Compare HELOC rates in Utah.

Introduction to HELOC Rates

A HELOC is a revolving line of credit. It works like a credit card, but it’s secured by your home’s equity. HELOC rates are influenced by factors including the prime rate and a borrower’s financial profile. Understanding these influences can help you navigate the market and get the best deal possible on your home equity line of credit.

What Is a HELOC?

What is a home equity line of credit? A HELOC is a revolving line of credit similar to a credit card, except it’s secured by your home’s equity. A HELOC isn’t like a traditional loan. It lets you borrow funds and repay them repeatedly during the draw period.

The Draw Period

A HELOC draw period is typically a decade. During those 10 years, a homeowner can access funds up to a preapproved credit limit, and interest payments are generally required only on the money withdrawn. Principal payments may be optional. HELOCs’ flexibility make them particularly appealing for addressing larger financial obligations.

Recommended: HELOC Interest-Only Calculator

The Repayment Period

The repayment period on a HELOC is generally 10 to 20 years, during which the borrower pays back the loan principal and interest. Using a HELOC repayment calculator can help a homeowner plan and prepare, since variable interest rates may fluctuate, impacting the cost of the loan.

Where Do HELOC Interest Rates Come From?

When you want to get equity out of your home, it’s important to understand interest rates. HELOC rates are tied to the prime rate, which derive, somewhat distantly, from Federal Reserve rates and other broader economic factors.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on any home loan’s affordability. A 1% fluctuation in the interest rate may result in a borrower paying thousands of dollars more in interest over the life of the loan. Here is a look at three examples — a $25,000, a $50,000 and a $100,000 HELOC, all repaid over 10 or 20 years, and at two different interest rates:

HELOC Interest Rate Trends

HELOC interest rates tend to closely follow the prime interest rate. Understanding and anticipating the possibility of rate fluctuations will help homeowners make informed decisions as they consider the best time to apply for a HELOC.

Historical Prime Interest Rate

The prime rate’s fluctuations over the years, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023, have had a direct influence on HELOC rates in Utah.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Beyond the prime rate, HELOC rates in Utah are influenced by the borrower’s home equity, credit score, income, and loan-to-value (LTV) ratio. If these factors are optimal, they will increase a homeowner’s chance of securing a favorable HELOC rate.

Home Equity

If you have significant home equity, you can usually score a favorable interest rate when you apply for a home equity line of credit. Homeowners with a minimum of 15% equity will generally qualify for a HELOC. The higher your equity, the less risk a lender assumes.

Credit Score

To qualify for a HELOC, maintain a credit score of 680 or higher. If your score is 700 or above, even better. The higher your score, the lower the risk you present to lenders.

Stable Income

Lenders look at your income when determining your ability to pay back a HELOC. A borrower with steady income is less likely to default, and will therefore get a better interest rate. You’ll need to provide income documentation when you submit your application.

Loan-to-Value Ratio

Many lenders require a combined loan-to-value ratio (mortgage balance + desired HELOC amount / appraised home value) of 85% or less. If your home is worth $500,000, your mortgage balance is $300,000, and your HELOC balance is $100,000, your combined LTV ratio is going to be 80%.

Variable vs Fixed Interest Rates

HELOCs are characterized by variable interest rates, as noted above. These rates are subject to change over the loan’s duration. Variable interest rates tend to start out lower than fixed rates, but will increase or decrease depending on prevailing market conditions. The fluctuations will have an impact on your HELOC rates in the state of Utah.

Tools & Calculators

Online calculators are super useful if you’re preparing to borrow against your home’s equity. A HELOC Monthly Payment Calculator, for one, can help you get an idea of how much your monthly payments might be, and to determine how much you might feel comfortable borrowing. Plug in a range of interest rates, and you can see how having a variable-rate loan might affect your monthly bills. Here are a few of our favorite calculators:

How to Qualify for a Competitive HELOC Rate

To be eligible for the most desirable HELOC rates in Utah, it’s important to maintain your credit score, a steady source of income, and a low debt-to-income ratio. These factors play a key role in determining your eligibility for favorable HELOC offers, since they provide lenders a comprehensive assessment of your financial situation and creditworthiness.

Take Good Care of Your Credit Score

By making timely payments and reducing or paying off credit card balances, you can continually improve your credit score. This is important if you want to secure more favorable HELOC rates in the state of Utah. The higher your score, the better your chances of qualifying for the best HELOC options, which will give you greater financial flexibility.

Assess Your Home Equity

The first thing you need to do when you prepare a HELOC application is to assess your home equity. Making regular mortgage payments over time helps home equity build. Home equity can also be enhanced through renovations that increase the property’s value. Increasing home equity leads to better terms and credit amounts when you apply for a home equity line of credit.

Calculate Your Debt-to-Income Ratio (DTI)

Your debt-to-income (DTI) ratio, calculated by dividing your monthly debt payments by your gross monthly income, is a good indicator of your attractiveness as a borrower to home equity lenders. Typically, they prefer a DTI below 36%. A lower DTI is even more favorable.

Application Process for a HELOC in Utah

Applying for a HELOC in Utah involves a series of steps to demonstrate your financial strength. Complete them correctly and you’ll have the best chance of obtaining an optimal HELOC rate. Applying for a HELOC, from submitting the application through closing, may take 30 to 60 days:

Step 1. Run the Numbers

Check your credit score, calculate your DTI ratio, and use an online estimate of your home’s value. Try to make sure you have at least 15% home equity before you apply for a HELOC.

Step 2. Compare Lenders

Visit lender sites or check in with your bank’s mortgage officer in order to compare loan qualification requirements, minimums and maximums, fees, length of the draw, and repayment periods. Some lenders offer more competitive rates and benefits, including discounts for automatic payments or remote closing options.

Step 3: Gather Your Documents

You’ll need to have a government-issued I.D. and proof of income (recent pay stubs, W-2 forms, and a recent tax return) on hand. Are you self-employed? Lenders may ask for a profit-and-loss statement and two years of tax returns. Lenders typically require a homeowners insurance declaration page as part of your property documentation. Make sure your policy is up to date.

Step 4: Submit Your Application

The next step is to give the lender your HELOC application. You can probably do this online or in person. Be sure you submit a complete and accurate application to increase your chances of approval and securing a competitive rate.

Step 5: Get an Appraisal

After submitting your application, you’ll need to meet a home appraisal requirement. This might be an in-person appraisal. Or the lender may use an automated valuation model (AVM), in which an algorithm uses existing data to compute a home’s estimated value. The appraisal can help you determine the amount of equity you have in your home, and will also likely affect the HELOC rate you’ll qualify for. Higher appraisal values tend to lead to larger credit lines.

Step 6: Prepare for Closing

Once you find a HELOC offer at a comfortable interest rate, and with favorable terms, you’re ready to close on the loan agreement. Before you can access your HELOC funds, you’ll have to sign loan documents and pay necessary fees. Lenders may make funds available in as little as three days after the HELOC’s closing. Ensure that all paperwork is in order and fees are paid promptly so you can efficiently access your funds.

Tax Benefits and Considerations

As a homeowner, you can deduct the interest you pay on a HELOC if the funds borrowed are used to buy, build, or markedly improve your primary residence. Deductions must be limited to interest on the first $375,000 of the mortgage principal for an individual taxpayer, and $750,000 for married couples who file jointly. You’ll need to itemize the deductions on your tax return. Consult a tax advisor for help.

Closing Costs and Fees

The good news is, HELOC closing costs are lower than those for home-buying or cash-out refinancing. The appraisal fee — the largest expense — may range from $150 to around $500. Other costs to know about include application, loan origination, and administrative fees. Lenders may also charge annual maintenance, transaction, inactivity, or early termination fees. Or they may waive closing costs, but in this case will often charge a higher interest rate.

Alternatives to HELOCs

Financing options other than HELOCs include different types of home equity loans, cash-out refinancing, and personal loans. Every option has advantages and considerations.

Home Equity Loan

What is a home equity loan> Unlike a HELOC, it puts a lump sum in your pocket. You pay back different types of home equity loans at a fixed interest rate. A home equity loan calculator can help you estimate your borrowing capacity.

Borrowers can usually access up to 85% of the equity they’ve built through a home equity loan. Here’s an at-a-glance comparison of a HELOC vs. home equity loan:

Cash-Out Refinance

Homeowners can also tap into home equity via a mortgage refinance. This means applying for a refi of your mortgage loan for the purpose of pulling out cash. This option, however, often comes with higher interest rates.

Personal Loan

A personal loan is a flexible, typically unsecured loan. You pay it back in regular payments over a term of 2–7 years. Unlike certain home equity loans, personal loans do not require collateral. Look closely at terms to evaluate whether a personal loan or a home equity loan better suits your needs.

Credit Card

A HELOC comes with a lower interest rate than a credit card. This tends to make it a cheaper option for large balances, such as for home renovations, education expenses, or a debt consolidation.

The Takeaway

HELOCs make it easy to access the equity in your home. Competitive interest rates and flexible repayment options make a home equity line of credit a valuable financial tool. Make sure you understand all of the terms and conditions, though — especially concerning variable interest rates and the potential impact on your credit score.

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?

A $50,000 HELOC’s monthly payment will fluctuate based on the interest rate and repayment terms. With 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 will cost you $418 per month, although you’ll pay more in total interest during the 20-year term.

Is a HELOC a good idea right now?

It depends on your financial situation and your needs. HELOC interest rates are better than those on credit cards, which can make them useful for spendy projects. But it’s important to consider where variable interest rates can go down the road, and the potential impact on home equity.

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

You can estimate your monthly payment on $100,000 using a HELOC monthly payment calculator. It will crunch your numbers based on the loan amount, interest rate, and repayment period. For example: If you had a 6.00% interest rate and a 20-year repayment term, you’d have a $716 monthly payment. At a 7.00% interest rate, your payment would jump to $775.

What are the benefits of a HELOC?

A HELOC offers multiple benefits, including low interest rates compared to credit cards and the flexibility to borrow and repay funds as you need to during the draw period. A home equity line of credit can be used for home improvements, debt consolidation, or education expenses. Additionally, the interest you pay on a HELOC may be tax-deductible.

Do you need an appraisal for a HELOC?

Yes, an appraisal is typically required for a HELOC. It allows lenders to determine the value of your home and the amount of equity available.

What can disqualify you from getting a home equity loan?

Several factors can stand in the way of your getting a home equity loan. These include a low credit score, high debt-to-income ratio, insufficient home equity, or a history of late payments.

How difficult is it to get a HELOC?

It will depend on your financial situation and the lender’s requirements. HELOCs typically require a good credit score, sufficient home equity, and a stable income. The application process involves providing thorough documentation and undergoing a home appraisal. Comparing lenders and understanding their qualification requirements can help you weigh the ease or difficulty of obtaining a home equity line of credit.

Does HELOC affect credit score?

It can, in several ways. Applying for a HELOC may result in a hard inquiry, and that can temporarily lower your score. High utilization of your credit line can also negatively impact your score. But if you make timely payments on your HELOC, your score can improve 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-Q424-054

Compare HELOC rates in New Mexico.

Introduction to HELOC Rates

If you’re wondering about interest rates for a home equity line of credit (HELOC) in New Mexico, this guide can help you understand the current landscape and how to secure the best available deal.

We’ll discuss what is a home equity line of credit, where posted interest rates come from, and the factors influencing those rates. We’ll also cover the application process and alternatives for leveraging home equity to give you an understanding of how to navigate the market.

What Is a HELOC?

A HELOC is a revolving line of credit, similar to a credit card, that lets you leverage and borrow up to 90% of the equity you’ve built up in your primary residence. A HELOC has two phases: the draw period and the repayment period.

The Draw Period

During a HELOC’s draw period, typically lasting 10 years, you can access funds up to your credit limit. Interest payments will likely be required during this period, but principal payments may be optional. You can choose to make payments to reduce your balance, and then you may borrow again.

The Repayment Period

The repayment period of a HELOC is usually 10 to 20 years, and follows the draw period. During this phase after borrowing has ended, you must pay back the principal with interest. You will only pay interest on the amount you’ve borrowed, not the entire credit limit. Variable interest rates can fluctuate, however, making repayment unpredictable. A HELOC monthly payment calculator can help you to figure out what you might pay each month.

Recommended: Different Types of Home Equity Loans

Where Do HELOC Interest Rates Come From?

Interest rates for HELOCs are tied to the prime rate. This is the benchmark interest rate banks charge their most creditworthy customers. Policy decisions by the Federal Reserve also influence HELOC rates. Understanding these factors can help a borrower anticipate rate fluctuations and make informed decisions about the best time to apply for a HELOC.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on the cost of enjoying credit via a HELOC. The difference in total interest you’ll pay on a $100,000 HELOC at 6.00% and 7.00% amounts to about $14,000 over a 20-year term. A HELOC interest-only calculator can help you determine how much total interest you might end up paying. This chart also includes some examples:

HELOC Interest Rate Trends

Past fluctuations in the prime rate can provide insight into the potential trajectory of New Mexico HELOC rates. Staying informed about current HELOC rates will give you power to make well-timed decisions if you plan to borrow against your home equity.

Historical Prime Interest Rate

Since 2018, the prime rate has fluctuated considerably. It has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. Historical trends can offer valuable insights into the potential future of HELOC rates in New Mexico.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

The prime rate is important, but it isn’t the only thing that influences HELOC interest rates in New Mexico. Factors that are specific to the individual borrower often come into play as well. Understanding these considerations may help you to attain the most favorable rates for your home equity line of credit.

Home Equity

Having an impressive level of equity in your residential property makes you a safer prospect for lenders. As a borrower, you’ll typically need a minimum of 15% equity to qualify for a HELOC. The amount of equity you hold can potentially help you secure a better interest rate.

Credit Score

To make sure you get a favorable interest rate for your HELOC, you’ll want to maintain a credit score of 680 or higher. Many lenders prefer a credit score of 700 and above.

Stable Income

Lenders take a close look at your income in order to evaluate your ability to repay the HELOC. The stability of your incoming cashflow is important.

Loan-to-Value Ratio

Lenders are likely to require your combined loan-to-value ratio (CLTV) to be 90% or less. You can use this equation to compute your CLTV: Add your existing mortgage balance to the amount you hope to access with a HELOC, then divide by the appraised value of your home. Here is an example:

A homeowner has a property valued at $500,000. They owe $300,000 on the mortgage and apply for a $120,000 HELOC.

   $300,000 + $120,000 = $420,000

   $420,000 / $500,000 = .84

   The homeowner’s CLTV is 84%.

Variable vs Fixed Interest Rates

As we’ve noted, HELOCs often have variable interest rates. That means they are subject to change over the life of the loan. Initially, variable interest rates tend to be lower than fixed rates, but they generally increase or decrease over the loan’s duration, depending on prevailing market conditions. Rate fluctuations are almost certain to impact your HELOC payments.

Tools & Calculators

Online calculators will be useful as you prepare to borrow against the equity in your home. These tools will help you get an idea of how much you may be able to borrow, and what your monthly payments could ultimately be. Try plugging in different interest rates to see how a variable-rate loan could affect your monthly bills down the road. These three widgets, including a HELOC repayment calculator, may all be helpful:

How to Qualify for a Competitive HELOC Rate

To secure a good HELOC interest rate in New Mexico, you will want to make sure that, among other things, your credit score looks stellar. Do these things before applying:

Take Care for Your Credit Score

Keep up with payments. Work on chipping away at credit card balances you’re carrying. You will not just tidy up your finances — you will be nurturing your credit score. Regularly review your credit reports, look for inaccuracies, and correct them. The higher your credit score, the more attractive a candidate you’ll be for a home equity line of credit.

Assess Your Home Equity

If you are planning to apply for a HELOC, go for the best terms possible. You can do this by making sure you have at least 15% equity, or more, in your home. You can build your equity by making timely mortgage payments and investing in home improvements. Equity grows as your property’s value increases.

Calculate Your Debt-to-Income Ratio (DTI)

You can find out your DTI ratio by using a simple formula: Take the sum of your total monthly debt payments (car loan, student loan, etc.) and divide that number by your gross monthly income. A DTI below 50% is acceptable to some lenders. Others require a DTI of 36% or less. As a rule, lower is better. This number is always a factor in determining your HELOC eligibility and the terms you might be offered.

Application Process for a HELOC in New Mexico

The application process for a home equity line of credit in New Mexico will involve a detailed review of your financial situation and a formal appraisal of your home, among other steps. Understanding each part of the process can help you navigate it smoothly.

Step 1. Run the Numbers

Confirm that your credit score is 680 or above, and that your DTI ratio is below 36%. Estimating your home equity will give you an idea of how much you can borrow. Some lenders offer online prequalification tools, which can help you hone in on short-term goals.

Step 2. Compare Lenders

When seeking the best HELOC rates in New Mexico, it’s helpful to compare interest rates, qualification requirements, credit line minimums and limits, fees, and the duration of draw and repayment periods from multiple lenders.

Step 3: Gather Your Documents

When you’re ready to prepare your HELOC application, start by gathering and organizing all the necessary documents. This typically includes proof of income (such as W2 forms and at least one tax return), and property documents including proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns — it’s smart to have these items prepared in advance.

Step 4: Submit Your Application

You can likely submit your HELOC application online or in person, depending on the lender. Sometimes you can even apply by phone. Be sure to attach all of the necessary documents.

Step 5: Get an Appraisal

A home appraisal plays an essential role in determining your eligibility for a HELOC. If your home’s appraised value exceeds the outstanding balance of your mortgage, you may qualify. The lender will offer resources to guide you through the appraisal process.

Step 6: Prepare for Closing

Before you’ll be able to access funds via your home equity line of credit, you’ll need to complete the process by signing documents and paying any fees the lender requires. Some lenders may make funds available as quickly as three business days following the signing.

Tax Benefits and Considerations

Homeowners can deduct the interest paid on a HELOC if the funds are used for significant home improvements (hold onto your receipts!). The maximum amount of mortgage principal eligible for interest deductions is $375,000 for a single filer, and $750,000 for couples filing jointly. It’s a good idea to consult a tax advisor, who can help you understand your eligibility for HELOC-related deductions.

Closing Costs and Fees

Closing costs for a HELOC tend to be lower than those you’d typically pay when buying a home. The fees may include $300–600 for the home appraisal, and lesser amounts for the application, origination, and administrative charges. Annual maintenance, transaction, inactivity, and early termination fees may also apply. Some lenders offer reduced or waived closing costs but then charge a higher interest rate for your home equity line of credit.

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 and to consider the differences between a HELOC and home equity loans to choose the right option for you.

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 type of loan. Interest rates are usually a bit higher than those for HELOCs.

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

Cash-Out Refinance

One option that is a little different from a typical mortgage refinance is cash-out refinancing. This offering allows homeowners to tap into their home equity by refinancing their existing mortgage for more than they currently owe. They can then use the extra cash for any purpose.

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

Personal Loan

Personal loans are typically unsecured, and are likely to have a higher interest rate than a HELOC or home equity loan. You repay this type of loan in regular payments over a period of 2–7 years. This loan option can be utilized for almost any purpose and, unlike a home loan, doesn’t require you to use your home as collateral.

Credit Card

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

The Takeaway

A home equity line of credit can be a valuable financial tool for a homeowner seeking to capitalize on the equity they have accumulated in their home. HELOCs typically provide competitive interest rates and flexible repayment options. Just remember, a HELOC’s variable interest rate means that monthly payments can increase unexpectedly, since the rate fluctuates with the market. But if you aren’t sure how much you need for a major project, a HELOC is a flexible 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?

You can use a HELOC monthly payment calculator to determine the monthly payment on a $50,000 HELOC. Just plug in the interest rate and loan term, along with the amount you plan to draw. 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 only take what you need at any given moment, up to your approved credit line. You won’t pay any interest on the portion of the credit line you aren’t using. But HELOCs do typically have variable interest rates.

If you prefer a steady monthly payment amount, a home equity loan might be more appealing. You can play with a home equity loan calculator to see how the two might compare.

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 as discussed, along with how much of the credit line you are using. If you’ve drawn just $30,000 of your $100,000 limit, the payment might 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 a flexible way to borrow. You withdraw only the amount of the credit line needed at any given time, and only pay interest on the amount you’ve borrowed. Because it is secured by your property, a HELOC typically has a lower interest rate than a personal loan or a credit card. You can use the funds you borrow for almost anything. For many homeowners, an open credit line is a financial security blanket in case unexpected costs, like big-ticket home repairs, come up.

Do you need an appraisal for a HELOC?

Yes. An appraisal is customarily a requirement for a home equity line of credit. 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.

What disqualifies you from getting a home equity loan?

A poor credit history, insufficient home equity, or a high debt-to-income ratio — any of these issues can 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 (tax returns, pay stubs, etc), and that you meet all the lender’s qualifications, it shouldn’t be hard to get a HELOC. The entire process takes 1–2 months and will move even faster if you’re organized. Be efficient when deciding which lender you’d like to utilize, and be sure to swiftly arrange access for the appraiser if a home visit is required.

Does HELOC affect credit score?

It can, yes. Applying for a HELOC entails a hard inquiry, which can have a temporary impact on your credit score.Your score is also influenced by how you manage your debts, so making consistent, punctual payments is essential. Stay on schedule and you 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-Q424-041

Compare HELOC rates in Virginia.

Introduction to HELOC Rates

A HELOC, or home equity line of credit, provides flexible access to funds for home renovations, debt consolidation, or significant expenses. The key to its affordability is the interest rate a borrower manages to secure. This article provides an overview of HELOCs in Virginia, explaining what is a home equity line of credit, how HELOC rates in Virginia are set, and what factors will influence the rate you’ll receive. As you’re thinking about how to get equity out of your home it helps to have strategies for how to present your HELOC application, and we’ve got that, too. But let’s start with the basics.

What Is a HELOC?

A home equity line of credit (HELOC) is a revolving line of credit. Using one is similar to using a credit card, but one that is secured by your home. A lender may allow you to borrow up to 90% of the home’s value, minus your mortgage balance. 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. HELOCs have two phases: the draw period and the repayment period.

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 even borrow the money again. Interest payments are typically required during this period, while principal payments are often optional. A HELOC interest only calculator can help you see what monthly payments might look like during the draw period.

The Repayment Period

During the repayment period (typically 10 to 20 years), borrowing ends and the principal is paid back with interest. HELOCs offer lower interest rates than many other forms of borrowing because your home serves as collateral. But especially because your home is on the line, it’s important to think about how a variable interest rate might change your payment amounts over the course of a HELOC. Using a HELOC repayment calculator can provide valuable insights into what payments might be depending on different borrowing levels and interest rates.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are tied to the prime rate, which is the benchmark interest rate that lenders set for very creditworthy customers. Prime rates are in turn influenced by Federal Reserve policy decisions. Understanding these factors can help borrowers keep tabs on Fed movements and rate fluctuations and make an informed decision about when to apply for a HELOC.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant influence on the affordability of HELOCs, both the monthly payment and the lifetime interest paid. As you can see from the chart below — which shows different interest amounts based on rate, term, and amount borrowed — it pays to research the best HELOC rates in Virginia to ensure you are getting the most competitive offers available.

HELOC Interest Rate Trends

One way to gain perspective on whether you’re being offered a good rate is to understand the history of the average prime rate. Since 2018, the prime rate has fluctuated, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023, as you can see in the chart below. The graphic shows the average prime rate over more than a half-century. As you think about the variable rate of a HELOC, it’s helpful to see what kind of swing in the prime rate has happened historically and how broad (or not) those changes have been over a decade or two.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Of course, if everyone was offered the prime rate, you could stop reading right now. But lenders adjust their rate offers based on a series of metrics that is distinctive to you. Get to know them so you can see if any might get your application red-flagged.

Home Equity

As you’ve been making monthly payments on your home loan, you’ve built up equity in your property. You’ll need at least 15% to 20% equity to qualify for a HELOC, and the more substantial your ownership stake, the better rate you may get.

Credit Score

A credit score of 680 or higher is a good place to be when applying for a HELOC, but higher is better. Some lenders prefer a score of 700 or more.

Stable Income

Lenders assess your income to determine your ability to repay the HELOC. A stable income signals to them a lower risk of default, potentially leading to better HELOC rates. An erratic income isn’t a deal-breaker, but you might find that you have to take extra steps during the application process to show your earnings, such as providing more than one year of tax return information.

Loan-to-Value Ratio

Lenders usually require a combined loan-to-value ratio of 90% or less. For example, if your home is worth $500,000 and you have a $300,000 mortgage and want a $100,000 HELOC, your LTV ratio would be 80%, safely within the margin.

Variable vs Fixed Interest Rates

As we’ve seen, HELOCs feature variable interest rates, which will fluctuate during the loan term. Variable interest rates usually start out lower than fixed rates but adjust up and down with market conditions. A HELOC calculator can help you see what might happen if your entry HELOC rate adjusted up by, say, a half a percentage point or more.

Tools & Calculators

Calculators can not only assist you in estimating monthly payments, but can show you the total interest you might pay over the life of a HELOC or home equity loan. Here are a few we recommend:

How to Qualify for a Competitive HELOC Rate

To qualify for a competitive home equity line of credit rate, it is prudent to concentrate on enhancing your credit score, maintaining a consistent income stream, and ensuring that your loan-to-value ratio remains low. These factors are evaluated by lenders when determining the interest rate offered.

Care for Your Credit Score

Pay on time and avoid maxing out all your credit cards — it’s good credit hygiene for life. Another thing you’ll want to do is check your credit report for errors. They do happen and fixing them can help your score recover.

Assess Your Home Equity

You know you need at least 15% equity in your home for a HELOC. Maybe you have enhanced your home value through renovations. Or perhaps you live in a hot real estate market. Take a few minutes to look up your home’s estimated value on a real estate web site. Subtract from that amount whatever you owe on your mortgage. Then divide the result by the estimated value. That’s your home equity percentage.

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 50%, although some like 36% or less. Generally, the lower the better.

Application Process for a HELOC in Virginia

The steps involved in the application process for a HELOC in Virginia include reviewing your financial health, comparing rates, preparing documentation, submitting an application, undergoing a home appraisal, and waiting for approval and closing. Each step is crucial for securing a HELOC.

Step 1. Run the Numbers

Some lenders enable prospective borrowers to prequalify for a home equity line of credit online, thereby streamlining the application process. These lenders will calculate your DTI ratio and equity. If you don’t prequalify online, you’ll need to do the math by hand. First make sure you have at least 15% equity. Then ensure a DTI ratio of at least 50%. If you tick both boxes, it’s time for Step 2.

Step 2. Compare Lenders

When seeking the best HELOC rates in Virginia, it’s essential to compare various lenders. Don’t just look at posted interest rates. Consider factors such as qualification requirements, loan minimums and maximums, the length of draw and repayment periods, and fees.

Step 3: Gather Your Documents

To ensure a smooth and efficient HELOC application process, it’s important that you gather all the necessary documentation, including proof of income, a detailed employment history, and details about your property’s insurance coverage. Having these documents readily available will expedite the completion of your HELOC application.

Step 4: Submit Your Application

Submitting your HELOC application online or in person (or sometimes even by phone) is the next step. A complete and accurate application will better your chances of approval and helps you secure competitive HELOC rates in Virginia.

Step 5: Get an Appraisal

After you submit your application, you will probably need a home appraisal. This might be an in-person appraisal, or a lender may use an automated valuation model (AVM) appraisal, where an algorithm uses data to decide a home’s estimated value. The appraisal helps determine the amount of equity you have in your home, which affects your HELOC rate.

Step 6: Prepare for Closing

Once you find a HELOC offer at an acceptable interest rate and with terms you consider favorable, you’re ready to sign the loan agreement. Before accessing your HELOC funds, you’ll also pay necessary fees. Lenders can make funds available as quickly as three days after the closing. Ensuring all paperwork is in order and fees are paid will help you access your funds promptly.

Tax Benefits and Considerations

Homeowners can deduct HELOC interest if the funds are used for buying, building, or significantly improving their primary residence. Deductions are limited to interest paid on the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consult a tax advisor to navigate specific tax implications and confirm eligibility. And save your receipts for home improvements.

Closing Costs and Fees

HELOC closing costs are lower than home buying or cash-out refinance. The appraisal fee is usually the highest expense, ranging from $300 to $600. Other costs include application, loan origination, and administrative fees. Some lenders offer to reduce or waive closing costs but they may charge a higher interest rate.

Alternatives to HELOCs

In addition to HELOCs, there are different types of home equity loans and other financing options available. Consider this list before you sign on to any type of borrowing.

Home Equity Loan

Home equity loans and HELOCs are often confused. So it’s helpful to see what is a home equity loan and how it’s different from a HELOC. Unlike home equity lines of credit, home equity loans provide a lump sum and have a fixed interest rate. Homeowners can typically access up to 85% of the equity built in their home through a home equity loan. A home equity loan calculator can help you see how much you might be able to borrow. Here’s a quick look at the HELOC vs. home equity loan comparison:

Cash-Out Refinance

A cash-out refinance is a mortgage refinance that allows homeowners to refinance their existing mortgage for more than they owe, paying off their initial loan and taking the balance in cash. It’s useful for those who need a large lump sum.

A few things to think about if you’re considering a cash-out refinance vs. a home equity line of credit: 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. It also means a new interest rate and loan terms. If rates have dropped since you initially financed your home, this could be good news. Look closely at current interest rates in Virginia to make sure you aren’t paying significantly more interest by refinancing.

Personal Loan

Personal loans can be used to cover a wide range of expenses, just like HELOCs and home equity loans. However the repayment term tends to be shorter — 2 to 7 years. Interest rates for personal loans are also often higher than those for HELOCs or home equity loans because personal loans are unsecured. Some borrowers like the fact that their home wouldn’t be used as collateral. And because you sidestep a home appraisal, the loan approval process may be faster, too.

Credit Cards

Credit cards tend to come with higher interest rates than HELOCs, which can make them much more expensive if you carry a big balance from month to month. When considering borrowing strategies, it’s worth noting that a home equity loan or HELOC can offer a better rate and more flexible repayment terms than a credit card.

The Takeaway

HELOCs present Virginia homeowners with a highly flexible method to effectively leverage their home equity for a wide range of financial needs. Given the availability of competitive rates and a diverse selection of lenders, homeowners can conveniently secure substantial loan amounts for various purposes. Carefully tending your credit score, fully documenting your application, and comparing lenders’ rates can help ensure you get the best available HELOC rate in the state.

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 on a $50,000 home equity line of credit (HELOC) is contingent upon the interest rate and repayment conditions — and of course, whether you are using the entire credit line. The best way to get the precise monthly payment is to plug your numbers into an online HELOC payment calculator.

Is a HELOC a good idea right now?

Deciding if a home equity line of credit (HELOC) is a sound financial move will depend on your financial circumstances. A HELOC is a very flexible way to borrow because you only borrow (and pay interest on) what you need. Do you need to borrow in increments, and are you comfortable with the HELOC’s variable interest rate? If so, a HELOC may be a good move for you.

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

The monthly payment on a $100,000 HELOC will be based on how much of the credit line you have used, and on your term and rate. If you use the entire $100,000 and need to 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 very flexible way to borrow. You only withdraw what you need at any given time. HELOCs also typically have a lower interest rate than a personal loan or credit card. You can use the funds borrowed from a HELOC for anything. And many borrowers find it reassuring to have a credit line open for any unexpected emergencies.

Do you need an appraisal for a HELOC?

Yes, an appraisal is usually a must for a HELOC. The value of your home helps the lender decide how much money you can borrow — and whether you can borrow at all.

What disqualifies you from getting a home equity loan?

Poor credit history, insufficient home equity, and a high debt-to-income ratio are some of the factors that can disqualify you from obtaining a home equity loan.

How difficult is it to get a HELOC?

The level of difficulty associated with getting a HELOC depends on your credit score, home equity, and debt-to-income ratio. Homeowners with strong financial profiles may find qualifying for a HELOC to be smooth sailing, whereas those with less favorable profiles may run up against challenges.

Does HELOC affect credit score?

Applying for a HELOC may result in a hard inquiry on your credit report, which can cause a temporary decrease in your score. How you manage your HELOC can also influence your credit score over the long term. If you’re the pay-on-time type, you should be fine.

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-Q424-056

Compare HELOC rates in Montana.

Introduction to HELOC Rates

If you are looking to learn about home equity lines of credit (HELOC) and what the rates are in Montana, chances are you’ve been making timely home loan payments and building up valuable home equity. Congratulations.

Before you begin an application, use this guide to learn about the underlying factors that influence HELOC rates. It will help you choose the best offer for your personal financial needs.

You’ll find out what drives rates in Montana and come away knowing how to put your best foot forward with a prospective lender. We’ll take you step by step through the application requirements. And because a HELOC is just one way to get equity out of your home, we’ll explain alternatives to HELOCs as well.

What Is a HELOC?

A HELOC is a revolving line of credit using your home as collateral. The credit line you qualify for will depend on your home’s value and the remaining balance on your mortgage. Qualified borrowers may be able to pull out as much as 90% of their equity with a HELOC. You can draw, repay, and draw again with this flexible type of credit line.

HELOCs have two phases: draw and repayment. It’s important to understand them both.

The Draw Period

During a HELOC’s draw period, usually 10 years long, you have access to funds up to your credit limit. Payments in this period tend to be interest-only, with principal payments optional. If you pay down the principal, you can borrow against the full credit line more than once. A HELOC interest only calculator can help you manage your finances during the draw phase.

The Repayment Period

The repayment period of a HELOC may last 10 to 20 years. During that time, your borrowing ends and you pay back the principal with interest. Your interest rate is usually variable, and that can make monthly repayment amounts unpredictable. A HELOC repayment calculator can help you figure out what your monthly payments would be at various interest rates.

Where Do HELOC Interest Rates Come From?

Variable HELOC interest rates change over the life of the credit line, and are related to the prime rate — the rate banks and other lenders charge customers they think carry the least risk of default. Lenders look to Federal Reserve rates when setting their prime rates.

How Interest Rates Impact HELOC Affordability

An interest rate can have a significant impact on a HELOC’s affordability. When it’s time to repay a $60,000 HELOC, having an interest rate of 6.00% over a 20-year term would make your monthly payment $430. A 7.00% interest rate would increase that payment to $465. Looking at the entire term, the customer with the 7.00% interest rate would pay an additional $8,477 overall.

The more you borrow and the higher your interest rate, the larger the numbers. This chart shows you more examples:

HELOC Interest Rate Trends

Interest rates for HELOCs closely follow the prime rate. Understanding and anticipating possible interest rate fluctuations can help a homeowner make sound decisions when applying for a HELOC.

Historical Prime Interest Rate

The prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. Its fluctuations over the years have directly influenced HELOC rates in Montana.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

In addition to the prime rate, HELOC rates in Montana are significantly influenced by a borrower’s level of home equity, credit score, income, and loan-to-value (LTV) ratio. When all of these factors are optimal, the homeowner’s chances of securing a favorable HELOC rate are high.

Home Equity

If you hold significant equity in your home, you can usually score an attractive interest rate for a home equity line of credit. Homeowners who possess a minimum of 15% equity generally qualify for a HELOC. The more equity you have, the less risk your lender assumes.

Credit Score

To secure the most advantageous interest rates on HELOCs, you will want to maintain a credit score of 680 or higher — ideally, 700 or above. A higher score indicates to lenders that you present a lower risk.

Stable Income

Lenders assess your ability to pay back a HELOC by looking at your income. A borrower with a steady stream of income is less likely to default. This means you will almost always get a better interest rate if you can provide documentation of consistent income when you apply.

Loan-to-Value Ratio

Many lenders require you to show a combined loan-to-value ratio (mortgage balance + desired HELOC amount / appraised home value) of 85% or less. If your home is worth $500,000 and your mortgage balance is $300,000, for example, and your HELOC balance is $100,000, then your combined LTV ratio will be 80%.

Variable vs Fixed Interest Rates

A HELOC’s variable interest rate means that your rate changes throughout the life of the loan. Variable interest rates frequently start lower than fixed rates, then adjust upward or downward depending on conditions in the market. Understanding how variable rates work is key to managing a HELOC throughout the two phases.

Tools & Calculators

Financial tools like a HELOC monthly payment calculator, a HELOC interest-only calculator, and a home equity loan calculator can be helpful resources. Widgets like these will help you estimate your payments and understand a home equity line of credit’s financial implications.

How to Qualify for a Competitive HELOC Rate

To secure the best HELOC rates in Montana, you’ll want to make sure you have stellar credit, among other things. Do these things before you apply:

Take Care of Your Credit Score

Keep up with your payments and chip away at your credit card balances. When you take care with these things, you’re not just tidying up your finances — you are nurturing your credit score. Regularly review your credit reports. Correct inaccuracies promptly. The higher your credit score, the more attractive a candidate you are for a home equity line of credit.

Assess Your Home Equity

If you are planning to apply for a HELOC, make sure you have 15%–20% equity in your home, or even more. Build equity by making timely mortgage payments every month, or by investing in improvements. As your home’s value increases, your equity will grow.

Calculate Your Debt-to-Income Ratio (DTI)

You can figure out your DTI ratio using a simple formula: your total monthly debt payments (car loan, student loan, etc.) divided by your gross monthly income. Some lenders will allow a DTI below 50%. Others require 36% or less. Lower is always better. This number is important in determining your eligibility for a HELOC, as well as the terms you might be offered.

Application Process for a HELOC in Montana

The application for a home equity line of credit involves a multi-step process, including a financial evaluation, a formal application, and a home appraisal. Here’s a step-by-step.

Step 1. Run the Numbers

Before you jump in to apply for a home equity line of credit, size up your finances. Start by compiling your credit score info and DTI ratio. Some lenders invite you to prequalify for a HELOC online, and doing so can help you suss out whether your stats meet their requirements.

Step 2. Compare Lenders

Look at interest rates, along with lenders’ qualifications, credit limits, fees, and the duration of their draw and repayment periods. All these stats will give you a sense of which lenders might be a good fit for you.

Step 3: Gather Your Documents

Before you apply, gather the following: recent pay stubs, your latest tax return, a recent mortgage statement, and bank statements. Self-employed applicants should be ready with at least two years of tax returns. Having these documents prepared will ease the process.

Step 4: Submit Your Application

Once your ducks are in a row, you’re ready to submit the application. You can do this online, over the phone, or in person, depending on the lender. Double-check everything before you hit “send” or “submit” to avoid any issues going forward.

Step 5: Get an Appraisal

Your home’s appraisal is key to the HELOC process, since its market value is a determinant of how much equity you have, and that influences how much credit a lender might offer you.

Step 6: Prepare for Closing

Before you can draw on your credit line, you’ll need to sign paperwork and take care of any fees charged by the lender. Lenders often make funds available quickly — sometimes around three business days after you sign.

Tax Benefits and Considerations

If you decide to use HELOC funds to buy, build, or improve your home, you could deduct the interest you pay on the first $375,000 borrowed if you file taxes as an individual ($750,000 if you are married and filing jointly). Consulting with a tax advisor for specifics is smart and will help you make the most of deductions related to your home equity line of credit.

How Much Does a HELOC Cost?

HELOC closing costs are lower than those for buying a home or a mortgage refinance. The appraisal fee, which may range from $300 to $600, is typically the most significant line item. Other costs may include application, origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Be aware that reduced or waived closing costs may come with a higher interest rate.

Alternatives to HELOCs

Other ways to get equity out of your home are available, such as different types of home equity loans and cash-out refinancing. Personal loans are also an option if you prefer an unsecured loan. Consider the advantages and disadvantages when looking at each option to determine which best meets your requirements.

Home Equity Loan

When you compare a HELOC vs. home equity loan, you’ll find that the latter provides a fixed lump sum amount and is paid back at a fixed interest rate. Borrowers may be able to access up to 85% of their home equity through this option.

You can use a home equity loan calculator to estimate your borrowing capacity. Here’s a quick look at some differences between the two:

Recommended: What Is a Home Equity Loan?

Cash-Out Refinance

If you are debating between a cash-out refinance vs. a home equity line of credit, this might help: With cash-out refinancing, homeowners can refinance their mortgage for more than what’s owed. They then will receive the difference in cash. This option may suit you if you need a large lump sum.

Personal Loan

This option does not require collateral, making it viable for those without significant home equity. Personal loans will pay out anywhere from $1,000 to $100,000 and are paid back in regular, set payments over a term of 2–7 years. You can use a personal loan for home improvements, debt consolidation, and other large expenses.

Credit Cards

Credit cards and HELOCs are both revolving debt options. Instead of receiving a big chunk of money, you access a credit line that you can tap as needed. Credit cards, of course, come with higher interest rates than HELOCs, and that can make them more expensive if you carry a large balance month upon month. While cards may offer flexibility for smaller purchases, a home loan like a HELOC may be a more cost-effective solution for larger expenses like home improvements, or if you are consolidating debt.

The Takeaway

A home equity line of credit can be a valuable financial tool for homeowners seeking to capitalize on their home’s accumulated equity. HELOCs provide competitive interest rates and flexible options for repayment. Homeowners who aren’t sure how much they need for a major project may find a HELOC a worthwhile option to consider. Just keep in mind that a HELOC’s variable interest rate means monthly payments can increase unexpectedly if the market shifts.

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 on a $50,000 home equity line of credit can vary, based on how much of the credit line you draw, the interest rate, and the repayment term. With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. This is assuming you will make interest-only payments through the draw period.

Is a HELOC a smart move for you?

To determine whether a home equity line of credit is a sound financial decision, you’ll need to consider your individual financial circumstances. While HELOCs can be advantageous for home improvements, debt consolidation, and other big expenses, it’s essential that you carefully consider the interest rates, repayment terms, and potential risks of assuming this type of credit.

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

The payments you’ll need to make on a $100,000 home equity line of credit (HELOC) can be easily calculated with a HELOC monthly payment calculator. The interest rate, the repayment term, and other details will influence the monthly payment. If you assume you’ll draw the full amount, secure a 7.00% interest rate, and repay over a 20-year term, your monthly payment will be about $836.

What are the benefits of a HELOC?

HELOCs offer homeowners flexible access to funds, competitive interest rates, and potential tax advantages. They can help fund home improvement projects, educational expenses, and debt consolidation.

Do you need an appraisal for a HELOC?

Yes. An appraisal is generally required for HELOC applications, as they help a lender to ascertain the property’s current market value. With the appraisal, lenders can evaluate the amount of available equity and set the borrowing limit.

What might prevent you from getting a home equity loan?

Several factors, including a poor credit history, insufficient home equity, or a high debt-to-income ratio, may disqualify you from receiving a home equity loan. Familiarize yourself with various home equity loan requirements to enhance your chances of meeting the criteria for a loan.

How hard is it to get a HELOC?

How hard it is to secure a HELOC may be contingent on several factors, including your credit score, your amount of home equity, and your income stability.

Does HELOC affect credit score?

When you apply for a home equity line of credit, it may temporarily cause a slight decrease in your credit score because of the hard inquiry. But when you make consistent and punctual payments on your HELOC, it can have a positive impact on your credit score over time by demonstrating your responsible borrowing behavior and positive credit history.

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-Q424-036