Compare HELOC rates in Alaska.

Introduction to HELOC Rates

If you’re an Alaskan homeowner who’s curious about HELOC interest rates, this guide can help you understand the current landscape and how to secure the best available deal. Learn about the factors influencing these rates, how to compare lender offers, and the steps of the application process. By the end, you’ll not only understand why HELOCs are a popular financial tool, but which type of home equity loan or line of credit is right for your situation and goals.

What Is a HELOC?

First, what is a home equity line of credit? A HELOC is a revolving credit line based on your home equity. HELOCs offer lower interest rates because they’re secured by your home, but they come with the risk of foreclosure if you default. A HELOC has two phases: draw and repayment. Let’s break them down:

The Draw Period

During the HELOC‘s draw period, usually lasting 10 years, you can access funds up to your credit limit. Interest payments are typically required during this period, but principal payments may be optional. If you do make payments to pay down your balance, you can borrow the money again — that’s why it’s called “revolving” credit.

The Repayment Period

The repayment period for a HELOC typically lasts 10 to 20 years. During this phase, borrowing ends, and you must pay back the principal with interest. Interest rates are usually lower because the loan is secured by your home. You only pay interest on the amount borrowed, not the entire credit limit. However, variable interest rates can fluctuate, making repayment unpredictable. Using a HELOC repayment calculator can help you plan for these changes.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are tied to the prime rate and can be influenced by economic and housing market factors. The prime rate is the benchmark interest rate that banks charge their 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 play a pivotal role in determining 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 noted, HELOC rates in Alaska are closely linked to the prime interest rate. Movements in the prime rate serve as a reliable indicator of the direction of Alaska HELOC rates. By keeping informed about these trends, borrowers are empowered to make well-reasoned financial decisions.

Historical Prime Interest Rate

Since 2018, the prime rate has experienced notable fluctuations, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. A thorough examination of historical trends can provide valuable insights into potential future HELOC rates.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Several other factors influence HELOC rates in Alaska, including a borrower’s home equity position, credit score, income, and loan-to-value (CLTV) ratio. Understanding these factors can significantly enhance your chances of securing more favorable rates. Here they are in more detail.

Home Equity

Home equity is the amount of your home value that you actually own. It’s calculated by subtracting your mortgage balance from the market value of your property. For example, if your home is worth $350,000, and your mortgage balance is $250,000, you have $100,000 in home equity. Homeowners generally need a minimum of 15% equity in their property to qualify for competitive HELOC rates.

Credit Score

Maintaining a high credit score, ideally 680 or higher, is of utmost importance when applying for a HELOC with favorable interest rates. Many lenders prefer a credit score of 700 or above.

Stable Income

The stability of your employment may be just as important as your actual salary level. A steady income stream serves as a reliable indicator of a reduced likelihood of default, potentially resulting in more favorable HELOC rates. Consistent earnings serve as a testament to your financial dependability, a quality that lenders highly value when assessing your application.

Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (mortgage balance plus loan amount / 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. Here’s an example: Let’s say your home value is $500,000. Your mortgage balance is $300,000, and you’re applying for a $100,000 HELOC:

Your combined LTV ratio would be 80%, well within the safety zone.

Variable vs Fixed Interest Rates

HELOCs feature variable interest rates, which are subject to change over the course of the loan period. Initially, variable interest rates tend to be lower compared to fixed rates, but they can fluctuate in either direction based on prevailing market conditions — meaning your monthly costs could go up. Utilizing a HELOC interest calculator can provide valuable insights into how these variations may impact your payments.

Tools & Calculators

Online tools can provide substantial assistance in estimating your payments and gaining a comprehensive understanding of the financial implications associated with your HELOC. A HELOC Interest Only Calculator can tell you how much your payment might be during the draw period.

How to Qualify for a Competitive HELOC Rate

To obtain the most competitive HELOC rates in Alaska, homeowners should maintain an excellent credit score, have a low debt-to-income ratio, and demonstrate a consistent and reliable source of income. Additionally, comparing offers from multiple lenders is highly recommended to ensure you secure the best Alaska HELOC rates that align with your specific financial requirements and objectives.

Improve Your Credit Score

Maintaining timely payments and reducing credit card balances can contribute to a robust credit score — a crucial metric in securing more favorable HELOC rates. A higher credit score serves as a strong indicator of financial health, presenting you as a more attractive candidate for obtaining a HELOC.

Assess Your Home Equity

The first step for any 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. A home equity loan calculator can help you calculate your position.

Calculate Your Debt-to-Income Ratio (DTI)

Your debt-to-income (DTI) ratio is calculated by dividing your total monthly debt payments by your gross monthly income. Typically, home equity lenders prefer a DTI below 36%. A lower DTI often indicates financial stability, which is advantageous when applying for a HELOC.

Application Process for a HELOC in Alaska

Applying for a HELOC involves several important steps that require attention, such as reviewing your financial health, comparing interest rates, preparing necessary documents, submitting an application, undergoing a home appraisal, and patiently waiting for approval. By understanding the HELOC process, you can navigate it more effectively and efficiently, ensuring a smoother and more successful experience.

Step 1. Run the Numbers

Check your credit scores, calculate your DTI, and get a good estimate of your home equity before you apply for a HELOC. Some lenders allow borrowers to prequalify for a HELOC online, streamlining the application process.

Step 2. Compare Lenders

See what offers you might qualify for when it comes to interest rates, but also compare their qualification requirements, loan minimums and maximums, fees, the length of the draw and repayment periods they’re offering, and other factors.

Step 3: Gather Your Documents

To apply for a HELOC, you will need personal identification, income verification, and property information. Income documentation often includes recent pay stubs, W-2 forms, and tax returns. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns. Lenders require a homeowners insurance declaration page as part of the property documentation for HELOC loans.

Step 4: Submit Your Application

Submitting your HELOC application can take place online, by phone, or in person. Be sure to double-check that all of the information provided is accurate and complete, as any errors or omissions could result in delays during the processing of your application.

Step 5: Get an Appraisal

After submitting your application, a home appraisal will be conducted to determine the current market value of your property. If the appraised value exceeds 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. Some lenders are known to make funds available within three days following the closing of the HELOC loans. Make absolutely certain that you completely understand all terms and conditions before you finalize the agreement.

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 for individual taxpayers ($750,000 for married couples filing jointly). You’ll have to itemize deductions to claim this credit. And you may want to consult a tax advisor to navigate the specific tax implications and confirm eligibility for deductions related to HELOCs.

Closing Costs and Fees

HELOC closing costs are lower than home-buying or mortgage refinance costs. The appraisal fee, usually the highest expense, ranges from $150 to $500. Other costs may include application, origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Be aware that many lenders offer to reduce or waive closing costs but may charge a higher interest rate.

Alternatives to HELOCs

There are other ways to get equity out of your home. In addition to home equity lines of credit, other financing alternatives include home equity loans, cash-out refinancing, and personal loans.

Home Equity Loan

What is a home equity loan? Unlike HELOCs, home equity loans provide a lump sum amount and are paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. This comparison chart may make the HELOC vs home equity loan decision a little clearer:

Cash-Out Refinance

Homeowners can refinance their mortgage for more than what they owe and take the difference as cash. This option suits those needing a substantial sum. However, it may come with higher interest rates than traditional refinancing. Compare the cash-out refinance vs a home equity line of credit for an informed decision.

Personal Loan

A personal loan gives borrowers a lump sum of $1,000 to $100,000 that is repaid in equal monthly payments over a set term from 2 to 7 years. Unlike a home loan, personal loans do not necessitate the pledging of collateral, making them an alternative for individuals who lack substantial home equity or other assets that can serve as collateral.

Credit Cards

Credit cards and HELOCs are both forms of revolving debt. Instead of receiving a lump sum of money, you get access to a credit line that you tap as needed. But credit cards often come with higher interest rates compared to HELOCs, which can make them considerably more expensive if you maintain a substantial balance that carries over from month to month.

The Takeaway

A home equity line of credit (HELOC) can be a versatile financial tool for homeowners in Alaska. HELOCs typically provide competitive interest rates and flexible repayment options. However, a HELOC’s variable interest rate means that monthly payments can increase unexpectedly depending on the market. But for homeowners who aren’t sure how much they need for a major project, a HELOC can be used for various purposes, including home improvements and debt consolidation.

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 is contingent upon the interest rate and repayment terms. Utilizing a HELOC monthly payment calculator can provide an accurate estimation. As an example, with an 8.50% interest rate and a 10-year term, your monthly payment will be about $620. This also assumes you make interest-only payments through the draw period.

Is a HELOC a good idea right now?

A home equity line of credit can be an advantageous financial option for individuals with a steady income and a strong credit history. It provides versatile solutions for many different needs, including home renovations and debt consolidation. Nevertheless, homeowners should carefully evaluate the prevailing interest rates and their current financial circumstances before making a decision.

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

The monthly payment on a $100,000 home equity line of credit is influenced by the interest rate and repayment terms. Utilizing a HELOC monthly payment calculator can provide an estimate of this amount. As an example, assuming you draw the full amount, secure an 8.50% interest rate, and choose a 20-year repayment term, your monthly payment should be about $868.

What are the benefits of a HELOC?

A home equity line of credit offers flexible access to funds, competitive interest rates, and potential tax benefits. A HELOC can be utilized for a diverse range of purposes, such as home improvements, educational expenses, and debt consolidation.

Do you need an appraisal for a HELOC?

Yes, an appraisal is generally required to obtain a home equity line of credit. The appraisal serves the purpose of determining the value of your home, which directly impacts the amount of money you are eligible to borrow.

What disqualifies you from getting a home equity loan?

Several factors can disqualify you from securing various types of home equity loans, including an unfavorable credit history, insufficient home equity, and an unstable source of income. When evaluating your application, lenders also place significant emphasis on your debt-to-income ratio and the loan-to-value ratio, as these metrics provide valuable insights into your overall financial stability and ability to manage debt.

How difficult is it to get a HELOC?

The level of difficulty in obtaining a home equity line of credit is contingent upon your financial circumstances. Lenders evaluate various factors, including credit scores, available home equity, and stability of income. By preparing the requisite documentation and acquiring a good understanding of the application process, individuals can significantly enhance their chances of qualifying for a HELOC.

Does HELOC affect credit score?

A home equity line of credit may affect your credit score. Applying for a HELOC may prompt a hard inquiry, which has the potential to temporarily lower your score. Plus, the way in which you manage the HELOC, making payments and maintaining a balance, can impact your credit score either positively or negatively.

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.

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-Q424-012

Compare home equity loan rates in Wisconsin.

Introduction to Home Equity Loan Rates

Welcome to our guide on Wisconsin home equity loan rates. We’re here to help you understand how to leverage the equity in your home, the interest rates you can expect, and tips on how to get the best deal. We’ll also discuss some alternatives to home equity loans that might be a good fit for your needs.

To begin, let’s look at what is a home equity loan.

How Do Home Equity Loans Work?

Home equity loans can be a smart financial move: By using your home as collateral, homeowners secure lower interest rates than on personal loans. If you’re still paying off your first home loan, a home equity loan is considered a second mortgage. These loans come with fixed interest rates and flexible repayment terms, typically ranging from 5 to 30 years.

To qualify, homeowners need at least 20% equity in their property. If you’re approved, the funds can cover an array of expenses, from renovations to education, medical bills, and debt consolidation.

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

Where Do Home Equity Loan Rates Originate?

Home equity loan interest rates are a product of multiple economic factors, with the prime rate playing a significant role. The prime rate is what banks charge their most creditworthy clients. Federal Reserve policy decisions on interest rates can also sway home equity loan rates. By understanding these influences, homeowners can better anticipate rate shifts and make well-informed decisions about the timing of your home equity options.

How Interest Rates Impact Home Equity Loan Affordability

The interest rate you secure can have a significant impact on your ability to afford a loan over its full term. Over a standard 20-year home equity loan, for example, a 1% difference in the interest rate can mean a higher monthly payment. Even more significant, that seemingly small difference can add up to an extra $11,000 in interest paid over the life of the loan, as illustrated in the chart below.

Home Equity Loan Rate Trends

The prime interest rate is a moving target, and its fluctuations are a crystal ball of sorts for predicting the future of home equity loan rates. By keeping a close eye on the prime rate, you can gain valuable insights into what the future holds for your borrowing options. This knowledge can empower you to make more informed financial decisions.

Historical Prime Interest Rates

Since 2018, the prime rate has dipped to a low of 3.25% in 2020 and peaked at 8.50% in 2023. This fluctuation is a reflection of the ever-changing economic climate and the Federal Reserve’s continuous efforts to keep things steady. These tweaks have a ripple effect, influencing the rates of adjustable-rate mortgages, credit cards, corporate loans, and various home equity options.

The graphic below shows that the prime rate has not been above 10% since the 1980s.

Source: TradingView.com

Factors Influencing Home Equity Loan Rates

Besides the prime rate, a variety of other factors help determine your home equity loan rate, such as your credit score, loan-to-value ratio, home value, home value stability, property location, and lender policies. Lenders carefully consider these elements when setting the interest rate and terms of a home equity loan, as they provide a comprehensive view of your financial standing, the value of your property as collateral, and the overall risk of the loan.

These same factors also influence the rates and terms of a HELOC (home equity line of credit), which is another way to get equity out of your home.

Credit Score

The better your credit score, the more favorable your interest rates. Lenders often look for a minimum of 680, but many prefer 700 or higher. Why? Because a higher score means you’re less likely to default, which makes you a more attractive candidate for a loan.

Home Value

Lenders often use independent appraisals to help determine the value of a home and the amount of equity a homeowner has. This helps them set appropriate loan limits. The more equity you have, the more you may be able to borrow.

Loan-to-Value (LTV) Ratio

The LTV ratio is a critical factor in determining the maximum loan lenders will permit. In Wisconsin, most lenders cap your combined LTV (your mortgage balance plus loan amount divided by your home value) at around 85%.

Let’s say you currently owe $300,000 on your mortgage and you want to borrow $75,000 for a renovation project. Your home is appraised at $450,000:

$300,000 + $75,000 = $350,000

$375,000 / $450,000 = 83%

At 83% combined LTV, there is a good chance a lender will approve a home equity loan.

Home Value Stability

The ups and downs of home values impact the equity you’ve built in your home. When the housing market is on the upswing, lenders are often more willing to approve larger loans, as the increasing value of your property can act as a safety net. But when home values dip, lenders might tighten their belts, leading to more stringent criteria and potentially smaller loan amounts.

Property Location

Living in an area with a high risk of natural disasters or other hazards can lead to higher interest rates. Lenders may charge more in interest to offset the risk of lending in these areas. High-risk areas can include places that are prone to natural disasters, such as hurricanes, floods, and wildfires.

Lender Policies

When you’re looking at home equity options in Wisconsin, it’s important to consider lender policies. They can have a big impact on the interest rate you’re offered. To make sure you’re getting the best deal, compare interest rates, fees, and closing costs from several lenders. Do your homework, and you can get the most favorable terms for your home equity options in Wisconsin.

How to Qualify for the Lowest Rates

To qualify for the best home equity loan rates in Wisconsin, you’ll need to have a strong credit score, a low debt-to-income ratio, adequate property insurance, and a good amount of equity in your home. By making sure you meet these qualifications, you’ll be able to get the best loan terms for your needs and enjoy the financial flexibility and peace of mind that come with homeownership.

Build a Strong Credit Score

A robust credit score is your ticket to more attractive interest rates on home equity loans. On the flip side, a lower credit score might mean higher rates or even a rejection. That’s why it’s key to keep your credit score in tip-top shape by paying your bills on time, checking your credit report regularly, and not maxing out your credit cards.

Manage Debt-to-Income (DTI) Ratio

Your DTI ratio is a crucial factor in determining your eligibility for a home equity loan. This ratio, which compares your gross monthly income to your monthly debt payments (auto loan, student loan, personal loan, etc), gives lenders a clear picture of your financial health. Most lenders require a DTI of 36% or less to approve a home equity loan. However, some lenders may offer home equity loans to borrowers with a DTI between 36% and 50%, but charge higher rates and fees.

Obtain Adequate Property Insurance

It’s standard practice for home equity lenders in Wisconsin to require property insurance, especially in areas prone to flooding. These policies are designed to protect you and your lender from potential financial losses due to damage or destruction of your property. It’s a good idea to review your coverage before applying for a home equity loan or HELOC.

Maintain Sufficient Home Equity

To qualify for a home equity loan in Wisconsin, you’ll need to have at least 20% equity in your home. The 20% equity requirement is in place to protect borrowers from taking on more debt than they can handle and to protect lenders from the risk of default. A home equity loan calculator can help you determine your equity level.

Fixed vs. Variable Interest Rates

Home equity loans typically come with fixed interest rates, which means you can count on steady, predictable monthly payments for the life of the loan. While fixed rates offer peace of mind, they often start out higher than variable rates, which can be more affordable at the outset. This is something to consider if you’re looking for a home equity loan in Wisconsin and want to know exactly what your payments will be.

Tools & Calculators

Use the helpful tools and calculators to find out how much you can borrow and what your payments will be, and to compare different loan options. Here, in addition to the home equity loan calculator, you’ll find a HELOC repayment calculator and a HELOC interest only calculator.

Closing Costs and Fees

Home equity loan closing costs typically range from 2% to 5% of the loan amount. These include a variety of fees such as the appraisal, credit report, document preparation, origination, notary, title search, and insurance.

Loan origination fees may be around 0.5% to 1% of the loan amount, or a flat fee. Title insurance is another cost, typically 0.5% to 1% of the loan balance, with title search fees ranging from $100 to $250. Appraisal fees can be between $300 and $500, and credit report fees are usually $50 to $100. Make sure to factor these into your calculations when determining the cost of your home equity loan.

Tax Deductibility of Home Equity Loan Interest

Good news: The interest you pay on a home equity loan can be tax-deductible if it’s used for home improvements. If you’re married and filing jointly, you can deduct interest on loans up to $750,000. Single filers can deduct interest on loans up to $375,000. Just remember, you’ll need to itemize your deductions to claim this benefit.

Alternatives to Home Equity Loans

There are a few different types of home equity loans and lines of credit. Home equity lines of credit (HELOCs), home equity conversion mortgages (HECMs), and cash-out refinances all have unique features and requirements. Each option has its own pros and cons, so it’s important to consider your specific financial situation and needs.

Home Equity Line of Credit (HELOC)

A home equity line of credit (HELOC) can be another smart financial move. You can borrow up to a certain limit and pay interest only on the amount you use. During the draw period, you can pay down the principal balance, making more money available to borrow. One drawback: Variable interest rates can change, so your monthly payments may go up. Here’s a HELOC vs home equity loan comparison at a glance:

Recommended: What Is a Home Equity Line of Credit?

Home Equity Conversion Mortgage (HECM)

An HECM, a government-insured reverse mortgage, is an option for those 62 and older to receive payments from the lender based on their home’s value. The funds can be received in various ways: a lump sum, regular payments, or a line of credit. Unlike Wisconsin home equity options and HELOCs, HECMs don’t require monthly payments, only becoming due when you leave the home. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)

Cash-Out Refinance

A type of mortgage refinance, cash-out refinance is a new mortgage that pays off your old one and lets you pocket the difference. Most lenders will let you borrow up to 80-85% of your home’s equity. Wisconsin home equity options and HELOCs require at least 20% equity, while reverse mortgages have no equity requirement but do have an age stipulation.

The Takeaway

In Wisconsin, home equity loans are a great way to leverage the equity in your home for a variety of financial needs. Understanding how home equity loans work and how to get the best interest rates are key to making a smart decision that’s right for your financial situation. Shopping around to compare rates, fees, and closing costs can also be enlightening and ensure you get the best available deal.

FAQ

What would my monthly payment be on a $50,000 loan?

With a $50,000 home equity loan, you have to consider the interest rate and loan term, as these will greatly affect how much you’ll pay each month. An 8.00% interest rate and a 10-year term would mean a monthly payment of $607. Score a 6.00% rate and choose a 20-year term and you’d pay $358 per month.

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

The monthly payment on a $100,000 HELOC will depend on the current market interest rate and how much of the line you have used. If you used the entire $100,000 and repaid it over 20 years at 7.00% interest, you would need to come up with $775 per month. To get a rough estimate of your monthly payment, you can use the calculator shown above.

What is the payment for a $25,000 home equity loan?

When considering a home equity loan, it’s important to consider the current interest rate and the term of the loan, as they will affect your monthly payment. To give you an idea, an 8.50% interest rate repaid over 10 years would give you a $310 monthly payment.

What would the payment be on a $30,000 home equity loan?

When you’re thinking about a $30,000 home equity loan, it’s important to consider how the interest rate and loan term will affect your monthly payment. But if you had a 7.00% interest rate and repaid the loan over 10 years, you’d pay about $348 per month.

What might disqualify you from securing a home equity loan?

There are a few things that can prevent you from getting a home equity loan, including having a poor credit history, not having enough equity in your home, having a high debt-to-income ratio, and not having enough insurance on your home. These factors can make it harder for you to get a home equity loan, so it’s important to consider them before you apply.

What are the benefits of a HELOC?

Home equity lines of credit, or HELOCs, are a great way to access the equity in your home. They offer flexibility in borrowing, lower interest rates than most credit cards, and the option to pay interest only on the money you actually borrow. These features make HELOCs a popular choice for homeowners looking for a cost-effective way to borrow.

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-Q424-109

Compare home equity loan rates in Oklahoma.

Introduction to Home Equity Loan Rates

Ready to learn how to get equity out of your home in Oklahoma? This guide is your introduction to home equity loan rates in the Sooner State — how they are determined, what factors influence them, and (especially key) how you can qualify for the best home equity loan rate possible. We’ll also show you the tools that are available to help you determine how much you can borrow and whether you qualify.

First, let’s make sure you understand the basics: What is a home equiy loan?

How Do Home Equity Loans Work?

A home equity loan is a loan that uses your home as collateral, which is why home equity loans typically offer lower interest rates than most unsecured personal loans. With a fixed rate, home equity loans offer a consistent, predictable repayment schedule. In order to take advantage of a home equity loan, you’ll need at least 20% equity in your primary residence to qualify — so it helps to pay off your home loan for a while before you apply. Many Oklahomans use these loans for renovations, education, medical bills, or debt consolidation.

You might be wondering, is a home equity loan the same thing as a home equity line of credit? The short answer is no. But we’ll get to what is a home equity line of credit in more detail below.

Where Do Home Equity Loan Interest Rates Originate?

The all-important home equity loan interest rate that drives the cost of your loan is not an arbitrary number; the interest rate a borrower is offered is influenced by a variety of economic factors. The cascade starts with the Federal Reserve. Fed policy on its rates helps drive the prime rate, which is the interest rate that banks charge their most creditworthy customers. Lenders have their prime rate, and then adjust it based on an individual borrower’s qualifications.

How Interest Rates Impact Home Equity Loan Affordability

The interest rate you secure can have a big impact on your ability to pay down your loan. For example, a 20-year home equity loan of $100,000 with an interest rate of 7.50% would mean a monthly payment of $806. The table below shows you how that monthly payment will change if you alter the loan amount, interest rate, or loan term.

Home Equity Loan Rate Trends

The prime interest rate is a key player when it comes to Oklahoma home equity loan rates. By keeping an eye on changes to the prime rate and understanding its historic ups and downs, you can make an informed decision about the right time to apply for an Oklahoma home equity loan.

The chart below shows the prime rate in recent years. It bottomed out at 3.25% in 2020 and peaked at 8.50% in 2023. The graphic below shows a much longer period of time: 50-plus years. As you can see, rates as low as 3.25% haven’t come around very often.

Historical Prime Interest Rates

Source: TradingView.com

Factors Influencing Home Equity Loan Rates

As noted above, several factors, such as credit score, loan-to-value ratio, home value, home value stability, property location, and lender policies, influence home equity loan rates. Many of these are within your control (unlike the prime rate), so it’s worth looking at them closely:

Credit Score

If you’re the kind of person who’s diligent about making timely payments, you’re in luck. Lenders are more inclined to offer you a better interest rate. They generally look for a credit score of 680 or higher, but many will be more impressed if you’re at 700 or above.

Home Value

To figure out how much you can borrow, lenders will request an appraisal to determine your home’s value. This will help them establish your equity and the maximum loan amount they’re willing to approve.

Loan-to-Value (LTV) Ratio

Once you know your home value, the LTV ratio can be calculated by taking the loan amount (the amount you owe on your first mortgage plus the amount you want to borrow with a home equity loan) and dividing it by your home’s appraised value. For a home equity loan, you generally want the answer to be less than 85%.

Home Value Stability

The stability of home values can significantly impact the amount of equity homeowners can access and utilize. When home values are on the rise in your part of Oklahoma, lenders may be more inclined to approve larger loan amounts, as the increased value of the property reduces the perceived risk. Conversely, if home values have been declining, lenders may be more conservative.

Property Location

Living in a place with a history of natural disasters or extreme weather can mean higher interest rates. Lenders may see these areas as risky, which can mean you’ll pay more over the life of your loan. If you live in an area with a high risk of flooding, tornadoes, or wildfires, you may have a more challenging time finding the lowest rates in Oklahoma.

Lender Policies

When you’re looking for a home equity loan, it’s important to consider how a lender’s policies will impact the interest rate you are offered. To make a smart decision, you should shop around and compare interest rates, fees, and closing costs from different lenders. By doing your homework and comparing your options, including home equity rates in Oklahoma, you can find the loan that’s right for you and may save money in the long run.

How to Qualify for the Lowest Rates

To qualify for the best Oklahoma home equity loans rates, there are a few things you should keep in mind. Tick off everything on this to-do list and you should be in good shape:

Build a Strong Credit Score

A higher credit score can lead to more favorable interest rates on home equity loans. Check your credit report and correct any inaccuracies before applying for a home equity loan. Avoid using the maximum on all your credit cards at once. And above all, pay your bills on time.

Manage Debt-to-Income Ratio

Your debt-to-income (DTI) ratio is a key player in loan approval. It’s a simple calculation: Add up your monthly debts (car loan, student loan, etc.) and divide by your gross monthly income. You’re looking for a number under 50% — and under 36% is even better for a home equity loan.

Obtain Adequate Property Insurance

Lenders want to know their investment is protected, especially in high-risk areas, so make sure your homeowner’s insurance is up to date.

Maintain Sufficient Home Equity

You’ll need at least 20% equity in your residence to qualify for a home equity loan, as we’ve seen. When you’re computing your equity to make sure you hit this number, remember to use the current estimated value of your home.

Fixed vs. Variable Interest Rates

Home equity loans typically feature fixed interest rates, so monthly payments remain constant throughout the loan’s life. While fixed interest rates offer stability, they may result in higher initial rates compared to variable rates, which can start lower but fluctuate over time. A home equity line of credit (HELOC) usually offers variable interest rates. Depending on your comfort level with changing monthly payment amounts and the direction you think interest rates are headed, one or the other of these options will be more suitable for you.

Tools & Calculators

By using our online tools and calculators, you can get a better idea of your eligibility for a home equity loan or HELOC, the amount you may be able to borrow, and your monthly payments. Play around with these helpful tools before you submit a loan application.

Closing Costs and Fees

Home equity loans typically come with closing costs that range from 2% to 5% of the loan amount. These may include fees for services such as appraisals, credit reports, document preparation, origination, notary, title search, and title insurance. Every lender’s fee schedule is different, so it’s important to consider not only what interest rate you are being offered but also the lender’s fee schedule when you are weighing one loan option against another.

Tax Deductibility of Home Equity Loan Interest

Here’s the scoop: The interest you pay on a home equity loan could be tax-deductible if you’re using the funds to buy, build, or improve your home. If you’re married and filing jointly, you can deduct interest on loans up to $750,000; for single filers, the number is $375,000. To benefit from this deduction, you’ll need to itemize your deductions on your tax return.

Alternatives to Home Equity Loans

Beyond the conventional home equity loan, there are different types of home equity loans at your disposal. Each comes with its own set of features and eligibility requirements.

Home Equity Line of Credit (HELOC)

A home equity line of credit (HELOC) is like a credit card. The lender will approve you for a certain amount of credit, and you can borrow up to that limit. You are not required to take the full amount of the HELOC. You will only pay interest on the amount you have borrowed. A HELOC has a variable interest rate that changes with the prime rate. If the prime rate goes up, your interest rate goes up and your payment will increase. Here’s a quick look at HELOCs vs. home equity loans:

Home Equity Conversion Mortgage (HECM)

An HECM is a government-backed reverse mortgage option for those 62 and older. With an HECM, you can receive payments from the lender based on your home’s value. The beauty of it is that you don’t have to repay the loan until you leave your home. This sets it apart from Oklahoma home equity loans and HELOCs, which require regular payments. While HECMs may have higher closing costs and longer processing times, the benefits are worth considering. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)

Cash-Out Refinance

This special type of mortgage refinance gives you a new mortgage that pays off your old one and an additional lump sum that you can use however you wish. Lenders usually permit borrowing up to 85% of your home’s value. If you’re considering a cash-out refinance vs. a home equity line of credit, the rate you have on your current mortgage is an important

The Takeaway

If you’re a homeowner in Oklahoma, you can make the most of your home equity by learning about home equity loan rates in Oklahoma and the factors that influence them. By comparing lenders, using online tools, and considering all financing options, you can make an informed decision about your home equity loan.

FAQ

What will you be paying each month on a $50,000 home equity loan?

The interest rate and loan term will determine what the monthly payment is on a $50,000 home equity loan. An 8.00% interest rate and a 10-year term would mean a monthly payment of $607. If the interest rate was 7.00%, the monthly payment would change to $581.

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

Your monthly payment on a $100,000 HELOC will fluctuate based on the current interest rate and how much of your credit line you’ve used. Consider using a HELOC Monthly Payment Calculator, which can take these variables into account and provide an accurate projection.

What is the payment on a $25,000 home equity loan?

If you’re thinking about a $25,000 home equity loan, it’s a smart move to shop around and compare interest rates and loan terms to find the right loan for your financial needs. If you paid back the loan over a decade, at an interest rate of 6.50%, you would pay $284 per month. But changing either the term or rate would change the payment amount, as well as how much interest you pay over the life of the loan.

What would the payment be on a $30,000 home equity loan?

A 10-year term and 8.00% interest rate would equal a monthly payment of $364. A 7.00% interest rate would cost you $348 per month over the same time period.

What might disqualify you from getting a home equity loan?

Generally speaking, lenders want to see that you have a history of making on-time payments and being financially responsible. Having a bad credit score, lacking adequate equity in your home, being burdened by a high level of debt, or not having insurance on your property could all be disqualifying factors.

What are the benefits of a HELOC?

A home equity line of credit (HELOC) has a lot of benefits, including a lower interest rate than a credit card and the ability to only pay interest on the money you borrow. If you know you need cash on hand for an upcoming project or expense but you aren’t sure exactly how much, a HELOC can be an especially flexible option.

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.

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