELOC vs home equity loan chart for you visual learners:

Cash-Out Refinance

A cash-out refinance lets homeowners refinance their existing mortgage for more than they owe and take the difference in cash. If you’re considering a cash-out refinance vs. a home equity line of credit, there are two things to keep in mind. A cash-out refi will leave you with one monthly payment (a new mortgage) versus the two you’d have when choosing to carry both a mortgage and a HELOC or home equity loan. It means, too, that you’ll have a new interest rate. If your current home loan provides a favorable rate, look closely at how much more you’ll end up paying in interest if you go with a refi.

Personal Loan

A personal loan is a flexible, typically unsecured loan that you pay back in regular payments over a term of 2-7 years. Personal loans do not require collateral, which is handy if you don’t have much home equity built up yet. However, the lack of collateral also means you’ll pay a significantly higher interest rate than you would on a HELOC or home equity loan.

Credit Cards

Credit cards come with much higher interest rates than HELOCs, which means you don’t want to carry a large balance from month to month. While credit cards offer flexibility for smaller purchases, HELOCs are better suited for larger expenses.

The Takeaway

Delaware homeowners have many options for leveraging their home equity to borrow money. A HELOC is a good choice if you need funds for a large project (home renovation, college education) but will be paying multiple bills over a longer period of time. By maintaining a robust credit score, paying down credit card debt, and comparing loan offers from various lenders, you can secure the best available HELOC interest rates — and potentially save thousands of dollars.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What is the monthly payment on a $50,000 HELOC?

To determine the monthly payment on a $50,000 HELOC, you can use a HELOC monthly payment calculator. Plug in the interest rate and repayment term, along with the maximum amount you plan to draw with the HELOC. For example, if you borrow the max on a $50,000 credit line at an interest rate of 7.50%, and your term is 20 years, your monthly payment would be $403.

Is a HELOC a smart move for you?

Whether a HELOC is a good idea depends on your financial situation. HELOCs offer flexibility and can be beneficial for homeowners with substantial equity and a strong credit history. However, it’s important to consider current interest rates and your ability to make the monthly payments after the draw period is over.

What is the monthly payment on a $100,000 HELOC?

The monthly payment on a $100,000 HELOC could be $700 to $850 depending on the interest rate and assuming you have a 20-year repayment term.

What are the benefits of a HELOC?

HELOCs provide several significant benefits: versatile access to funds, lower interest rates than other loan options, and potential tax advantages. A HELOC can be used for many different purposes, such as home renovations, consolidating debt, or paying for college.

Do you need an appraisal for a HELOC?

For HELOCs, an appraisal is often required to determine the current value of your home. This appraisal helps lenders assess the amount of equity you have and the maximum loan amount you qualify for. The process ensures that the HELOC is secured by an accurate valuation of your property.

What disqualifies you from getting a home equity loan?

Several factors can disqualify you from obtaining a home equity loan, including a low credit score, a high debt-to-income ratio, and insufficient home equity.

How difficult is it to get a HELOC?

The difficulty of obtaining a HELOC depends on your financial profile. Lenders consider factors such as credit score, home equity, and income. HELOCs are generally easier to qualify for if you have a strong credit history and more than 20% equity in your home.

Does HELOC affect credit score?

HELOCs can affect your credit score in several ways. Applying for a HELOC results in a hard inquiry, which can temporarily lower your score. Additionally, using a significant portion of your available credit can increase your credit utilization ratio, potentially impacting your score. However, making timely payments on your HELOC can positively influence your credit history over time.

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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.

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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