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.

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-Q424-018

Compare HELOC rates in Minnesota.

Introduction to HELOC Rates

If you’re wondering how to get equity out of your home and considering a home equity line of credit (HELOC), this guide will make your application process easier and help you get a competitive interest rate. You’ll learn the key factors influencing Minnesota HELOC rates and how to effectively utilize this information to make an informed decision. Let’s start with the basics:

What Is a HELOC?

A home equity line of credit enables homeowners to borrow against equity they’ve built in their home. You can borrow up to 90% of your home’s value, minus what you still have to pay on your mortgage. Because a HELOC works somewhat like a credit card, you don’t have to borrow the entire amount at once. You can draw money as you need it. The HELOC is secured by your home, so it may have a better interest rate than a credit card or a personal loan.

HELOCs have two phases: first the draw period, followed by the repayment period. It’s important to understand them and their differences.

The Draw Period

During a HELOC’s draw period (10 years is standard), you can access funds up to your credit limit, make payments on your balance, and borrow the money again if you want to. As a borrower, you’ll usually be required to make interest payments in the draw period, but paying back the principal may be optional.

The Repayment Period

During the 10- to 20-year period of repayment, borrowers pay off the principal with interest. Experiment with a HELOC repayment calculator for help understanding your monthly payments and overall interest.

Where Do HELOC Interest Rates Come From?

Interest rates on HELOCs are variable, meaning they change over the life of the credit line. They’re influenced by the prime rate, which is the rate banks and other lenders charge borrowers they perceive to be at the lowest risk of default.

How Interest Rates Impact HELOC Affordability

Interest rates can have a significant impact on the costs surrounding a HELOC. When it’s time to repay a $60,000 HELOC, having an interest rate of 6.00% over a 20-year term would mean a monthly payment of $430. An interest rate of 7.00% would require a $465 payment. Over the entire term, a customer with a 7.00% rate would pay $8,477 more in interest. The more you borrow and the higher your interest rate, the larger the numbers.

HELOC Interest Rate Trends

HELOC rates are tied to the prime interest rate set by banks, so getting to know the history of the average prime rate (shown in the chart and graphic below) may help you understand where current HELOC rates in Minnesota fall on the spectrum.

Since 2018, the prime rate has ranged from 3.25% at its lowest in 2020 to 8.50% at its highest in 2023. These fluctuations can have a impact on HELOC vs. home equity loan considerations, in part because, while HELOC rates are variable, home equity loan rates tend to be fixed (more on that below).

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

The prime rate is important, but it’s not the only thing influencing HELOC interest rates in Minnesota. A number of key factors specific to an individual borrower also matter. Understanding them can help you secure the most favorable rates for your loan or line of credit.

Home Equity

Having a sizable amount of equity in your residential property makes you an attractive prospect for lenders, potentially scoring you reduced interest rates. Homeowners typically need a minimum of 15% equity to qualify for a HELOC.

Credit Score

When it comes to securing a desirable interest rate for a HELOC, maintaining your credit score at 680 or higher is a good move. Many lenders even prefer a credit score of 700 or above.

Stable Income

Lenders look hard at your income. They are going to carefully evaluate your ability to repay the HELOC, so stability is important to them. It’s a good idea to use a HELOC monthly payment calculator to make sure you’re able to make the monthly payments.

Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (CLTV) to be 90% or less. You can compute your CLTV by adding the existing balance on your mortgage to the amount you hope for your HELOC to be, and then dividing by your appraised home value. Here’s an example:

A homeowner’s property appraises at $500,000. They still owe $300,000 on the mortgage. They are applying for a $120,000 HELOC.

   $300,000 + $120,000 = $420,000

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

Variable vs Fixed Interest Rates

As you read above, HELOCs often carry variable interest rates, subject to change over the loan’s duration. To begin with, variable interest rates often look lower when compared to fixed rates, but by design, they increase or decrease in accordance with market conditions.

Tools & Calculators

Time-saving online tools can assist you in calculating approximate payments and the interest you’ll pay on a HELOC. Our favorites include a HELOC interest-only calculator, which can determine the payments you’ll need to make during the draw period.

How to Qualify for a Competitive HELOC Rate

A checklist for securing a competitive rate on your HELOC can help you get started. These “to dos” will help you to think about factors that lenders will scrutinize when determining your eligibility and interest rate. A solid financial standing can enhance your ability to secure different types of home equity loans and lines of credit.

Cultivate Your Credit Score

When you applied for your home loan, your credit score was paramount. Its importance when you apply for a HELOC is equal. You can build your credit score over time by paying your bills on or before the due dates. Reducing or eliminating credit card balances is also essential. Review your credit report regularly and address errors promptly.

Assess Your Home Equity

Timely mortgage payments help homeowners build home equity. Renovations not only make your home happier — they can enhance your equity by boosting the property’s value. If your home equity is in the single digits or teens, getting approved for a HELOC may be difficult.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is how much you pay monthly on debt — like student loans, a car loan, or a personal loan — divided by your gross monthly income. Home equity lenders tend to look for a DTI below 36%. Some allow up to 50%. Calculating your DTI ratio is important, as it can help you determine your eligibility for a HELOC, and whether you’ll qualify for favorable terms.

Application Process for a HELOC in Minnesota

A HELOC application in Minnesota involves several key steps. If you understand the process, your application journey will be smooth and hopefully fruitful.

Step 1. Run the Numbers

Check your credit scores, crunch your DTI, and get an estimate of your home equity before you apply for a HELOC. Some lenders have website options that let you prequalify for a HELOC online, streamlining the application process.

Step 2. Compare Lenders

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

Step 3: Gather Your Documents

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

If you are self-employed, a lender may ask you for a profit-and-loss statement and two years’ worth of tax returns. Having these documents prepared can make the application process go faster and boost your chances of grabbing a competitive HELOC rate.

Step 4: Submit Your Application

If you find a potential lender that offers an online HELOC application portal, it will make the process that 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 your application, the lender will schedule a home appraisal. This is to determine the current value of your property. If your home appraises higher than your outstanding mortgage balance, there’s a good chance the lender will approve your HELOC. The appraisal process might take a few weeks.

Step 6: Prepare for Closing

Before you can access and spend your HELOC funds, you will need to sign loan documents and most likely pay some fees. Your lender may make funds available as quickly as three days following closing. Make sure you understand your loan’s terms and conditions before you sign.

Tax Benefits and Considerations

Before you can access and spend your HELOC funds, you will need to sign loan documents and most likely pay some fees. Your lender may make funds available as quickly as three days following closing. Make sure you understand your loan’s terms and conditions before you sign.

How Much Does a HELOC Cost?

HELOC’s do have costs, but they tend to be lower than those of a typical home loan or mortgage refinance, which can range from 2% to 5% of the loan amount. With a HELOC, the appraisal fee, which can reach $500, is the biggest line item. Application and administrative fees may represent additional charges. Some lenders bill for annual maintenance, as well as transaction, inactivity, and early termination fees. Some lenders may reduce or waive fees but charge a higher interest rate.

Alternatives to HELOCs

HELOCs have competition! Other financing options you could consider include home equity loans, cash-out refinancing, and personal loans. Each has benefits and drawbacks.

Home Equity Loan

Unlike a HELOC, a home equity loan hands you a lump sum. More on what is a home equity loan: Often, you can tap into up to 85% of your home’s equity with one of these. The qualification process is similar to a HELOC, requiring an appraisal.

Another factor in any HELOC vs. home equity loan comparison: You must begin repaying a home equity loan immediately, and because it will have a fixed interest rate, the payments will remain the same over the loan term of 5–30 years. Use a home equity loan calculator to get an idea of what you could borrow and compare the two options.

Here’s a quick look at the two:

Cash-Out Refinance

Homeowners can use cash-out refinancing as another way to leverage a home’s value. This mortgage refinance option is a good one for those who need a large sum of money at once.

When comparing cash-out refinance vs. a home equity line of credit, be sure to note that cash-out refinancing might come with a higher interest rate than other home loans. Cash-out refis draw some borrowers because they prefer to have one payment to keep track of instead of two.

Personal Loan

A personal loan has fixed payments made over 2–7 years. It can be used for almost anything and you won’t have to offer your home as collateral to get one. However, personal loans are likely to have higher interest rates than HELOCs or home equity loans.

Credit Cards

Credit cards carry steeper interest rates than HELOCs, and that factor can balloon your costs if you juggle a big balance. Credit cards are definitely handy for everyday buys, but HELOCs may be a better pick to pay for big-ticket items like a home upgrade or consolidating debt.

The Takeaway

HELOCs offer a helpful, flexible way to tap your home equity. They’re especially useful if you need to borrow money but aren’t sure exactly how much you need, since you’ll only have to pay interest on the amount you use at a given time. With good preparation and efforts to build your credit score and drop your debt level, you can submit an application that will get you a great rate in Minnesota.

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?

An 8.00% interest rate and a 10-year term would require a monthly payment of about $607. The exact amount you’ll pay will always depend on your interest rate and loan term. The same 8.00% rate over a 20-year term would cost you about $418 per month, although you would pay significantly more total interest in the end.

Is a HELOC a smart move for you?

Whether a HELOC is a good idea at this moment depends on your financial scenario and your longer-term goals. HELOCs can help you accomplish home improvements, consolidate debt, or cover other large expenses. But it’s important to consider interest costs, fees, and the potential impact on your home equity before making a decision.

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

Monthly payments on a $100,000 HELOC depends on the interest rate and length of term for the line of credit you’ve chosen. At 6.00% over 20 years, the payment would be $716 monthly. An 8.00% interest rate and the same term would mean a payment of $836.

What are the benefits of a HELOC?

A HELOC is a flexible way to borrow. Rather than taking out a lump sum, you can pull money in smaller increments according to your needs, and at a lower rate than you’d get with a credit card. Plus, you only pay interest on what you borrow.

Do you need an appraisal for a HELOC?

Yes, you do. The appraisal is crucial to the process, since it helps to establish your home’s value, and that in turn determines the amount you’ll be able to borrow. Lenders want to make sure your loan is secured by enough home equity, and will provide details on what type of appraisal is required.

What might prevent you from getting a home equity loan?

Several factors can disqualify you from getting a home equity loan. These include bad credit, a lack of equity in your home, and a high level of debt relative to your income.

How hard is it to get a HELOC?

If you can meet lenders’ requirements of a healthy credit score and optimal debt levels, and you have a minimum of 15% equity in your home, it shouldn’t be hard to get a HELOC. Hardest for many would-be borrowers is compiling the financial documents required for the application. But taking the time to do it carefully and accurately will help move your application process along.

Does HELOC affect credit score?

When you apply for a HELOC, a lender will perform a hard inquiry on your credit report. That could cause a small decrease in your credit score, but it will be temporary. Carrying a large balance on your HELOC could negatively impact your credit utilization ratio and lower your credit score, too. But if you make regular payments to your HELOC account, it will demonstrate that you can use credit responsibly. That should reflect favorably on your score.

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-Q424-033

Compare HELOC rates in South Carolina.

Introduction to HELOC Rates

This guide provides an overview of HELOC interest rates in South Carolina. Our goal is to help homeowners understand all the factors influencing these rates and how to secure the best deal on a home equity line of credit. Readers will learn about the different types of home equity loans, the application process, and how to use online tools to predict your monthly payments and total interest paid. Plus, we’ll explore HELOC alternatives, such as home equity loans, cash-out refinances, and personal loans, so that you have all the information you need to make a smart decision.

What Is a HELOC?

A home equity line of credit, or HELOC, is like a credit card secured by your home equity. It allows you to borrow up to 90% of your home’s value, minus your mortgage. One advantage of a HELOC is that you only withdraw from it what you need at a given time — and you only pay interest on what you withdraw. HELOC interest rates are usually variable, meaning they can rise (or fall) with market conditions.

A HELOC has two phases: draw and repayment.

The Draw Period

During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit, make payments to pay down your balance, and borrow the money again. The borrower is usually required to make interest-only payments during the draw period, but payments toward the principal may be optional.

The Repayment Period

During the repayment period (10 to 20 years), you pay back the principal with interest in regular monthly payments. Variable interest rates can make repayment somewhat unpredictable — and more expensive if rates rise. Fortunately, a HELOC interest-only calculator can help you predict your payments during this period based on different draw amounts and interest rates, so there are no surprises.

The major risk with a HELOC is that the lender can foreclose on your home if you default. That is true with other ways to get equity out of your home, too. We’ll discuss them later.

Where Do HELOC Interest Rates Come From?

It’s not enough to know What is a home equity line of credit; borrowers need to know a little something about how interest rates work. HELOC interest rates are tied to “the prime rate,” the benchmark rate that lenders set for the most creditworthy customers. HELOC rates are also influenced by Federal Reserve decisions and economic factors. For borrowers in South Carolina, the local housing market weighs on interest rates there.

Understanding all this can help borrowers anticipate rate fluctuations and make informed decisions about the best time for a HELOC.

How Interest Rates Impact HELOC Affordability

Your interest rate can make a big difference in affordability over the course of a HELOC. For example, let’s say you have a $75,000 HELOC with a 20-year repayment term. A 1% difference in interest rate can result in $11,000 in additional interest.

As you can see from the chart below — which shows different total interest amounts based on rate, term, and amount borrowed — it pays to research the best HELOC rates in South Carolina. This table was created with a HELOC repayment calculator; plug in your numbers to see your payment and total interest.

HELOC Interest Rate Trends

The movement of the prime interest rate serves as an indicator of future HELOC rate trends. Since 2018, the prime rate has undergone substantial fluctuations, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. The graphic below shows a longer history of the average prime rate over the last 50 years.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Not everyone gets the prime rate. Other metrics factor into the interest rate that you’re offered, such as your home equity position, credit score, income, and combined loan-to-value (CLTV) ratio.

Home Equity

Possessing substantial equity in your principal residence makes you appear less risky to lenders, potentially leading to more favorable interest rates. Typically, homeowners must have a minimum of 15% equity in their property to qualify for a HELOC. You can estimate your equity by checking your home value with an online real estate tool, then subtracting your current mortgage balance.

Credit Score

Maintaining a credit score of 680 or higher is crucial to qualifying for a HELOC. And you’ll secure better rates with a score of 700+. A higher credit score indicates lower risk for lenders.

Stable Income

Lenders evaluate your income to determine your ability to fulfill the HELOC repayment obligations. A consistent income signifies a diminished probability of default, potentially securing more favorable HELOC rates.

Combined Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (mortgage balance + desired HELOC amount / appraised home value) to be 90% or less, although some will allow you to borrow 100% of your home’s value. The ratio will determine your credit limit.

If your home value is $500,000, your mortgage balance is $300,000, and your HELOC balance is $120,000, then your CLTV ratio is 84%. That’s within the acceptable range.

Variable vs Fixed Interest Rates

HELOCs feature variable interest rates, which are subject to change throughout the duration of the loan. Initially, variable interest rates are lower than typical fixed rates, but they fluctuate in accordance with market conditions. It is beneficial to comprehend the distinction between HELOC and home equity loan interest rates in order to make an informed decision.

Tools & Calculators

SoFi provides numerous online tools to assist you in estimating your payments and gaining insight into the financial implications of a HELOC. Below you’ll find a home equity loan calculator as well as two HELOC calculators mentioned above.

How to Qualify for a Competitive HELOC Rate

To obtain the most competitive HELOC rates in South Carolina, you may need to do some advance work before applying. Focus on your credit score, home equity stake, and debt-to-income ratio. Here’s your To Do list:

Build Your Credit Score

By consistently paying your bills on time and paying down your credit card balances, you can substantially improve your credit score. A higher credit score can make you eligible for the most competitive HELOC rates available in the South Carolina market.

Assess Your Home Equity

Regular home loan payments help in building equity over time. Home equity can also be enhanced through renovations that boost the property’s value. Increased home equity can lead to better terms and higher amounts when applying for a HELOC.

Calculate Your Debt-to-Income Ratio (DTI)

Your debt-to-income ratio (DTI) is calculated by dividing your total monthly debt payments (student loans, auto loan) by your gross monthly income. Typically, home equity lenders prefer a DTI below 36%, but a lower DTI is always more favorable. A rock-bottom DTI can significantly enhance your chances of securing the most competitive HELOC rates available in South Carolina.

Application Process for a HELOC in South Carolina

If you’re concerned about whether you qualify for a HELOC, you’ll need to take extra care in preparing your application. Each of these steps plays an important role in the process.

Step 1. Crunch the Numbers

Check your credit score, calculate your DTI, and get a good estimate of your home equity before you apply for a HELOC. Some lenders offer online prequalification for a streamlined application process.

Step 2. Compare Lenders

Interest rates vary between lenders, so shop around to see what offers you qualify for with multiple lenders. You’ll want to compare not just interest rates, but also qualification requirements, minimums and maximums, fees, and the length of the draw and repayment periods.

Step 3: Gather Your Documents

When you have selected a lender, remember to gather the required documents for your HELOC application. These usually include proof of income (W-2s, tax returns), employment history (a resume), credit history, and proof of homeowners insurance. Having all this ready can expedite the application process and increase your chances of approval.

Step 4: Submit Your Application

Submitting your HELOC application can take place online, by phone, or in person. The lender will review your application and reach out if any additional information is required. Submitting a complete and accurate application will facilitate a swift approval process.

Step 5: Get an Appraisal

After submitting your application, the lender will arrange for a home appraisal to determine your home’s current value. If your home appraises for more than your mortgage balance, you may be approved for a HELOC. The appraisal is a crucial step in the process, as it directly affects the amount of equity you can access.

Step 6: Prepare for Closing

Before accessing your HELOC funds, you must sign the documents and pay necessary fees. Some lenders obligingly make funds available within three days following the closing of the HELOC loans.

Tax Benefits and Considerations

Homeowners can 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 mortgage 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 typically lower than home-buying and mortgage refinance costs. The appraisal fee ($150-$500) is usually the highest expense. Other costs may include application, origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Other lenders may waive closing costs but charge a higher interest rate.

Alternatives to HELOCs

Even if you’re leaning toward a HELOC, it’s smart to check out the alternatives. Each financing option below has its own pros and cons, which suit particular borrowers. Make sure your choice is the best one for your financial needs and goals.

Home Equity Loan

What is a home equity loan? Unlike HELOCs, home equity loans provide a lump sum amount and are paid back immediately at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan (as opposed to 90% with a HELOC). This option is suitable for those who need a specific amount of money for a one-time expense.

Review our HELOC vs home equity loan

Cash-Out Refinance

A cash-out refi pays off your original mortgage for more than you owe and gives you the difference as cash. If you’re considering a cash-refinance vs. a home equity line of credit, you should know that the refinance means you’ll have only one monthly payment, as opposed to two if you take on a HELOC while paying off a mortgage. A cash-out refi also means a new interest rate and loan terms. If rates have dropped since you initially financed your home, this could be good news.

Personal Loan

A personal loan is an installment loan that you pay back over a term of 2 to 7 years. Interest rates for personal loans are often higher than those for HELOCs or home equity loans because personal loans are unsecured. Some borrowers like the fact that their home isn’t used as collateral. And because you sidestep a home appraisal, the loan approval process may be faster, too.

Credit Cards

Credit cards typically come with much higher interest rates than HELOCs, which makes them more expensive if you carry a large balance from month to month. While credit cards offer flexibility for smaller purchases, HELOCs are better suited for larger expenses such as home improvements or debt consolidation.

The Takeaway

HELOCs in South Carolina are known for their competitive rates, flexible repayment, and potential tax benefits. To secure the most favorable South Carolina HELOC rates, borrowers should possess a strong credit score, maintain at least 15% equity in their residential property, and keep their debt-to-income ratio below 36%. It’s also important to shop around with multiple lenders, since each sets their own HELOC interest rates. Just make sure to also compare fees and penalties, qualifications, and the lengths of the draw and repayment periods. If you do your homework, you’ll be well-positioned to secure the best available rates in South Carolina.

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?

The monthly payment for a $50,000 home equity line of credit depends on several factors, including prevailing interest rates and the repayment term. Assuming you draw the full amount and make interest-only payments during the draw period, your monthly payment over 20 years could range from $388 (at 7.00% interest) to $483 (at 10.00%). A repayment term of 10 years will mean higher monthly payments but less interest paid over the life of the loan.

Is a HELOC a good idea right now?

A home equity line of credit (HELOC) can be a good financial tool for homeowners with a steady income, strong credit, and ample home equity. HELOCs provide flexibility and convenience for addressing substantial expenses. However, because a HELOC is secured by your home, if you default you could face foreclosure.

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

The monthly payment on a $100,000 HELOC is based on how much of the credit line you have used, and on your repayment term and interest rate. If you use the entire $100,000 and pay it back at 7.50% interest over 20 years, your monthly payment would be $806. If you had a 7.00% interest rate, you would pay less: $775.

What are the benefits of a HELOC?

A home equity line of credit is a type of revolving credit, similar to a credit card. It offers numerous advantages, including flexible access to funds as required, competitive interest rates, and potential tax deductions. These financial tools can be used for a variety of purposes, including home renovations and debt consolidation.

Do you need an appraisal for a HELOC?

It’s standard practice for HELOC lenders to require an appraisal. This step determines the current market value of the borrower’s property, which is used to calculate your available equity.

What might prevent you from getting a home equity loan?

Several factors may make you ineligible for a home equity loan: a poor credit history, insufficient home equity, a high debt-to-income ratio, and unstable income.

How hard is it to get a HELOC?

The difficulty of securing a HELOC hinges on your financial situation. But if you have a strong credit score (700+), sufficient home equity (15% or more), and steady income, your odds are good. Just be prepared for a rigorous application process, and have your financial documentation ready.

Does HELOC affect credit score?

HELOCs probably will impact your credit score. When you apply for a HELOC, there is a possibility that a hard inquiry will be conducted, which may temporarily lower your score. Additionally, the HELOC can potentially affect your credit utilization ratio, which in turn can have an influence on your score.

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-Q424-050