Compare HELOC rates in Arkansas.

Introduction to HELOC Rates

For homeowners who have been making regular home loan payments over the years, leveraging their accumulated equity can be a relatively cheap source of cash. But with so many financing options out there, how do you choose the best one for your financial situation and goals? And how do you know you’re getting the best available interest rate?

This article provides an overview of Arkansas HELOC interest rates. Readers will learn about the HELOC application process, the benefits of HELOCs, and other ways to borrow against your home. By the end, you’ll understand the factors influencing these interest rates and how to secure a competitive deal that fits your long-term needs.

First we’ll get into what is a what is a home equity line of credit.

What Is a HELOC?

A HELOC is a revolving credit line that allows the homeowner to borrow up to 90% of your home’s value, minus what you owe 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 borrow in increments as you need the money. And because the HELOC is secured by your home, it usually has a lower interest rate than a credit card or personal loan.

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 reduce your balance, and borrow again. Interest-only payments are typically required during this period, but principal payments may be optional.

The Repayment Period

During the repayment period (typically 10 to 20 years), borrowing ends, and you pay back the principal with interest (but only on the amount borrowed, not the full credit line). HELOCs have variable interest rates that fluctuate over the loan term, making repayment unpredictable. A HELOC repayment calculator can help you understand the impact of interest rate changes on your payments.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are tied to the prime rate and influenced by economic and housing market factors. The prime rate is the benchmark interest rate for a bank’s most creditworthy customers. Federal Reserve policy decisions also impact HELOC rates.

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

How Interest Rates Impact HELOC Affordability

Interest rates significantly impact the affordability of HELOCs over a 10-year draw and 20-year repayment period. A mere 1% difference in interest rate can result in thousands of dollars in additional interest over the duration of the loan. This example, for a $50,000 HELOC repaid over 20 years, shows the monthly payment and total interest paid at three 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

HELOC rates follow the prime interest rate trends. Since 2018, the prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. The chart shows prime rate fluctuations over the last 50 years. Understanding these trends can help you predict where HELOC rates are headed.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

HELOC rates are also influenced by the borrower’s financial profile.

Home Equity

Possessing substantial home equity places you in a lower risk category for lenders, thereby securing you more favorable interest rates. Customarily, homeowners are required to have a minimum of 15% equity to qualify for a HELOC. Employing a home equity loan calculator can give you an estimate of your equity and potential borrowing capacity.

Credit Score

You need to maintain a credit score of 680 or higher when seeking a HELOC in Arkansas, and many lenders prefer it to be 700+. Building your credit score can increase your chances of securing more beneficial terms.

Stable Income

A steady income serves as a reliable indicator of a lower likelihood of default. That means consistent employment in the same job over the years can be just as important as how much you make.

Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (your mortgage balance + desired HELOC, divided by your appraised home value) to be 90% or less, although some will allow you to borrow 100% of your home’s value. The ratio is a key metric in determining your credit limit. If your home value is $500,000, your mortgage balance is $300,000, and your HELOC balance is $100,000, then your LTV ratio is 80%.

Recommended: HLEOC Interest-Only Calculator

Variable vs Fixed Interest Rates

HELOCs feature variable interest rates, which are subject to change over the course of the loan term. These rates may start lower compared to typical fixed rates but then change — going either up or down — with market conditions.

Tools & Calculators

Online calculators can be valuable tools to have at your disposal when deciding between a HELOC vs a home equity loan. You can utilize our calculators to plan your budget, estimate your interest-only payment during the draw period, and your larger monthly payment when borrowing is over.

How to Qualify for a Competitive HELOC Rate

To secure the most favorable Arkansas HELOC rates, there are steps you can take. First, work to cultivate your credit score over time, evaluate the state of your home equity, and precisely calculate your debt-to-income ratio.

Take Care to Your Credit Score

Consistently pay your bills on time, and diligently pay down your credit card balances, and your credit score will benefit. Review your credit reports on a regular basis as well, and dispute any errors you find.

Assess Your Home Equity

Regular mortgage payments help in building home equity over time. Home equity can 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 by your monthly income. Generally, home equity lenders prefer a DTI below 36%, but the lower your DTI, the more favorable it is.

Application Process for a HELOC in Arkansas

The HELOC loan application process in Arkansas consists of multiple essential steps. Here they are in detail.

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. Some lenders allow borrowers to prequalify for a HELOC online, streamlining the application process.

Compare Lenders

See what interest rates you qualify for in Arkansas, but also compare lenders’ qualification requirements, loan minimums and maximums, fees, the length of the draw and repayment periods they’re offering, and other factors.

Gather Your Documents

Before applying for HELOC loans, it is imperative to gather and organize all the necessary documents. These typically include proof of income (W2s, pay stubs), employment history (a resume), credit reports, and documentation of your home’s value. Having these documents readily available will not only streamline the application process but also ensure a smoother and more efficient experience.

Submit Your Application

Submitting your HELOC application takes place online, by phone, or in person. Make sure to complete all fields; leaving anything blank or failing to attach documentation can slow or stall the process.

Get an Appraisal

If your home appraises for more than your mortgage balance, the lender may approve you for a HELOC. The appraisal helps determine the amount of equity you have in your home, which affects the loan amount you can qualify for.

Prepare for Closing

Before accessing your HELOC funds, you must sign loan documents and pay necessary fees. Certain lenders conveniently make funds available within a mere three business 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). Consulting a tax advisor can help borrowers navigate the specific tax implications and confirm your eligibility for deductions.

Closing Costs and Fees

HELOC closing costs are usually lower than home buying or cash-out refinance costs. The appraisal fee, typically the highest expense, ranges from $150 to $500. Other costs may include application, loan origination, and administrative fees. Some lenders charge annual maintenance fees, transaction fees for withdrawals, inactivity fees, or early termination fees. Many lenders waive closing costs but may charge a higher interest rate.

Alternatives to HELOCs

There are different types of home equity loans in addition to home equity lines of credit (HELOCs), other financing options include home equity loans, cash-out refinancing, and personal loans. Carefully consider the pros and cons of each option, including HELOCs versus home equity loans and cash-out refinancing versus home equity lines of credit, to determine the best fit for your specific financial needs and circumstances.

Home Equity Loan

Now we come to what is a home equity loan. Unlike home equity lines of credit, home equity loans provide a lump sum amount and are repaid at a fixed interest rate. Homeowners can typically borrow up to 85% of the equity built in their homes through a home equity loan. The chart below breaks down the differences between these two popular options.

Cash-Out Refinance

This type of mortgage refinance allows homeowners to pay off their current mortgage for more than they owe and take the difference in cash. A cash-out refi will leave you with one monthly payment (a new mortgage) rather than the two you would have if you carry a mortgage plus a HELOC or home equity loan. However, if you have a rock-bottom interest rate on your current mortgage, a refi might not make sense at this time.

Personal Loan

An unsecured personal loan is repaid in regular monthly payments over a term of two to seven years. Personal loans do not require collateral, making them a good alternative for individuals who lack home equity. However, interest rates are typically higher than those for HELOCs and home equity loans.

Recommended: Cash-Out Refinance vs Home Equity Line of Credit

Credit Cards

Credit cards typically come with higher interest rates than HELOCs, which can make them considerably more expensive if you carry a substantial balance over an extended period of time. While credit cards offer convenience and flexibility for smaller purchases, they often don’t make sense for larger expenses such as home improvements or debt consolidation.

The Takeaway

Understanding HELOCs and their alternatives can be a complex endeavor. In a nutshell, HELOCs offer competitive interest rates and flexible repayment for a host of big-ticket items. If you’ve cultivated a good credit score, have a low DTI ratio, and substantial home equity, a HELOC is worth considering. Just make sure to shop around with multiple lenders to find the best available rates and 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?

The monthly payment for a $50,000 HELOC, which is a type of revolving credit that uses the equity in your home as collateral, is determined by the interest rate and repayment terms. Employing a HELOC monthly payment calculator can be helpful in approximating the payments. For instance, with a 7.25% interest rate and a 10-year repayment period, the monthly payment would amount to approximately $587.

Is a HELOC a good idea right now?

Deciding whether a HELOC is a good choice is contingent upon your financial situation. While HELOC loans can make paying for home improvements or debt consolidation a bit more cost-effective and convenient, they are not without drawbacks. Carefully consider the current interest rates, your ability to repay, and the possible impact on your overall financial stability before making a decision.

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

The monthly payment for a $100,000 home equity line of credit (HELOC) can fluctuate based on the prevailing interest rate, the chosen repayment term, and the amount you draw. For example, if the interest rate is set at 7.25% and the repayment term is 10 years, the monthly payment would hover around $1,174.

What are the benefits of a HELOC?

HELOC loans provide numerous advantages, including flexible access to funds, competitive interest rates, and potential tax benefits. These versatile loans can be utilized for a wide range of purposes, encompassing home renovations, education expenses, and debt consolidation. However, responsible management of the loan is crucial to avoiding financial strain and ensuring a positive borrowing experience.

Do you need an appraisal for a HELOC?

In most cases, a HELOC loan requires an appraisal to ascertain the property’s current market value. However, some lenders may offer appraisal-free options based on automated valuation models. The appraisal serves as a crucial safeguard to ensure that the loan amount does not surpass the property’s equity, safeguarding both the borrower and the lender.

What disqualifies you from getting a home equity loan?

Several factors, including a low credit score, inadequate home equity, a high debt-to-income ratio, and unstable income, can impede your ability to secure a home equity loan.

How difficult is it to get a HELOC?

Obtaining a HELOC can be challenging due to various factors, primarily credit score, home equity, and income stability. Generally, lenders mandate a minimum credit score of 680, along with home equity of at least 15%. Assessing your financial situation in advance can significantly improve your chances of qualifying for a HELOC.

Does HELOC affect credit score?

HELOC loans can impact your credit score in various ways. Submitting an application for a HELOC may trigger a hard inquiry, which can temporarily cause a small reduction in your score. Conversely, prudent use and punctual payments can contribute to maintaining or even enhancing your credit 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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q424-014

Compare HELOC rates in Kansas.

Introduction to HELOC Rates

This guide provides a handy overview of current Kansas HELOC rates. We’ll walk you through all you need to know about HELOC interest rates, the application process, and what homeowners need to do to secure an advantageous deal. By the end, readers will be able to confidently navigate the HELOC marketplace, select the option that best suits their needs, and utilize it responsibly to achieve their long-term financial goals.

To begin, what is a home equity line of credit?

What Is a HELOC?

A HELOC is a revolving credit line, similar to a credit card, that allows homeowners to get equity out of their home to pay for big projects. Because their home serves as collateral, borrowers usually find that HELOC interest rates are lower than those for personal loans. You can borrow up to 90% of your home’s value, minus your primary home loan. A HELOC has two phases: draw and repayment.

The Draw Period

During the initial draw period of a HELOC, usually lasting a decade, homeowners can access funds up to their credit limit, make payments, and borrow again as needed (thus, the term “revolving credit”). Typically, interest-only payments are required during this phase, while principal payments remain optional. A HELOC interest-only calculator can help you determine what your payments will be during the draw period.

The Repayment Period

The repayment period of a HELOC usually spans 10 to 20 years, during which borrowing ends and the principal is repaid with interest. Borrowers pay interest only on the amount borrowed. However, variable interest rates can fluctuate, making repayment unpredictable and potentially more expensive over time. Here’s a comparison chart that boils down the differences between a HELOC vs a home equity loan, another type of financing.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are tied to the prime rate and influenced by economic and housing market factors. The prime rate is the benchmark interest rate banks offer their most creditworthy customers. Federal Reserve policies also impact HELOC rates. Understanding these factors (even loosely; you won’t be tested) helps borrowers anticipate rate changes and make informed decisions about the best time for a Kansas HELOC.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on the affordability of a HELOC. Over the course of a 20-year loan term, a 1% difference in interest rate can result in a substantial $11,000 upcharge in total interest paid. The table below illustrates how the interest rate and repayment term impacts your monthly payment. This underlines the importance of securing the most favorable rate possible.

HELOC Interest Rate Trends

As we noted above, fluctuations in the prime rate serve as indicators of where HELOC rates in Kansas are likely to go. By staying alert to this and other trends, borrowers are empowered to make timely decisions about their finances.

Historical Prime Interest Rate

Since 2018, the prime rate has fluctuated significantly, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. Below the table, the graphic shows the ups and downs of the prime rate over the last 50 years. The rate rarely dips below 4.00% or rises above 10.00% — but it does happen now and then.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Zooming in on HELOC interest rates reveals other factors that can raise or lower the rate you’re offered. They include your home equity level, credit score, income, and loan-to-value ratio. These metrics help lenders evaluate the risk associated with a HELOC, which ultimately determines the interest rate they offer to the borrower.

Home Equity

Substantial home equity can make borrowers appear less risky to lenders, potentially leading to lower interest rates. Typically, homeowners need at least 15% equity in their property to qualify for a HELOC. A home equity loan calculator can help you determine your equity stake.

Credit Score

Maintaining a credit score of 680 or higher is needed to qualify for a HELOC, with some lenders preferring a credit score of 700+.

Stable Income

Of course, lenders evaluate your income to make sure you can fulfill your repayment obligations. But did you know that a steady income serves as an indicator of reduced likelihood of default? So if you’ve been employed by the same company for many years, you may have an advantage over someone with a higher income who recently changed jobs.

Loan-to-Value Ratio

Your loan-to-value ratio comes into play when borrowing money. It’s calculated by dividing your desired financing amount by the appraised value of your home: HELOC amount / home value. The “combined LTV” (or CLTV) takes into account your mortgage balance too: HELOC amount + mortgage balance / home value. Lenders often require a CLTV ratio of 85% or less.

For example, if your home value is $500,000, with a $300,000 mortgage and a $100,000 HELOC, your CLTV ratio is 80%.

Variable vs Fixed Interest Rates

HELOCs are characterized by variable interest rates that are subject to change throughout the loan’s duration. Initially, variable interest rates can be lower than conventional fixed rates; however, they are adjusted based on prevailing market conditions. Understanding this distinction is crucial in making an informed choice between a HELOC and a home equity loan, which typically has a fixed interest rate.

Tools & Calculators

Presenting an extensive collection of financial tools, including a HELOC repayment calculator, a HELOC monthly payment calculator, and a Home Equity Loan calculator. These resources are designed to assist you in estimating your payments and determining what interest rate and repayment term you can afford.

How to Qualify for a Competitive HELOC Rate

Now that you know all the factors that influence your HELOC interest rate, here’s a To Do list: Cultivate your credit score, maintain a steady income, and aim for a low LTV ratio.

Tend to Your Credit Score

Making timely payments and reducing credit card balances can lead to a substantial boost in your credit score, which helps a lot in securing favorable HELOC rates.

Assess Your Home Equity

The first step in a HELOC application is to calculate your home equity. Regular mortgage payments will build home equity over time. Home equity can also be enhanced through renovations that boost the property’s value.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is how much you owe in monthly debt payments (auto loan, student loan, etc.) divided by your gross monthly income. Lenders generally look for a DTI that’s below 36%, but the lower your DTI, the better.

Application Process for a HELOC in Kansas

Now that you know how to prepare your finances for HELOC lenders, we’ll review the process for applying for a HELOC in Kansas. By gaining a clear understanding of the steps, you can effectively prepare for a successful HELOC application.

Step 1. Crunch the Numbers

Check your credit scores, calculate your DTI, and get a good estimate of your home equity before you apply for a HELOC. Some lenders offer online prequalification, simplifying the process. Remember that lenders prefer a credit score above 680, a DTI ratio below 36%, and an equity stake of 15% or above.

Step 2. Compare Lenders

By now you know why you want to compare interest rates, but also compare lenders’ qualification requirements, loan minimums and maximums, fees, and the length of the draw and repayment periods they’re offering.

Step 3: Gather Your Documents

Gather all the paperwork — real or digital — that you’ll need for your HELOC application. This typically includes proof of income (pay stubs, W2s, tax returns), employment history, bank statements, and mortgage statements. Having them ready will expedite and accelerate the application process for your HELOC.

Step 4: Submit Your Application

Submitting your HELOC application takes place online, by phone, or in person. Ensure that all necessary documentation is included to prevent any delays in the processing of your application.

Step 5: Get an Appraisal

The lender will typically schedule the appraisal for you. As long as your home appraises for more than your mortgage balance, the lender may approve you for a HELOC.

Step 6: Prepare for Closing

Before accessing your HELOC funds, you must sign loan documents and pay necessary fees. Certain lenders may make funds available within three business days of closing. Congratulations!

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). Consulting a tax advisor is crucial to navigate the specific tax implications and confirm eligibility for deductions related to HELOC loans. Understanding these benefits can help you make informed decisions about your home equity line of credit.

Closing Costs and Fees

HELOC closing costs are generally lower than for a home loan or mortgage refinance. The appraisal fee, $150–$500, is often the highest expense. Other costs include application, loan origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Lenders may reduce or waive closing costs for a higher interest rate.

Alternatives to HELOCs

In addition to HELOCs, other financing options include home equity loans, cash-out refinancing, and personal loans. Compare the pros and cons of each to determine the most suitable option for your specific financial circumstances.

Home Equity Loan

What is a home equity loan? Unlike HELOCs, home equity loans provide a lump sum amount that is repaid immediately with monthly payments that remain the same for the life of the loan. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan.

Cash-Out Refinance

Cash-out refinancing lets homeowners refinance for more than what’s owed on the mortgage and take the difference in cash. A cash-out refi can provide a substantial lump sum but may come with higher interest rates. Accessing up to 85% of a home’s value is common, requiring at least 15% equity post-refinance. Our cash-out refinance vs home equity line of credit guide can fill you in on the details.

Personal Loan

A personal loan is an installment loan repaid in set monthly payments over a term of 2 to 7 years. One advantage is that you don’t have to offer your home as collateral to get this loan. However, personal loans tend to have higher interest rates than HELOCs or home equity loans.

Credit Cards

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

The Takeaway

HELOCs provide a flexible option to tap into the equity in your home to meet a variety of financial needs in the Sunflower State. Offering competitive interest rates and the freedom to borrow as needed, a HELOC can serve as a valuable financial tool. However, borrowers should compare lenders and make sure they understand all the terms and conditions before proceeding with an application.

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 HELOC varies depending 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 total interest with the 20-year term.

Is a HELOC a good idea right now?

Whether a HELOC is a good idea right now depends on your financial situation and needs. HELOC loans offer flexibility and competitive interest rates, making them suitable for large expenses like home renovations. However, it’s important to consider the potential risks and ensure you can manage the payments.

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

The monthly payment on a $100,000 HELOC varies based on several factors, including the interest rate, repayment term, and how much you’ve drawn. Let’s assume you draw the full $100,000. 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 means a payment of $836.

What are the benefits of a HELOC?

HELOCs have numerous advantages, encompassing relatively low interest rates and the ability to draw funds as they’re needed. Best of all, you only pay interest on what you borrow at any given time.

Do you need an appraisal for a HELOC?

Indeed, a HELOC of credit typically requires an appraisal. This evaluation serves to determine the value of your home, which directly influences the maximum loan amount you are eligible to borrow.

What disqualifies you from getting a home equity loan?

A number of factors can make you ineligible for a home equity loan, such as a poor credit score, inadequate home equity, and a high debt-to-income ratio.

How difficult is it to get a HELOC?

It all depends on your financial circumstances. But if your credit score is above 680, your available home equity is above 20%, and your income is stable and high enough to afford the monthly payments, you probably won’t have a problem getting approved for a HELOC. Just make sure to gather your documentation in advance and that you fully understand what you’re signing up for.

Does HELOC affect credit score?

Yes, a HELOC can affect your credit score. Applying for a home equity line of credit may result in a hard inquiry, which can temporarily lower your score. Additionally, high balances on a HELOC can increase your credit utilization, potentially impacting your score. However, managing your HELOC loans responsibly can help maintain a good credit 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-Q424-026

Compare HELOC rates in Idaho.

Introduction to HELOC Rates

If you’re thinking about how to get equity out of your home and considering a home equity line of credit (HELOC), this guide will smooth your application process and help you get the most competitive interest rate available. You’ll learn the key factors influencing Idaho HELOC rates and how to effectively utilize this information to put your best financial foot forward and make a well-informed decision about borrowing money. Let’s start with the most basic info:

What Is a HELOC?

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

HELOCs have two phases: the draw period and the repayment period, and it’s important to understand the difference between them.

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 payments during the draw period, but payments toward the principal may be optional. This flexibility allows homeowners to manage their finances effectively during the HELOC draw period. It’s important to note that Idaho HELOC rates can vary, so it’s wise to compare offers from different lenders to ensure you get the right terms for your situation.

The Repayment Period

During the 10- to 20-year repayment period, borrowers repay the principal with interest. A HELOC repayment calculator can help you understand what potential monthly payments and overall interest paid will be. HELOCs carry the risk of foreclosure if borrowers default, so it’s important to understand what payments will be required and to research HELOC rates in Idaho to ensure you’re getting a competitive deal.

Where Do HELOC Interest Rates Come From?

The starting point for HELOC rates is at the Federal Reserve, which sets rates that influence lenders’ prime rates. The prime rate is the benchmark interest rate for a lender’s most creditworthy customers. But this rate isn’t offered to every borrower, and there are additional factors that influence what each applicant is offered. We’ll get to those later. But first, it’s helpful to understand just how big a deal rates are.

How Interest Rates Impact HELOC Affordability

Your interest rate can make a big difference in affordability when you borrow with a HELOC. Using a HELOC repayment calculator can help homeowners understand this, but here is a look at one example, a $50,000 HELOC repaid over 20 years at three 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

Looking at the history of fluctuations in the average prime rate provides insight into current trends in HELOC rates. As you can see in the chart below, since 2018, the prime rate has fluctuated notably, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023. The graphic shows a span of more than 50 years. If you’re thinking about a home equity line of credit but wondering if a 4.00% rate is in your future, looking at this graphic will provide valuable perspective.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Each of the factors below can influence the Idaho HELOC rate you’ll be offered.

Home Equity

Having substantial equity in your home makes you appear less risky to lenders, which can lead to lower interest rates. Homeowners typically need at least 15% to 20% equity in their property to qualify for favorable HELOC rates. To determine your equity, subtract whatever you owe on your home from its estimated value.

Credit Score

Maintaining a credit score of 680 or higher is of utmost importance in securing more favorable interest rates on HELOCs, and 700 is even better. A higher credit score serves as an indicator of reduced risk.

Stable Income

Lenders look at your income, but they are also looking for a steady income, which indicates a diminished risk of default. You may be asked to produce business records or additional pay stubs if your income is not from full-time employment.

Loan-to-Value Ratio

Many lenders require your combined loan-to-value ratio (combined loan balance / appraised home value) to be 90% or less, although some will allow you to borrow 100% of your home’s value. The ratio is a key metric in determining your credit limit. This ratio significantly impacts your home equity line of credit terms. Your combined LTV ratio is calculated by dividing the HELOC amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. If your mortgage balance is $300,000, and you want a $100,000 HELOC, and your home value is $500,000, then your LTV ratio would be 80%.

Variable vs Fixed Interest Rates

HELOCs feature variable interest rates, which can change during the loan term. While variable interest rates often start lower than fixed rates, they can adjust up or down in accordance with prevailing market conditions. Plugging different possible interest numbers into a HELOC interest calculator can provide you with valuable insights into the potential effects of these fluctuations.

Tools & Calculators

Calculators can help you gain valuable insights into your monthly payment amount and overall loan affordability, whether you’re thinking about a HELOC or a home equity loan. Here are three useful tools:

How to Qualify for a Competitive HELOC Rate

To obtain the most favorable HELOC rates in Idaho, you’ll want to do a little financial housekeeping before you submit your first application. Here’s your to-do list:

1. Strengthen Your Credit Score

Maintaining regular and timely payments while simultaneously reducing credit card balances can help you cultivate the kind of credit score lenders are looking for. Take a few minutes to check your credit report as well, and request a correction to any inaccuracies.

2. Assess Your Home Equity

Increased home equity can lead to better terms and higher amounts when applying for a HELOC. Make sure you have at least 20% equity in your home.

3. 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%, though many prefer a ratio below 36%, and the lower your DTI, the better.

Application Process for a HELOC in Idaho

The application process for a home equity line of credit in Idaho involves a detailed review of financial health and a formal appraisal of your home, among other steps. Understanding each step can help you navigate the process smoothly.

Step 1. Run the Numbers

Check that your credit score is 680 or above and that your DTI ratio is at least 36%. Estimate your home equity to understand how much you can borrow. Some lenders offer online prequalification tools to streamline this process.

Step 2. Compare Lenders

When seeking the best HELOC rates in Idaho, compare interest rates, qualification requirements, loan limits, fees, and the duration of draw and repayment periods from multiple lenders.

Step 3: Gather Your Documents

When preparing your HELOC application, it helps to gather and organize all the necessary documents in advance. This typically includes proof of income (such as W2 forms and at least one tax return), and property documents such as proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns.

Step 4: Submit Your Application

You’ll submit your HELOC application online or in person, or sometimes even by phone, depending on the lender. Be sure to attach all necessary documents at this stage.

Step 5: Get an Appraisal

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

Step 6: Prepare for Closing

Before accessing your home equity line of credit loans funds, complete the process by signing documents and paying any required fees. Some lenders 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 (so keep your receipts). The maximum amount of mortgage principal eligible for interest deductions is $375,000 for single filers, and $750,000 for couples filing jointly. It is advisable to consult a tax advisor to understand your eligibility for deductions related to a HELOC.

Closing Costs and Fees

Closing costs for HELOCs are generally lower than typical home buying costs. Fees may include a fee of around $300 to $600 for the appraisal, and lesser fees for the application, loan origination, and administrative costs. Annual maintenance, transaction, inactivity, and early termination fees may also apply. Some lenders offer reduced or waived closing costs but may charge higher interest rates for your home equity line of credit.

Alternatives to HELOCs

Each avenue offers its own advantages and disadvantages, so it’s crucial to think through your financial objectives and to consider the differences between a HELOC and other types of home equity loans to ascertain the most suitable option.

Home Equity Loan

Unlike a HELOC, which offers a revolving credit line, home equity loans provide a fixed sum of money at a fixed interest rate. Homeowners can borrow up to 85% of their home’s equity with this type of loan and 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

Cash-out refinancing is a little different from a typical mortgage refinance. It allows homeowners to tap into their home equity by refinancing their existing mortgage for more than they 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 an informed decision about their financial options. A cash-out refinance will leave you with one monthly payment (a new mortgage) vs. the two you would have if you carry a mortgage and a HELOC or home equity loan. But it also means you will have a new interest rate. So if your current home loan provides a very favorable rate, you’ll want to look closely at how much more you would pay in interest with a refi.

Personal Loan

A personal loan is typically unsecured, so it will likely have a higher interest rate than a HELOC or home equity loan. It’s repaid in regular, fixed payments over a duration of two to seven years. This loan option can be utilized for diverse purposes and does not necessitate using your home as collateral, unlike a home loan.

Credit Card

Credit cards, like personal loans, typically come with a higher interest rate than a HELOC, which can make them much more expensive if you carry a large balance from month to month. While credit cards offer flexibility for various purchases, HELOCs can be more suitable for larger expenses such as home improvements.

The Takeaway

When considering a HELOC, you’ll want to carefully weigh the advantages and disadvantages. A home equity line of credit can provide a versatile source of funding for home renovations, debt consolidation, and other financial needs. However, it’s essential to thoroughly comprehend the interest rates, fees, and repayment terms before making a decision. Using an online calculator can be very helpful in this process.

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 utilize a HELOC monthly payment calculator. For example, if you had a 20-year repayment term and a 6.00% interest rate, your monthly payment would be $358. At a 7.00% interest rate, your monthly payment would jump to $388.

Is a HELOC a good idea right now?

Deciding if a HELOC is a good idea depends on your goals. A home equity line of credit can be beneficial for home improvements, debt consolidation, and other expenses. Some borrowers find it comforting to have the line of credit open even if they don’t always use it. However, it’s important to consider the current interest rates, your ability to repay, and the potential impact on your financial stability.

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

The monthly payment on a $100,000 HELOC depends on how much of the credit line you are using. But if you have drawn the maximum and are paying it off over 20 years, you would have a monthly payment ranging from around $700 to $900 if your interest rate was in the neighborhood of 6.00% to 8.50%.

What are the benefits of a HELOC?

A home equity line of credit (HELOC) offers several benefits, including flexible access to funds, lower interest rates compared to credit cards, and potential tax advantages if funds are used for remodeling. One big benefit is that you only pay interest on the amount you borrow, making a HELOC an efficient financial tool.

Do you need an appraisal for a HELOC?

It’s likely you will need an appraisal for a home equity line of credit. The appraisal helps determine the value of your home, which is crucial for calculating the amount you can borrow. Some lenders will send an appraiser in person; others will use an online model that evaluates many data points to determine your home’s estimated value.

What disqualifies you from getting a home equity loan?

Several factors can disqualify you from getting a home equity loan or line of credit. These include a low credit score, home equity below 15%, a high debt-to-income ratio, and unstable income. Addressing these factors can improve your chances of qualifying for a home equity loan.

How difficult is it to get a HELOC?

The difficulty of getting a home equity line of credit depends on your financial situation. Lenders consider factors such as your credit score, home equity, debt-to-income ratio, and income stability. Improving these aspects before you apply can make the process smoother.

Does HELOC affect credit score?

A home equity line of credit can affect your credit score in several ways. Applying for a HELOC may result in a hard inquiry, which can temporarily lower your score. Additionally, using a significant portion of your credit line can increase your credit utilization, potentially impacting your score. However, making timely payments on your HELOC can positively affect your credit score 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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q424-022

Compare HELOC rates in California.

Introduction to HELOC Rates

Congratulations. If you’re looking at rates for a home equity line of credit (HELOC) in California, then chances are you’ve been making your home loan payments and building up equity in your home. Now it’s time to see what rate and terms you might qualify for.

But first: Use this guide to understand the underlying factors that influence HELOC rates and choose the best offer for your personal financial needs. You’ll come away knowing what drives rates in California and how to put your best foot forward with a prospective lender. We’ll even take you step by step through the application process. And because a HELOC is just one way to get equity out of your home, we’ll also explain alternatives to HELOCs.

Ready to maximize your borrowing potential and achieve your financial objectives? Let’s start at the very beginning.

What Is a HELOC?

A HELOC is a revolving credit line with your home as collateral. The amount of your credit line will depend on your home’s value and your mortgage balance. Qualified borrowers are often able to borrow as much as 90% of their equity with a HELOC. You can borrow, repay, and borrow again against the credit line.

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

The Draw Period

During the draw period of a HELOC, usually lasting 10 years, you can access funds up to your credit limit. Payments during this period are typically interest-only, with principal payments being optional. If you do pay down the principal, you can borrow against the full credit line again. Using a HELOC monthly payment calculator can help you manage your finances effectively during this phase.

The Repayment Period

The repayment period of a HELOC typically lasts 10 to 20 years, during which borrowing ends and the principal is paid back with interest. Interest rates are usually variable, making monthly repayment amounts somewhat unpredictable. A HELOC repayment calculator can show you what your monthly payments would be at various interest rates.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are variable and can change over the life of the credit line. But they are influenced by the prime rate, which is the rate banks and other lenders charge customers deemed to be at lowest risk of default. Lenders look to Federal Reserve rates when setting the prime rate.

How Interest Rates Impact HELOC Affordability

As you might imagine, interest rates can have a significant impact on the affordability of a HELOC. When the time comes 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 equal a payment of $465. And over the entire term, the customer with the 7.00% rate would pay an additional $8,477 in interest. The more you borrow and the higher the interest rate, the larger these numbers become.

HELOC Interest Rate Trends

As we’ve seen, HELOC rates are tied to the prime interest rate set by banks and other lenders. Getting to know the history of the average prime rate (shown in the chart and graphic below) can help you understand where current HELOC rates in California fall on the spectrum.

Since 2018, the prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. These fluctuations can have a direct and significant impact on HELOC vs. home equity loan considerations, in part because while HELOC rates are variable, home equity loan rates are usually 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 California. Several key factors specific to the individual borrower come into play, and understanding them can help you improve your chances of securing the most favorable rates for your loan or line of credit.

Home Equity

Having a significant amount of equity in your residential property makes you a less risky prospect for lenders, potentially resulting in reduced interest rates. Homeowners typically need a minimum of 15% to 20% equity to qualify for a HELOC.

Credit Score

When it comes to securing a favorable interest rate for a HELOC, maintaining a credit score of 680 or higher is paramount. In fact, many lenders prefer a credit score of 700 or above.

Stable Income

Lenders scrutinize your income to evaluate your ability to repay the HELOC, so stability is important.

Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (CLTV) to be 90% or less. To compute your CLTV, add your existing mortgage balance to the desired amount of your HELOC and divide by your appraised home value. Here’s an example:

A homeowner’s property is worth $500,000. They owe $300,000 on their mortgage and they want a $120,000 HELOC.

$300,000 + $120,000 = $420,000

$420,000 / $500,000 = .84 (which is 84% CLTV)

Variable vs Fixed Interest Rates

As noted above, HELOCs are characterized by variable interest rates, which are subject to change over the course of the loan’s duration. Initially, variable interest rates are lower compared to fixed rates, but they can increase or decrease in accordance with prevailing market conditions. Consequently, these fluctuations have an impact on your HELOC rates within the state of California.

Tools & Calculators

Online calculators can be useful as you prepare to borrow against your home’s equity, helping you get a handle on how much you might be able to borrow and what monthly payments might look like. You can even plug in different interest rates to see how having a variable-rate loan might change your monthly bills. Here are three of our favorite calculators:

How to Qualify for a Competitive HELOC Rate

To be eligible for competitive HELOC rates in California, it is imperative to focus on improving your credit score, maintaining a steady source of income, and ensuring that your loan-to-value ratio remains low. These factors play a pivotal role in determining your eligibility for more favorable HELOC offers, as they provide lenders with a comprehensive assessment of your financial situation and creditworthiness.

Take Good Care of Your Credit Score

By maintaining timely payments and reducing credit card balances, you can significantly enhance your credit score, which is important to securing more favorable HELOC rates in the state of California. A higher credit score substantially increases your chances of qualifying for more advantageous HELOC options, providing you with greater financial flexibility and opportunities.

Assess Your Home Equity

The initial action for a HELOC application is to assess your home equity. Regular mortgage payments help in building home equity over time. Home equity can 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 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, serves as a good indicator in home equity lending. Typically, home equity lenders prefer a DTI below 50%, but an even lower DTI is generally more favorable.

Application Process for a HELOC in California

The application process for a HELOC in California involves a series of steps to demonstrate your financial fortitude. Do them correctly and you have the best chance of obtaining your optimal HELOC rate.

The process of applying for a HELOC, from application through closing, can 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 to make sure you have at least 15% home equity before applying for a HELOC.

Step 2. Compare lenders.

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

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) at hand for the application process. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns. Lenders also typically require a homeowners insurance declaration page as part of the property documentation so make sure your insurance on your home is up to date. Having these documents ready can expedite the application process and help you secure the best HELOC rates in California.

Step 4: Submit your application.

Submitting your HELOC application online or in person is the next step. Submitting a complete and accurate application increases your chances of approval and helps you secure competitive HELOC rates in California.

Step 5: Get an appraisal.

After you submit your application, a home appraisal is typically required. This might be an in-person appraisal, or a lender may use an automated valuation model (AVM) appraisal, where an algorithm uses existing data to compute a home’s estimated value. The appraisal helps determine the amount of equity you have in your home, which affects the HELOC rate you’ll qualify for. A higher appraisal value can lead to a larger line of credit.

Step 6: Prepare for closing.

Once you find a HELOC offer at a comfortable interest rate and with terms you consider favorable, you’re ready to close on the loan agreement. Before accessing your HELOC funds, you’ll sign loan documents and pay necessary fees. Lenders can make funds available as quickly as three days following the closing of the HELOC. Ensuring all paperwork is in order and fees are paid promptly helps you access your funds quickly and efficiently.

Tax Benefits and Considerations

Homeowners can deduct interest paid on a HELOC if the borrowed funds are used for buying, building, or significantly improving their primary residence. Deductions are limited to interest on the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). To take this deduction, you’ll need to itemize deductions on your tax return; consult a tax advisor for help.

Closing Costs and Fees

HELOC closing costs are lower than home-buying or cash-out refinance costs. An appraisal fee, ranging from $300 to $600, is often the highest expense. Other costs include application, loan origination, and administrative fees. Some lenders charge annual maintenance fees, transaction fees, inactivity fees, or early termination fees.

Alternatives to HELOCs

HELOCs aren’t the only way to take advantage of your hard-earned home equity. By understanding the types of home equity loans and California HELOC and home equity loan rates, individuals can make smart decisions and be prepared for any potential fluctuations in the market.

Home equity loans, cash-out refinancing (a special type of mortgage refinance), and personal loans are other financing options. Let’s take a closer look:

Home Equity Loan

It’s important to understand both what is a HELOC and what is a home equity loan when you’re thinking about borrowing. Home equity loans offer a lump-sum loan at a fixed interest rate. Borrowers can typically access up to 85% of their home’s equity (minus any existing loan balance). Home equity loans are well suited to large, one-time expenses, such as a renovation or debt consolidation. As with a HELOC, you can use a calculator to determine your borrowing capacity. Comparing both options highlights their differences and benefits. Here’s a quick look at the two:

Cash-Out Refinance

A cash-out refinance lets homeowners borrow against their home equity by refinancing for more than they owe. They can pay off their initial loan and are then left with a lump sum to use as they wish. As you compare a cash-out refinance vs a home equity line of credit or home equity loan, remember that a refi gets you an entirely new mortgage — and a new interest rate. If you have a sweet rate on your current mortgage, refinancing might not be the best bet. Do the math to compare costs before you decide what suits your overall home loan strategy.

Personal Loan

Personal loans, like home equity loans, can be used to cover a wide range of expenses. However the repayment term tends to be shorter: 2 to 7 years. Personal loan interest rates are also often higher than interest rates for HELOCs or home equity loans. The upside is that personal loans are unsecured — your home is not used as collateral. Because of that a personal loan won’t require a home appraisal, and the loan approval process may be quicker as a result.

Credit Cards

Credit cards typically come with higher interest rates than HELOCs, which can make them much more expensive if you carry a large balance from month to month. When considering types of home equity loans, it’s important to note that a home equity loan or HELOC can offer a lower rate and more flexible repayment terms compared to credit cards.

The Takeaway

When researching HELOCs, it’s essential to compare HELOC rates in California to find the option that delivers the lowest interest rate and lowest overall costs. There are alternatives to a HELOC, but for many borrowers, HELOCs offer unparalleled flexibility, since you can borrow (and pay interest on) only the amount you need at any given time.

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 utilize a HELOC monthly payment calculator which will take into consideration your interest rate and loan term. For example, if you borrow the max on a $50,000 credit line at an interest rate of 7.5% and a term of 20 years, your monthly payment would be $403.

Is a HELOC a good idea right now?

Deciding if a home equity line of credit (HELOC) is a sound financial move hinges on your specific financial circumstances. A HELOC is a very flexible way to borrow because you only borrow what you need at any given moment, up to your approved credit line. This means you don’t pay interest on the portion of the credit line you aren’t using. However HELOCs typically have a variable interest rate. So if you crave a steady monthly payment amount a home equity loan might be more your speed.

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

The monthly payment on a $100,000 HELOC will depend on how much of the credit line you have used to date. If you have used only $30,000 of your $100,000 limit, the payment might be just a few hundred dollars. On the other hand, if you have used the entire $100,000 credit line and are paying 8.00% interest over 20 years, your monthly payment would be $836.

What are the benefits of a HELOC?

A home equity line of credit is a very flexible way to borrow. You only withdraw the amount of the credit line that you need at any given time. (So you only pay interest on the amount you have borrowed.) Because they are secured by your property, HELOCs also typically have a lower interest rate than a personal loan or credit card. You can use the funds borrowed via a HELOC for just about anything. And for many borrowers, having an open credit loan is a financial security blanket in the event of unexpected expenses, such as a costly home repair.

Do you need an appraisal for a HELOC?

Yes, an appraisal is customarily required for a home equity line of credit. It accurately determines the value of your home which in turn determines your eligibility to borrow and your maximum loan amount.

What disqualifies you from getting a home equity loan?

A poor credit history, insufficient home equity, and a high debt-to-income ratio can all make you ineligible for a home equity loan.

How difficult is it to get a HELOC?

Assuming you have your financial life in order and can easily amass all the necessary documents (tax returns, pay stub, etc) and that you meet the qualifications of a lender, it shouldn’t be hard to get a HELOC. The entire process can take anywhere from one to two months and will move more quickly if you are organized, swiftly arrange access for the appraiser (if a home visit is required), and efficiently make a decision about which lender to utilize.

Does HELOC affect credit score?

Yes, obtaining a home equity line of credit can have an impact on your credit score. Applying for a HELOC entails a hard inquiry, which may cause a temporary reduction in your score. Furthermore, your credit score is influenced by how you manage your debts, including making consistent and punctual payments. If you are good about making your payments, 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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

SOHL-Q424-015