Current Home Equity Loan Rates in Utah Today
UTAH HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Utah.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Utah.
Key Points
• Home equity loan rates vary based on factors like lender, prime rate, and economic conditions.
• Home equity loans allow homeowners to borrow against their home’s equity for large expenses like renovations or debt consolidation.
• Home equity loan interest rates are influenced by the borrower’s credit score, debt-to-income ratio, and loan-to-value ratio.
• Interest rates on home equity loans are typically fixed, while home equity line of credit rates are variable.
• Alternatives to home equity loans include HELOCs, HECMs, and cash-out refinances, each with its own features and eligibility requirements.
Introduction to Home Equity Loan Rates
A home equity loan allows you to get equity out of your home. It uses your home as collateral, so it will likely offer a lower interest rate than an unsecured personal loan. In this guide, we’ll run down all the facts you need to know about home equity loan rates in Utah. We’ll look at how rates are set and provide details on how you can qualify for the best available rate on a home equity loan.
But first, let’s make sure we cover what is a home equity loan so you’ll know how it’s different from other types of loans or from a home equity line of credit.
How Do Home Equity Loans Work?
A home equity loan is essentially a second mortgage, with your home as the collateral. You receive the funds in a lump sum and then repay them, with interest, in equal monthly installments over a period of 5 to 30 years. These loans generally have a fixed rate, and at least 20% equity in your home will likely be required.
The Source of Home Equity Loan Interest Rates
Home equity loan interest rates are very important, as they largely determine the overall cost of your loan. These rates are influenced by a variety of economic factors. Federal Reserve policy decisions affect lenders’ prime rates, which is the rate that a bank charges its most creditworthy customers.
How Interest Rates Impact Home Equity Loan Affordability
Understanding how interest rates affect your loan is crucial. The chart below shows how different loan amounts, interest rates, and loan terms influence monthly costs. It’s important to realize that while the difference each month between, say, a 7.00% and an 8.00% interest rate may not be staggering, the difference in the total cost of the loan can run to thousands — even tens of thousands — of dollars, depending on the size of the loan.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
Home Equity Loan Rate Trends
The prime rate is an important determinant of the interest rate you may be offered for a home equity loan in Utah, so it pays to keep tabs on where current rates are and how they stack up against historical rates. The average prime rate hit a low of 3.25% in 2020 and a high of 8.50% in 2023. The graphic below shows the history of the average over five-plus decades. As you will see, history shows that it doesn’t drift below 4.00% very often.
Historical Prime Interest Rates
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
In Utah, as throughout the U.S., several factors beyond the prime rate come into play when determining home equity loan rates. Your credit score, home value, loan-to-value ratio, property location, and lender policies all have an impact on the rate you’re offered. These are important, so we’ll look at each factor individually.
Credit Score
You probably remember that when you got your home loan, your credit score was a critical part of the lender’s criteria. This is true with a home equity loan, as well. Lenders want to see a credit score of 680 or higher from a home equity loan applicant, although higher scores may get you a better rate.
Home Value
Lenders typically use independent appraisals to determine the value of your property before offering a loan. This appraised value of your home is key to determining exactly how much they will lend.
Loan-to-Value (LTV) Ratio
Once you know your home’s appraised value, you can figure out your LTV ratio. Your combined LTV ratio is calculated by dividing the remaining balance on your first mortgage plus the loan amount you’re seeking by the appraised value of the home. The maximum combined LTV lenders typically allow for home equity loans is around 85%.
Home Value Stability
Where you live in Utah is also important because movements of the local real estate market may affect your loan rate. If your home’s value is on the rise, lenders are more likely to greenlight a larger home equity loan, as an increasing property value helps lower their risk. But if values in your area are falling, lenders may offer smaller home equity loans.
Property Location
Where your property is located also impacts your interest rate in another way. If your home is in an area that is at a higher risk for natural disasters, you may be offered a higher rate, reflecting the fact that the lender is taking on more risk by lending in these areas. High-risk areas are those that are more likely to experience hurricanes, floods, tornados, or wildfires, for example.
Lender Policies
Each lender has its own policies that might impact the interest rate you’re offered. This is why it’s a good idea to shop around and compare interest rates, fees, and closing costs. By doing your research and comparing your options, you might be able to find better terms and save money.
How to Qualify for the Lowest Rates
To qualify for the lowest interest rates available, take these steps before you file your first home equity loan application.
Build a Strong Credit Score
A higher credit score can lead to better rates on home equity loans. Making timely payments is important, of course, but you should also take the time to check your credit report and correct any inaccuracies (they do happen). And avoid using the max credit line on all your credit accounts.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a significant factor when applying for a home equity loan. This ratio, which compares your monthly gross income to your monthly debt obligations, is a key indicator of your financial health. In Utah, lenders typically look for a DTI ratio below 36%, although some will go as high as 50% for home equity loans. You can figure out your DTI by adding up your monthly debts (student loan payment, car loan payment, etc.) and dividing by your gross monthly income.
Obtain Adequate Property Insurance
Full property insurance coverage is a must for home equity loans, as it protects you and your lender.
Maintain Sufficient Home Equity
If you’re eyeing a home equity loan in Utah, remember that you need to keep at least 20% equity in your property to qualify. This equity acts as a safety net for both you and the lender, ensuring that you’re not overleveraging your home.
Fixed vs. Variable Interest Rates
As noted above, home equity loans typically feature fixed interest rates. This means that the interest rate remains constant throughout the loan’s duration, ensuring predictable monthly payments. 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.
Tools & Calculators
Online tools and calculators can help you determine your eligibility for a home equity loan or home equity line of credit in Utah, learn your borrowing capacity, and determine what your monthly payments might be. Here are three calculators that take some of the stress out of the borrowing process:
Run the numbers on your home equity loan.
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Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for a home equity loan can range from 2% to 5% of the loan amount. Common closing costs include an appraisal fee, credit report fee, document preparation fee, and title insurance fee, but each lender has its own fee schedule. That’s why it’s important to compare fees when you’re comparing interest rates on loan offers.
Tax Deductibility of Home Equity Loan Interest
If you use your home equity loan to build or substantially improve a home, the interest you pay could be deductible. Joint filers can claim as a deduction interest on up to $750,000 of a home equity loan, while single filers can claim interest on up to $375,000 of a loan. Just remember, you’ll need to itemize your deductions to claim this benefit. This means you’ll need to save the receipts from your renovations with your tax documents.
Alternatives to Home Equity Loans
In Utah, homeowners have alternatives to traditional home equity loans. These different types of home equity loans include a home equity line of credit (HELOC), home equity conversion mortgage (HECM), and cash-out refinance. They are all different so make sure you study the details:
Home Equity Line of Credit (HELOC)
Qualifying for a home equity line of credit (HELOC) is similar to getting a home equity loan, but in actual use, a HELOC feels more like a credit card. You get a lender’s permission to borrow up to a certain limit, but you only pay interest on the portion of that credit line you actually use. As you consider the HELOC vs. home equity loan decision, it’s worth noting that the HELOC’s interest rate is usually variable and so can increase (or decrease) with time.
Home Equity Conversion Mortgage (HECM)
A home equity conversion mortgage (HECM) is a government-insured reverse mortgage program. Homeowners who are 62 years of age or older can withdraw some of the equity in their home as a lump sum, fixed monthly payments, a line of credit, or a combination of these. Unlike a home equity loan, HECMs do not require borrowers to make monthly mortgage payments. They repay the loan when they leave the home. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
A cash-out refinance is a special type of mortgage refinance. With a cash-out refi, you get a new mortgage that’s bigger than your old one. You’ll then pay off the old loan and be left with extra cash. Considering a cash-out refinance vs. a home equity line of credit? One thing to remember is that a cash-out refi leaves you with one monthly payment instead of two, which some borrowers find attractive. However, if your existing mortgage rate is nicely below current rates in Utah, you may find that doing a refinance won’t save you money on interest charges. Use a mortgage calculator to run the numbers before signing on.
The Takeaway
Understanding Utah home equity loan rates and what influences them is key to making smart financial decisions and making the most of your hard-earned home equity. By shopping around, cultivating a good credit score, and keeping your debt-to-income ratio in check, you can improve your chances of getting the best rate available to you.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payment be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan will depend on your interest rate and repayment term. Plug those numbers into a home equity loan calculator to get the exact payment amount.
What would a $100,000 HELOC look like in monthly payments?
Having a $100,000 home equity line of credit (HELOC) doesn’t mean that you have borrowed $100,000. A HELOC is a line of credit. So if you borrow $30,000 against that credit line, your monthly payment at 8.00% (with a 10-year term) could be $364. But if you use the full $100,000, then your monthly payment would be $1,213.
What is the monthly payment for a $25,000 home equity loan?
When you’re looking at a $25,000 home equity loan, it’s important to understand that the interest rate and loan term can impact your monthly payments. The monthly payment on a $25,000 home equity loan could run from $150 to around $500 depending on your interest rate and loan term.
Wondering what the payment would be on a $30,000 home equity loan?
Borrowing $30,000 with a 20-year term at a rate of 7.50% would equal a monthly payment of $242. Changing the interest rate or loan term will also change the monthly payment amount.
What might disqualify you from securing a home equity loan?
A history of bad credit, not enough equity in your home, a high debt-to-income ratio, or lacking enough property insurance can all lead to being disqualified for a home equity loan.
What are the benefits of a HELOC?
A home equity line of credit (HELOC) is an attractive financial tool for a number of reasons. It offers a lower interest rate than most credit cards, and the convenience of only paying interest on the amount of the credit line that you use. These benefits make a HELOC a good option for people who want to have financial flexibility and a cost-effective way to borrow money.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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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More home equity resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Liz Looks at: The 2025 Outlook
Defying Gravity
Gravity can be defined as a force that pulls two objects with mass toward each other, or more commonly, the force that makes things fall to the ground. Throughout the bull market of the past two years, there have been many forces that could have, and perhaps should have, acted as a gravitational force on markets — yet major stock indices rose to new all-time highs and defied gravity.
The debate over whether we’ll have a soft landing or hard landing has shifted — we’re now debating just how soft the landing will be, or whether there will be a landing at all. Hard landing narratives have left the chat, and optimism has permeated investor sentiment. Those trends were mostly in place before the U.S. presidential election, and have been fueled even more since then as we learn just how powerful political forces can be.
The New Year is an opportunity to start fresh and see our portfolios with new eyes. Of course, we always need to be aware of the risks, but we can’t invest by waiting for historical precedent to repeat in the same ways it has before. I, for one, have had to learn that lesson over and over throughout this cycle, as history has been a poor guide for what’s transpired. The trends remain strong, the economy has stayed on stable footing; and perhaps most importantly for markets, the buyers are still buying. For now — don’t fight it, ride it.
The Roar of 2024
The past year brought with it the beginning of the Federal Reserve’s rate cutting cycle, the continuation of an AI-fueled rally, an unemployment rate that rose above 4% for the first time since 2021, a wild election cycle, a Japanese currency scare, and a Treasury yield curve that finally re-steepened after its longest inversion ever.
Despite all the drama, the S&P 500’s biggest pullback for the year was 8.5%, considerably less than the average intra-year drawdown of 13%. A post-election relief and risk-on rally drove markets even higher, pushing the idea of a pullback even further from investors’ minds.
Nevertheless, there were a few noteworthy stocks that saw intra-year drawdowns much larger than that: Nvidia (-27%), Tesla (-43%), Super Micro Computer (-85%), and Dollar General (-55%). With the exception of Dollar General, all of those stocks are strongly positive year-to-date, showing how much price volatility there’s been this year.
The AI theme continued to power markets forward as the potential for increased productivity and innovation kept momentum intact. That said, the pace did slow as the year progressed, with investors increasingly looking for margin expansion and tangible profit to justify the large amounts of spending that has been directed toward AI. This resulted in a rotation into other areas of tech (i.e. software, but more on that later) and across different parts of the equity universe as investors search for other growth opportunities.
As for bond markets, the most notable aspect of 2024 was how much Treasury yields moved, with the 2-year yield surpassing 5% in late April, only to fall 150 basis points by the end of September. The 10-year saw similarly huge moves throughout the year, and the spread between the 2- and 10-year yield turned positive (i.e. un-inverted) for the first time since July 2022.
Contrary to conventional wisdom, stock market performance has been relatively unperturbed by the yield curve volatility, leading pundits to increasingly dismiss the shape of the curve as a useful indicator of anything ominous. I am not convinced that it should be ignored.
The persistence of buying appetite, both from investors and consumers, has kept the bull market rolling. We enter the holiday season and a new year with very little gravity pulling us down.
Rolling Into the First Half of 2025
2025 could prove to be the third year of this bull market run, but the age of the bull market tells us very little about how long it may last. Throughout history, we’ve seen bull markets that lasted less than two years, and others that lasted longer than 10. Knowing that the S&P was up 26% in 2023 and is likely to finish 2024 near or above that mark, it’s easy to wonder if all the juice has already been squeezed out.
What we found, however, is that even after consecutive strong years, the market can still do well — maybe not >25% well, but high single digits to low double digits well. It’s important to note that on average the strongest performance comes after negative years, but the blue and yellow bars below do not ring any alarm bells.
Current index levels present valuation risks and investors should be prepared for a more muted year of returns relative to 2023 and 2024, but we believe 2025 will still present opportunities and new ways to put money to work. We expect four pillars to support markets in the first half of the New Year, suggesting a friendly environment for earnings growth, and one that carries forward the current optimistic economic and business sentiment.
Pillar #1: Liquidity Spigot
The year could get off to a raucous political start as the debt ceiling limit will be reinstated on January 1. Once that happens, the Treasury will not be able to issue new debt until Congress raises the ceiling, which we do not expect to happen with any quickness.
Fear not, there is money available in the Treasury General Account (TGA) to cover spending in the meantime. In fact, estimates suggest the Treasury will have enough financial flexibility to cover expenses until the summer… even more reason why raising the debt ceiling is not an immediate threat to markets.
This means a few things: 1) Even without new debt issuance, money from the TGA will effectively boost market liquidity, 2) these available funds allow the Fed to continue on its quantitative tightening (QT) path, theoretically until mid-2025, 3) despite QT, bank reserves are likely to remain above the “scarce” range until then, which quells liquidity concerns.
Markets like liquidity, and many would argue the rally we’ve seen since late 2022 has been driven at least in part by liquidity being pumped into the system. Conceptually, there could be harsh consequences of this (i.e. reigniting inflation, excess government debt burden, increased interest expense), but so far those have not come to pass. In the first half of 2025, liquidity is still expected to be flowing enough to support markets.
Pillar #2: Strong Labor → Productivity → Cooling Wage Pressure
For much of 2024, markets feared a weakening labor market that could come with layoff announcements and an unemployment rate rising to uncomfortable levels. Since “promote maximum employment” is one of the Fed’s two mandates, a weak labor market would have strongly influenced the rate path. Long story short, that didn’t happen.
Instead, what we are in the midst of is a labor market that has slowed down and shown less churn, but remained stable and resilient. (By labor churn we mean things like the quits rate and the hires rate, both of which have declined steadily since 2022, but fell below pre-pandemic levels in 2024.)
The reason this matters is that it has helped reduce wage pressure that was fueling some inflation fears, and perhaps more importantly for 2025, because lower labor churn can power higher labor productivity. Fewer people moving around means people staying in jobs longer, which means a more efficient and productive workforce. In fact, current labor productivity is running slightly above 2%, which is higher than the non-recessionary average of about 1.4%. Higher productivity contributes to real growth in an economy.
Moreover, the chart below shows that measures of labor churn tend to lead wage costs by roughly six months. Since labor churn has fallen, we would expect wage costs (the dashed line) to continue falling as well.
As long as inflation remains under control or continues cooling, lower wage growth is not broadly detrimental to consumers. And if wage growth is falling, company labor costs are also coming down, putting less pressure on their bottom lines and allowing margins to stay stable or even expand. From an investor’s perspective, margins are critically important to earnings growth and return potential, so if this dynamic remains in place, it’s another supporting element for equity markets into 2025.
Profit margins for S&P 500 companies are currently running at trend, which is a healthy and balanced place to be, albeit lower than what we enjoyed between Q3 2021 and Q4 2022.
As an added tailwind, the new administration is expected to bring with it a looser regulatory regime, which could serve as a boost for industries such as financials, energy, and metals and mining, allowing for margins to expand.
Over time, we could also add AI and innovation to this supporting pillar as business innovation drives further productivity and profitability… but at this juncture that’s still a future force more than a current tangible reality.
Pillar #3: Inflation Under Control
We’ve come a long way from a Consumer Price Index (CPI) of 9.1% in June 2022 down to 2.7% for November 2024, which has calmed many anxieties. There are still elements of inflation that remain bothersome, namely shelter and car insurance, but many of the major components have cooled enough to satisfy markets.
The Fed’s preferred measure of inflation – the core Personal Consumption Index (PCE) – currently sits at 2.8%, down from a high of 5.6% in February 2022. Again, major progress has been made, and although not quite at the Fed’s 2% target, markets seem satisfied.
The important piece of this pillar is that inflation expectations stay under control, which could be tricky in 2025 with the prospect of increased tariffs and the level of optimism markets are exhibiting (see “What Could Go Wrong” later in this piece). This is perhaps the most questionable pillar in the pack, as inflation expectations have risen since late summer and the potential for the Fed to pause its rate cutting cycle has risen alongside.
We do expect the Fed to continue cutting rates, but at a much slower pace than originally thought. We also expect there to be adjustments made to the Fed’s projections on the neutral rate – not only the level, but the timeframe over which it may be met. If markets can remain comfortable with a higher neutral rate and a more gradual cutting cycle, inflation may not present too many problems.
In this case, the simple lack of a reignition in inflation would be a positive for markets.
Pillar #4: Sentiment has Momentum
Vibes are a powerful force for investor psychology, and although they are difficult to measure and can be fleeting, they are a force to be reckoned with when it comes to momentum. With the exception of a few blips here and there, market momentum and sentiment has been positive and pushing markets higher. We expect that trend to still have legs into 2025.
The main measures of consumer vibes are the sentiment surveys — namely, the Conference Board’s Consumer Confidence and the University of Michigan’s Consumer Sentiment surveys. In the first half of 2024, there were worries about higher than expected inflation and a slowing economy, which pushed both survey measures lower into summer. But there’s been reasonably steady improvement since then, which could continue if the labor market remains stable and the outlook for growth in 2025 stays strong. Watch for the trend to stay intact on both of these metrics.
Other major surveys that can give us a pulse on how businesses are feeling include the NFIB Small Business Optimism survey and the Purchasing Managers’ Index (PMI). These have also shown recent signs of improving, with November’s Small Business Optimism survey showing the largest single-month improvement in sentiment since July 1980.
One of the clear signs of improvement over recent months has been the U.S. economic surprise index, as data pertaining to GDP growth, consumer spending, jobs, and inflation has generally come in better than feared.
Post-election, the combination of positive economic surprises, certainty around the election outcome, and the expectation of a friendlier regulatory and capital markets environment could drive business sentiment higher from here.
For small businesses, the level of interest rates will be critical to sentiment and a gradual move down would be helpful. For larger companies, tariffs and U.S. dollar strength are critical components to future prospects. We are keeping a close eye on all of these indicators for confirmation or denial of our sentiment thesis.
What it all means for Equities
While sentiment and momentum can wield a lot of power, fundamentals are the key to market direction over longer term periods, which brings us to earnings. Earnings expectations for 2025 are strong – some might say too strong – but even if revised down slightly, companies still look to be in better shape than in 2024.
The drivers of earnings growth are important to note here. Technology is still at the top of the heap, but other sectors such as Health Care, Industrials, and Materials find themselves in new leadership positions if these forecasts come true. Also of note is that two of those three fall into the “cyclical” category and could be beneficiaries of the pro-growth sentiment that has materialized post-election.
But what about valuations? They’re high compared to history, that’s a simple fact. The S&P 500 is currently trading at 22.4x forward earnings, compared to the 10-year average of 18.4x.
Interestingly though, the average annual return on the S&P 500 is nearly 12%, and if earnings growth comes in over 14%, as expected, an average return on the S&P could actually result in a stable or lower price-to-earnings multiple before the end of the year, keeping bubble fears at bay.
In many ways, the fact that most investors do not expect another >25% year in the S&P is a good thing. If we were to produce a third year of rip-roaring returns, valuations would look even more stretched – if not exuberant – and likely drive volatility as investors try to manage exposures. An “average” year of returns may be what this market needs to stay rational.
What it all means for Yields
There’s been endless speculation on how high (or how low) Treasury yields will go. We don’t expect that to end in 2025. What we do expect though, is for yields to gradually come down as long as inflation stays contained.
A gradual drop in yields can be supportive of equities and sentiment, but contrary to expectations at the beginning of 2024, the Fed is unlikely to cut rates dramatically unless the economy weakens in a material way. This means markets and the economy may need to get (or stay) comfortable with a neutral rate that’s above pre-pandemic levels, and a 10-year Treasury yield that’s elevated as well.
Where Things Could Go Wrong
As with any new year comes new risks, or at least extensions of the prior year’s risks. To repeat a point from the beginning of this piece, we can’t invest by waiting for historical precedent to repeat. We do, however, have to keep in mind the risks we know exist as we allocate portfolios with the fresh eyes of January.
Risk #1: Sentiment Becomes Overdone, Speculation Overheats
We currently view the positive sentiment as a tailwind for markets that can continue into the first half of 2025, but there is a risk that sentiment could become over-extended and drive excess speculation in the financial system. There’s no hard-and-fast measure that can declare when we’re overheated, but something we like to track is the proportion of stock returns driven by earnings growth (i.e. fundamentals) versus multiple expansion (i.e. sentiment-driven upside).
The reason we track this is because the more of a rally that can be attributed to multiple expansion, the more fragile that rally can be. Some sentiment-driven upside is good as markets anticipate brighter days ahead, but it can turn into a chase as investors become greedy and start blindly buying risk assets.
The recent rally shows an increase in multiple expansion as a driver, but we could also argue that the business environment may change for the better in 2025 and might deserve the resulting upside.
Another way to look for excess speculation is through the lens of high quality vs. low quality asset performance. As investors increasingly pile into lower quality — therefore riskier — investments, speculation rises. One specific example of this is between mega-cap tech stocks versus those of non-profitable tech companies.
The recent outperformance of non-profitable tech stocks suggests investors have amped up their risk appetite, which is not a red flag in and of itself. Increased risk appetite could be warranted given some possible changes in the business environment in 2025 — but it’s a speculative move, nevertheless.
Lastly, much of the recent bump in sentiment has been predicated on the expectation of policies from the incoming administration that would reduce regulations, reign in government spending, and encourage stronger economic growth. Asset classes that have benefited from those expectations so far are financials, consumer discretionary, small-cap stocks, and crypto. On the flipside, there are some groups that have been hurt by new policy expectations such as health care, gold, and international stocks.
The concern is that if the expected policies do not come to fruition, or if they end up being different or less powerful than the market has priced itself for, we could see an unwind of the positive sentiment in some groups and a repricing in those that have been hit.
Expect policy volatility to continue in the first half.
Risk #2: Inflation Reignites → Fed Turns Hawkish → Yields Spike
It seems like a lot has to happen for this risk to materialize, but it could prove to be more possible than markets are appreciating. Inflation measures have come down considerably, but they’re currently stuck at levels above the Fed’s target.
If 2025 turns out to be one of stronger-than-expected consumer spending, and stronger-than-expected business investment, the resulting demand could again push prices higher. Moreover, if that’s happening with the backdrop of increasing tariffs and a reduction in the workforce due to lower immigration, costs could be driven up across multiple industries.
The possible reduction in supply and increased domestic demand could push inflation upward, and in turn pressure the Fed to stop cutting rates.
Yields are another aspect of this risk that can’t be ignored. Reheating inflation and a hawkish Fed could drive them higher, as well as the possibility of government spending remaining high while the budget deficit continues to grow. If the Treasury increases its issuance of debt, the market would need to find buyers to absorb that debt, thus pushing yields up further. The TGA can support us for a while, but not forever.
Risk #3: AI Fails to Be Monetized, Earnings Disappoint
This last risk we point out is more likely to be relevant for right now, but not forever. Eventually, we do expect AI to prove successful in various industries, but the theme is still in its infancy and it’s impossible to know how it may morph in the years to come.
Investors have already grown a bit impatient as it pertains to proof of profit for companies that have spent large amounts of CapEx on AI initiatives. In 2025, that scrutiny is likely to stick around and even increase. If companies are able to show real financial benefit, productivity, and innovation gains as a result of their AI-related spending, this risk dissipates. But if tangible results remain elusive, continued stellar earnings growth and stock price upside could also become elusive.
What Catches Our Eye in 2025
With this as a backdrop, here are a few areas we believe have tailwinds in 2025.
Software
• May be poised for a catch-up trade versus semiconductors as investors search for new pockets of growth with a lower hurdle rate.
• Could benefit from increased business capital expenditure in 2025.
• We believe this could be a next-phase beneficiary of the AI theme — a conduit for how the concepts can be brought to life.
Gold
• Institutional and international central bank appetite for gold is still strong, and it could further benefit from an increase in retail investor participation.
• Global political uncertainty is likely here to stay, gold is typically a beneficiary of policy and currency volatility around the world.
Cyclical Sectors: Financials, Industrials, Energy, Materials
• These may not produce the tech-like returns of 2023 and 2024, but a pro-growth environment with looser regulations could make 2025 a friendly cyclical environment.
Health Care
• A contrarian pick, as we believe much of the bad news and risks are already priced in. Any improvement in sentiment could drive a repricing upward.
• Expected to produce strong earnings growth in 2025, bested only by technology.
China
• Another contrarian pick given the incoming administration’s well-telegraphed plans to limit China’s trade with the U.S., but we also believe much of the bad news is already priced in.
• China’s sluggish growth may drive the country to announce more stimulus in 2025, and present an opportunity for upside.
Of course, if any of the above mentioned risks come to fruition, or other negative surprises occur, these investment implications would change. But absent a change in the investing or macro environment, we find these pockets of the market to be compelling.
Conclusion
The end of one year and beginning of the next is always a time for reflection and re-positioning. We believe 2025 has the potential to be a positive year for markets and the economy, albeit more muted than the past two years, and with its own set of risks and uncertainties.
This cycle’s economic and market resilience has been remarkable and is one for the history books. Looking back, in many ways it has been warranted. After all, the market is never wrong — it’s simply a reflection of investor sentiment and the outlook for growth prospects down the road. We choose optimism into 2025 and look forward to the new opportunities and surprises it will bring.
Want more insights from Liz? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.
SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite. Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.
Photo Credit: iStock/MicroStockHub
OTM2024121301
Read moreCurrent Home Equity Loan Rates in Maryland Today
MARYLAND HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Maryland.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Maryland.
Key Points
• Home equity loans allow homeowners to borrow against the equity in their home, typically for substantial expenses like renovations or debt consolidation.
• Home equity loan interest rates are influenced by the prime rate and home value stability.
• Factors like the borrower’s credit score, loan-to-value ratio, and property location also significantly impact home equity loan rates.
• Home equity loans offer fixed interest rates, ensuring consistent monthly payments, while HELOCs provide flexibility with variable rates and access to funds as needed.
• Closing costs and fees associated with home equity loans can range from 2% to 5% of the loan amount.
Introduction to Home Equity Loan Rates
In this guide on how to get equity out of your home, we’ll cover everything you need to know about home equity loan rates in Maryland. We’ll start by taking a look at what shapes the current rates being offered by your state’s lenders. We’ll also go over the factors that can affect the rate you personally are offered, and finally we’ll provide some tips to help you find the best loan for your needs from among the different types of home equity loans available.
The first step? Let’s make sure we’re all on the same page about what is a home equity loan, exactly.
How Do Home Equity Loans Work?
A home equity loan uses your home as collateral. For this reason, it will likely offer a lower interest rate than an unsecured personal loan. This means that if you are currently paying a mortgage and you take out a home equity loan, you’ll have a second mortgage. The interest rate on a home equity loan is usually fixed, which can be a great option for those who like to know exactly what to expect with their monthly payments.
To qualify, you’ll need to have made some progress paying off your home loan: You’ll need at least 20% equity in your primary residence. You can use the money you borrow with a home equity loan for a variety of expenses, including home improvements, education costs, medical bills, and debt consolidation.
If you’re wondering what is a home equity line of credit, and how it is different from a home equity loan, we’ll get to that below.
Where Do Home Equity Loan Interest Rates in Maryland Originate?
Home equity loan interest rates are not arbitrary; they are influenced by a variety of economic factors. Federal Reserve policy decisions regarding interest rates can influence the prime rate, which is the interest rate that banks charge their most creditworthy customers. A lender might start with its prime rate and then make adjustments based on the qualifications of an individual borrower before proposing a loan rate.
How Interest Rates Impact Home Equity Loan Affordability
Your interest rate is a crucial factor in the affordability of your loan over time. In everyday life, a 1% difference might not seem like a lot, but if you’re borrowing a large sum of money a 1% increase in your rate can add to your monthly payments and add significantly to the total amount of interest you pay over the life of the loan. The chart below shows how different rates and terms affect the monthly payment amount.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
Home Equity Loan Rate Trends
Given how important your interest rate is, you might wonder how much you can expect a lender’s prime rate to vary over time. The chart below shows that the average prime rate has seen its share of ups and downs in recent years, from a low of 3.25% in 2020 to a high of 8.50% in 2023.
The graphic below shows a much longer span of time: more than 50 years. Of course, waiting for the prime rate to inch down might not make sense if you urgently need to borrow funds. But if your timeline is flexible, keeping apprised of what is expected in the market may help you decide when is the best time to borrow.
Historical Prime Interest Rates
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
A variety of other factors beyond the prime rate come into play when determining your home equity loan rate in Maryland, and happily many of them — such as your credit score — are within your control. These factors can have an impact on the rate you’re offered.
Credit Score
You probably recall that when you got your home loan, your credit score was an important part of the lender’s criteria. The same is true with a home equity loan. Lenders usually want to see a credit score of 680 or higher from a home equity loan applicant, although higher scores may get you a better rate.
Home Value
Lenders often use independent appraisals to determine the market value of your property before offering a loan. This appraised value of your home is key to determining exactly how much they are willing to lend you.
Loan-to-Value (LTV) Ratio
Once you know your home’s appraised value, you and the lender can compute your LTV ratio. Your combined LTV ratio is calculated by dividing the loan amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. The maximum combined LTV lenders typically allow for home equity loans is around 85%.
Home Value Stability
If your home’s value is on the rise, lenders are more likely to greenlight a larger home loan, as an increasing property value helps shelter them from risk. But if home values in your area are sagging, lenders may offer smaller home equity loans.
Property Location
The location of your property can also contribute to your interest rate. If your home is in an area that is at a higher risk for natural disasters, you may have a higher interest rate, reflecting the fact that the lender is taking on more risk by lending to you. High-risk areas are those that are more likely to experience hurricanes, floods, tornados, or wildfires, for example.
Lender Policies
Each lender has its own policies that might impact the interest rate you’re offered. This is why it’s smart to shop around and compare interest rates, fees, and closing costs from multiple lenders. Taking the time to do this research might help you find more favorable terms and save money over time.
How to Qualify for the Lowest Rates
To secure the most favorable home equity loan rate, prioritize caring for your credit score, diligently manage your debt-to-income ratio, procure comprehensive property insurance, and keep your home equity high. Here are the to-dos:
Build a Strong Credit Score
A higher credit score can be your golden ticket to more favorable interest rates. Check your credit report now and then and make sure there are no inaccuracies. Try not to max out all your lines of credit. And above all, pay your bills on time.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a key player when you’re applying for a home equity loan. To figure out yours, add up all your monthly debts and divide by your gross monthly income. Multiply by 100 for a percentage. For the best home equity loan rates in Maryland, lenders typically look for a DTI ratio below 36%, though you may be able to get a loan with a DTI ratio up to 50%. A lower DTI ratio tells them you can handle your current debt and the added monthly payments of a home equity loan.
Obtain Adequate Property Insurance
It’s a standard requirement for home equity loans to require sufficient property insurance. These policies are designed to protect you and your lender from financial loss due to property damage or destruction. When you’re looking at home equity rates in Maryland, make sure to include the cost of any added insurance in your calculations, so you can get a clear picture of the total financial commitment.
Maintain Sufficient Home Equity
As noted above, lenders typically require homeowners to maintain at least 20% equity in their primary residence to be eligible for a home equity loan. Remember to compute equity based on your current property value, not what you paid for the property initially.
Fixed vs. Variable Interest Rates
Home equity loans usually come with a fixed interest rate, which means you can count on having the same monthly payment for the entire life of your loan. While a fixed rate can keep things predictable, it might also mean that you start off with a higher rate than you would with a variable rate. A variable rate, on the other hand, might start off lower, but it could also go up (or down) over time. A HELOC (home equity line of credit) usually comes with a variable interest rate.
Tools & Calculators
Take advantage of online tools and calculators to determine whether you might be eligible for a home equity loan or HELOC, to assess your borrowing capacity, and to figure out what your monthly payments might be. Here are three useful calculators:
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs on home equity loans typically range from 2% to 5%. You can expect to see fees for services such as appraisals, credit reports, document preparation, loan origination, notary, title search, and title insurance — though each lender has its own fee schedule. When considering Maryland home equity loans, it’s important to factor in costs and fees if you’re comparing one lender’s offer to another’s.
Tax Deductibility of Home Equity Loan Interest
Many borrowers are pleased to discover that the interest you pay on a home equity loan is tax-deductible if you’re using the funds to substantially improve your home. If you’re filing jointly, you can deduct interest on loans up to $750,000; for single filers, the limit is $375,000. Itemizing your deductions is the key to unlocking this benefit, so a chat with a tax pro might be in order.
Alternatives to Home Equity Loans
There are other ways to tap into your home’s equity, including HELOCs but also home equity conversion mortgages (HECMs) and cash-out refinances. Each of these options has its own set of requirements and features, so let’s take a closer look.
Home Equity Line of Credit (HELOC)
A HELOC is like a credit card but with lower interest rates. With a lender’s permission, you can borrow up to a certain limit and pay interest only on the amount of the credit line you actually use. One key difference in the HELOC vs. home equity loan comparison: The variable interest rates on HELOCs can change with the market, and if they go up, your costs can increase. The monthly payment on a home equity loan will remain steady. HELOCs are popular among borrowers who know they need cash — say, for a renovation project — but aren’t sure exactly how much.
Home Equity Conversion Mortgage (HECM)
An HECM is a government-insured reverse mortgage that empowers homeowners aged 62 and older to receive payments from the lender based on their home’s value. The proceeds from an HECM can be received as a lump sum, regular payments, or a line of credit. Unlike home equity loans and HELOCs, HECMs do not require you to make payments until you leave the home. Keep in mind, though, that HECMs generally have higher closing costs and longer processing times. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
A cash-out refinance is like hitting a refresh button on your mortgage. This special type of mortgage refinance replaces your existing home loan with a new (larger) one, giving you the chance to pocket some cash.
If you’re contemplating a cash-out refinance vs. a home equity line of credit or home equity loan, one thing to think about is how your current mortgage rate compares to prevailing rates in the market today. You’ll need to do the math to make sure taking out a new mortgage doesn’t radically inflate the interest you will pay. Remember to include closing costs and fees in your calculations.
The Takeaway
Knowing the ins and outs of Maryland’s home equity loan rates and the factors that sway them is key to making savvy borrowing choices. By shopping around and using online calculators to compare different lenders’ offers, you can ensure you secure the best terms and rates.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How much will you pay each month on a $50,000 home equity loan?
When it comes to a $50,000 home equity loan, the loan term and interest rate play a big role in the size of your monthly payment. Borrowing $50,000 at a 7.50% interest rate with a 10-year term would equal a monthly payment of $594. An 8.00% interest rate and a 10-year term would mean a monthly payment of $607.
What is the monthly payment on a $100,000 HELOC?
When you’re thinking about a $100,000 HELOC, keep in mind that your monthly payment will fluctuate based on the current interest rate and how much of your credit line you’ve utilized. If you used the full $100,000 and your interest rate was 8.00%, you’d pay $836 per month if you repaid the funds over 20 years. Using a HELOC monthly payment calculator will give you the most precise estimate of your payments.
What is the payment for a $25,000 home equity loan?
When you’re looking at a $25,000 home equity loan, you need to think about how the interest rate and the loan term will affect your monthly payments. Assuming a 10-year term, an interest rate of 6.00% would mean a $278 monthly payment. An interest rate of 8.00% would mean $303.
What would the payment be on a $30,000 home equity loan?
The monthly payment on a $30,000 home equity loan would be $287, assuming an interest rate of 8.00% and a 15-year term. Changing the rate or term will result in a change in the payment amount as well.
What could disqualify you from getting a home equity loan?
There are a number of factors that could prevent you from getting a home equity loan. These include a poor credit history, not enough home equity, a high debt-to-income ratio, and inadequate property insurance coverage. Each of these factors is important and can affect the outcome of your application. The good news is that you can take steps to address each of these issues and increase your chances of being approved for a home equity loan.
What are the benefits of a HELOC?
A home equity line of credit (HELOC) offers several benefits, including flexible borrowing options, lower interest rates vs. traditional credit cards, and the convenience of only paying interest on the amount of credit that you actually use. HELOCs provide homeowners with a versatile financial tool that can be tailored to their specific needs and financial situations.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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-Q424-080
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loan Rates in Massachusetts Today
MASSACHUSETTS HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Massachusetts.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Massachusetts.
Key Points
• Home equity loans allow homeowners to borrow against their home’s equity for various expenses such as renovations, education, or debt consolidation.
• Home equity loan rates are influenced by external factors such as the prime rate, economic conditions, and housing market trends.
• Personal factors such as credit score, debt-to-income ratio, property insurance coverage, and home equity level are also important.
• Home equity loans offer fixed interest rates, while a home equity line of credit (HELOC) offers a revolving credit line with adjustable rates.
• Alternatives to home equity loans include HELOCs, home equity conversion mortgages, and cash-out refinances, each with its own unique characteristics.
Introduction to Home Equity Loan Rates
If you’ve been making your monthly mortgage payments steadily and are wondering how to get equity out of your home, this guide is for you. In it, you’ll learn about Massachusetts home equity loan rates. We’ll explain the factors that affect your rate, and share how to find the best rates for your situation.
Finally, we’ll talk about alternatives to home equity loans — including what is a home equity line of credit, or HELOC — so you can make an informed decision. For starters, we’re going to cover what is a home equity loan in the first place.
How Do Home Equity Loans Work?
Different types of home equit loans are a popular way for homeowners to access the equity they have built up in their home by paying their home loan over the years. You can use the money from a home equity loan for just about any expense, including home renovation, debt consolidation, and education costs.
This particular type of loan is secured by the equity that you’ve built up over time in your home, making it a lower-risk loan option for lenders to consider and approve than an unsecured loan. This is why home equity loan rates in Massachusetts, as elsewhere, tend to be lower than rates for personal loans. If you’re still paying your first mortgage, the home equity loan will technically be a second mortgage.
Unlike a home equity line of credit (HELOC), which functions as a revolving credit account, a home equity loan provides the borrower with a lump sum of cash up front. Repayment of the principal balance and interest begins immediately, typically with a fixed interest rate.
Where Do Home Equity Loan Interest Rates in Massachusetts Originate?
Home equity loan interest rates are influenced by economic factors, chiefly the prime rate that banks charge their most creditworthy customers. Federal Reserve policy decisions regarding interest rates can help guide the prime rate. Understanding this can help borrowers keep an eye on the news and anticipate rate fluctuations so they can make informed decisions about when you secure a home equity loan or HELOC.
How Interest Rates Impact Home Equity Loan Affordability
It’s important to carefully weigh how interest rates can tip the scales of your financial situation over the life of a loan. The table below shows you how that monthly payment will change based on three factors: your loan amount, interest rate, and loan term.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
What’s even more striking is the change in the total interest you’ll pay over the life of the loan. Just a 1% difference in interest rate on a $100,000 home equity loan with a 20-year term comes to more than $14,000 in interest, either paid or saved!
Home Equity Loan Rate Trends
As noted above, banks’ prime rates play a vital role in determining Massachusetts home equity loan rates. Since 2018, the average U.S. prime rate has seen some significant ups and downs, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023. These swings have a direct impact on Massachusetts home equity loan interest rates and the overall affordability of these loans for you. Having a sense of how current rates compare with historical rates can be helpful in your decision-making. The chart below is a detailed look at average rates in recent years. The graphic gives 50-plus years of rates.
Historical Prime Interest Rates
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
The prime rate isn’t the only factor driving what interest rate you’re offered. Other factors also determine the level of risk associated with your application which in turn governs what interest rate you may be offered.
Credit Score
Your lender examined your credit score when you took out a home loan to purchase your residence, and a lender on a home equity loan will also examine your score. They’re more likely to approve you if your credit score is 680 or higher, but many prefer to see 700 or above.
Home Value
You’ll need a home appraisal if you apply for a home equity loan, as the value of your property will determine how much equity you have in your home (remember, you need at least 20% equity in order to get the loan).
Loan-to-Value (LTV) Ratio
Once you have an appraisal, you can figure out your loan-to-value (LTV) ratio, which helps determine how much you can borrow. You can compute your personal number by adding the amount you wish to borrow to the amount you currently owe on your mortgage (if anything). Then divide that total by the appraised value of your home. Multiply the result by 100 and you’ll have a “combined LTV.” The highest LTV most lenders will allow for a home equity loan is 85%. If you’re not sure how much you might be allowed to borrow, use a home equity loan calculator.
Home Value Stability
How stable home values are in your part of Massachusetts is another thing that lenders consider. When the market is healthy and values are stable or rising, lenders are more likely to give the okay to larger loans. But when the housing market is soft, lenders may have tougher criteria and offer smaller loan amounts.
Property Location
If your property is located in an area that is deemed at high risk for natural disasters such as flooding or tornadoes, higher interest rates may be in your future, as lenders consider this risky.
Lender Policies
Policies set by individual lenders can have a noticeable impact on the interest rates they offer borrowers. That’s why you’ll want to compare offers from a few different lenders during the loan application process and look not only at the interest rate you’re offered but also at the fees.
How to Qualify for the Lowest Rates
Take the steps below to ensure you get the best rate possible.
1. Build a Strong Credit Score
A robust credit score can be your ticket to more attractive rates on Massachusetts home equity loans. Periodically checking your credit report for errors and making payments on time are key to securing the best terms. And here’s a bonus: A stellar credit score can also open doors to better rates on other loans, like personal or auto loans.
2. Manage Debt-to-Income Ratio
When you’re applying for a home equity loan, your debt-to-income (DTI) ratio is a big deal. It’s a simple calculation that compares your monthly income to your monthly debt payments. (Add up your monthly debts, divide by your gross monthly income, and then multiply the result by 100.) Lenders usually look for a DTI ratio under 36% when considering home equity loans, though some may allow up to 50%. This number tells them you can handle your current debt and have enough income to take on extra monthly payments.
3. Obtain Adequate Property Insurance
We’re hoping you already have sufficient property insurance, but if you don’t, you’ll want to level up before applying for your home equity loan. This not only safeguards your property but can also lead to more favorable loan terms.
4. Maintain Sufficient Home Equity
As noted above, you’ll need to keep at least 20% equity in your home to qualify for a home equity loan. This equity acts as a safety net, assuring the lender that you have a significant financial investment in your property and are less likely to default.
Fixed vs. Variable Interest Rates
Fixed rates are typical for home equity loan rates, so you’ll have the comfort of knowing your monthly payments will stay the same. This can be a big help when you’re trying to budget. But keep in mind that fixed rates can be a bit higher than variable rates at the start.
Tools & Calculators
We have a variety of calculators to help you figure out what you can afford, how much you can borrow, and what your monthly payment will be. Here are three useful ones if you’re thinking about how to harness your home equity.
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
You’ll likely be looking at a range of 2% to 5% of your loan amount in closing costs. Common fees include appraisal, credit report, document preparation, and title insurance, though every lender is different (which is why it’s smart to compare fees and interest costs when you’re comparing home loan offers).
Tax Deductibility of Home Equity Loan Interest
Good news: The interest on your home equity loan could be tax deductible if you’re using it to significantly improve your space. Couples filing jointly can deduct interest on the first $750,000 of a home equity loan, while single filers can deduct interest on up to $375,000. Just remember to itemize your deductions when you file your tax return to claim this benefit.
Alternatives to Home Equity Loans
In addition to home equity loans, there are other ways to tap into your home’s equity. These include a home equity line of credit, home equity conversion mortgage, and a cash-out refinance. Each of these options has its own unique features and eligibility requirements, so it’s important to carefully consider and evaluate your choices before making a decision. These alternatives provide homeowners with different ways to access the equity they’ve built up in their home to meet their financial needs and goals.
Home Equity Line of Credit (HELOC)
A HELOC is a bit like a credit card, but the credit line you’re borrowing against is your home’s equity. You can borrow up to a certain amount, and you’ll only pay interest on the amount you’ve borrowed. As you think about a HELOC vs. a home equity loan, consider that while a home equity loan’s interest is typically fixed, the interest rate on a HELOC is variable, which means it can go up or down based on an index. This can cause your payments to increase, which is something to consider when deciding if a HELOC is right for you.
Home Equity Conversion Mortgage (HECM)
If you’re 62 or older, a government-backed HECM reverse mortgage could be the key to unlocking your home’s value. It offers you the flexibility to receive payments as a lump sum, regular disbursements, or a line of credit. The best part? You don’t have to make payments until you leave your home. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
A cash-out refinance is a special type of mortgage refinance. It’s a bit like hitting the reset button on your mortgage, but with a bonus. You take out a new, larger loan that pays off your existing mortgage and leaves you with some extra cash in hand.
As you consider a cash-out refinance vs. home equity line of credit or a home equity loan, remember that a cash-out refi is just that: a refinance. So if you have a really sweet interest rate on your current loan, it might not make sense to refinance into a higher rate. A HELOC or home equity loan could be a better bet.
The Takeaway
Understanding home equity loan rates in Massachusetts and what influences the rate you’ll be offered can help you decide on when you apply for a loan and ensure that you present the best possible financial picture to a prospective lender. By comparing lenders, keeping a strong credit score, and exploring all your options, including a HELOC, you can find the best rates and repayment plan for your financial goals.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What’s the monthly payment on a $50,000 home equity loan?
If you borrow $50,000 with a home equity loan and pay it back over 10 years, the monthly payments could range from $530 to $607, depending on your interest rate (this range is from 5.00% to 8.00%). But remember: The two main factors that will affect your payments are the interest rate and the loan term, so changes in either of these will change your payment.
What is the monthly payment for a $100,000 HELOC?
If you’ve maxed out your HELOC and are paying it back over 20 years at a rate of 7.00%, you can expect to pay $775 per month. Of course this is just an example. You can use a HELOC repayment calculator to compute the number for your exact interest rate.
What is the payment on a $25,000 home equity loan?
Borrow $25,000 with an interest rate of 8.00% and a term of 5 years, and you’re looking at a monthly payment of $507. Change either the interest rate or the term (or both) and your payment amounts will change as well.
How about a $30,000 home equity loan? What would that cost?
The monthly payment on a $30,000 home equity loan will depend on the interest rate and the loan term, but a 10-year term and 8.00% interest rate would mean a monthly payment of $364.
What might disqualify you from getting a home equity loan?
There are a number of factors that can prevent you from getting a home equity loan. These can include having a low credit score, having a high debt-to-income ratio, lacking 20% equity in your home, or not having enough insurance on your property.
What are the benefits of a HELOC?
HELOCs have a variety of benefits, including flexible borrowing, lower interest rates than many credit cards, and the ability to pay interest on only the amount of the credit line that you’ve used. These benefits make HELOCs a great financial tool for homeowners who need a flexible and cost-effective credit solution that fits their unique financial needs and long-term goals.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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-Q424-081
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loans in New Jersey Today
New Jersey HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
New Jersey.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in New Jersey.
Key Points
• Home equity loans allow homeowners to borrow against the equity in their homes, typically for large expenses like home renovations, education, or debt consolidation.
• Home equity loan interest rates are influenced by several factors, including the prime rate and prevailing economic conditions.
• Home equity loan rates in New Jersey have fluctuated over the years, and understanding these trends can help borrowers make informed decisions about when to apply for a loan.
• Alternatives to home equity loans, such as HELOCs, HECMs, and cash-out refinances, offer different features and eligibility requirements.
Introduction to Home Equity Loan Rates
If you’re wondering how to get equity out of your home in New Jersey, you’ve come to the right place. Our guide makes it easier to understand interest rates, shop for the best loan terms, and make the right borrowing decisions for your situation. We’ll cover what determines home equity loan rates in New Jersey, tips for getting the best available home equity loan rates, and how to qualify for a home equity loan.
But first, we’ll answer the obvious question, what is a home equity loan?
How Do Home Equity Loans Work?
A home equity loan is a second mortgage that uses your home as collateral. The funds are disbursed in a lump sum and repaid in equal monthly installments over a period of 5 to 30 years. These loans often come with lower interest rates than unsecured personal loans, and the rates are typically fixed, unlike some other home loans.
To qualify, you’ll generally need to have at least 20% equity in your home. In New Jersey, home equity rates can be particularly competitive, making them an attractive option for homeowners in the state. Home equity loans can be used for a variety of purposes, including home renovations, education, medical bills, and debt consolidation.
Reccommended: What Is a Home Equity Line of Credit?
The Origin of Home Equity Loan Interest Rates
The interest rates on home equity loans in New Jersey are influenced by a variety of economic factors, including the prime lending rate set by banks and the Federal Reserve’s monetary policies. By understanding these factors, you can better predict how interest rates might change and make more informed decisions about the best home equity loans in New Jersey.
How Interest Rates Impact Home Equity Loan Affordability
Interest rates can make or break the affordability of a home equity loan. For example, over a 20-year loan term, a 1% variance in interest rate could translate to a higher monthly payment and an extra $11,000 in interest over the loan’s lifetime. That’s no drop in the bucket.
It’s a weighty financial consideration, and one that underscores the importance of scrutinizing home equity rates in New Jersey before you commit. The table below shows how your monthly payment will change based on three factors: your loan amount, interest rate, and loan term.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
New Jersey Home Equity Loan Rate Trends
New Jersey home equity loan rates are closely tied to the prime rate, which can fluctuate up and down. When the prime rate moves, it can have a big impact on the direction of home equity loan rates. That’s why it’s important to keep an eye on the prime rate if you’re thinking about taking out a home equity loan or home equity line of credit (HELOC).
Historical Prime Interest Rates
Since 2018, the prime rate has fluctuated significantly, with a low of 3.25% in 2020 and a high of 8.50% in 2023. These changes have had a big impact on the economy and financial markets, influencing interest rates, borrowing costs, and investment decisions. They have also affected the terms and conditions of home equity loans.
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates in New Jersey
In New Jersey, a variety of factors can sway home equity loan interest rates, from your credit score to the loan-to-value ratio, and even the stability of your home’s value. Lender policies and property location also come into play. Each of these elements is one piece of the puzzle, and lenders carefully consider them all to establish the right interest rate for you.
Credit Score
Lenders see borrowers with higher credit scores (above 680) as less risky to lend to. In many cases, the lender will prefer a credit score of 700 or higher. That’s why it’s so important to keep your credit history in good shape. A higher credit score can help you qualify for better terms and conditions when you apply for a home equity loan.
Home Value
To make sure you aren’t borrowing more than your home is worth, lenders will order an independent appraisal. This will help determine the amount of equity in your home and set a borrowing limit. The appraisal process is a key part of the home equity loan approval process. It helps protect you and the lender from borrowing or lending too much.
Loan-to-Value (LTV) Ratio
Lenders use your loan-to-value (LTV) ratio to assess risk and determine your interest rate and loan terms. It’s calculated by dividing the sum of your mortgage balance plus your loan amount by the appraised value of the property. The maximum LTV for a home equity loan is typically 85%, which means you could potentially borrow up to 85% of your home’s equity.
Home Value Stability
The stability of home values directly impacts the amount of equity that homeowners can tap into. Rising home values may allow homeowners to secure larger loan amounts. Conversely, falling values increase the risk for lenders, potentially leading to tighter lending criteria or higher interest rates.
Property Location
If you’re in a region of the Garden State that’s no stranger to extreme weather or natural disasters — think floods or wildfires — lenders might quote you higher interest rates. It’s not personal; they’re just factoring in the added risk of lending in these areas.
Lender Policies
Lenders have a big say in the interest rate you’ll get for a home mortgage. By shopping around with different lenders, you can get a good idea of the interest rates, fees, and closing costs you might have to pay. This can help you make a more informed decision and find the best loan for you.
How to Qualify for the Lowest Rates
To get the best home equity loan rates in New Jersey, you’ll want to focus on a few key areas. First, work on your credit score by paying your bills on time and in full. Then, manage your debt-to-income ratio by paying down your debts. You’ll also want to get comprehensive insurance for your property to protect your investment. Finally, keep your home equity high by making extra payments on your mortgage if you can. Let’s look at this To Do list in detail:
Build a Strong Credit Score
Your credit score can make a big difference in the interest rate you’ll be offered for a home equity loan. It pays to work on your credit score by paying bills on time, checking your credit reports for errors on the reg, and paying down credit card debt. This is especially important when you’re looking at the current home equity rates in New Jersey.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio, which is the comparison of your monthly income to your monthly debt obligations, is a key metric that lenders consider when determining your eligibility for a loan. A DTI of less than 36% is ideal, but many lenders will approve you for a home equity loan in which your DTI is up to 50%. To improve your DTI, you’ll need to pay off as much debt as you can.
Obtain Adequate Property Insurance
Having the right property insurance is a must if you want to secure a home equity loan in New Jersey. This is especially true if you live in a flood-prone area. It can give you peace of mind and help you protect the valuable assets you’ve worked so hard to acquire.
Maintain Sufficient Home Equity
It’s recommended that homeowners keep at least 20% equity in their home if they’re thinking about getting a New Jersey home equity loan. That’s a good thing because it helps you avoid overextending yourself with debt. Plus, it’s a way to protect both you and the lender.
Fixed vs. Variable Interest Rates
Home equity loans in New Jersey typically offer a fixed interest rate. This means that you will have the same interest rate and monthly payment for the life of the loan. While the interest rate on a fixed rate loan may be slightly higher than the starting interest rate on a variable rate loan, you will have the peace of mind of knowing that your interest rate will never increase.
Tools & Calculators
Homeowners have access to a variety of tools and calculators that can help them determine their home equity loan payments. These tools can provide you with the information you need to make a decision about whether or not a home equity loan is right for you. Below you’ll also find a HELOC monthly payment calculator and a HELOC interest only calculator.
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
When it comes to closing costs, you’re looking at a range of 2% to 5% of your loan amount. These typically cover expenses like appraisals, credit reports, document preparation, and title insurance. Origination fees can vary from 0.5% to 1% of your loan amount, and title insurance can cost 0.5% to 1% of your loan balance, with additional title search fees ranging from $100 to $250.
Tax Deductibility of Home Equity Loan Interest
Here’s a tip that could save you some cash: The interest on your home equity loan could be tax-deductible if you used it to buy, build, or improve your home. If you’re married and filing jointly, you could deduct interest on up to $750,000 in home equity loans. Single filers can deduct the interest on up to $375,000.
Alternatives to Home Equity Loans
There are different types of home equity loans and lines of credit for borrowing against your home’s equity. These include HELOCs, home equity conversion mortgages (HECMs), and cash-out refinances. Each of these options has its own features and eligibility requirements, so it’s important to understand how they work before you decide which one is right for you.
Home Equity Line of Credit (HELOC)
A HELOC works much like a credit card, allowing you to borrow up to a certain limit on an as-needed basis and pay interest only on the amount you borrow. But remember, the interest rates on HELOCs are variable and can rise, which could increase the cost of your borrowing. Our HELOC vs home equity loan chart below spells out the differences at a glance.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment. |
| Disbursement | Charge only the amount you need. | Lump sum. |
Home Equity Conversion Mortgage (HECM)
An HECM is a government-backed reverse mortgage that allows homeowners aged 62 and older to receive payments from the lender based on their home’s value. You can choose to receive the proceeds from an HECM as a lump sum, regular payments, or a line of credit. The beauty of an HECM is that you don’t have to make payments until you leave the home, which sets it apart from home equity loans and HELOCs.
Keep in mind that HECMs generally have higher closing costs and longer processing times than other options. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
This version of a mortgage refinance means you take out a new mortgage to pay off the old one and pocket the difference. Lenders usually allow you to borrow up to 85% of your home’s equity. A cash-out refinance only makes sense, however, if you can secure a lower interest rate than on your original mortgage.
Our Guide to Cash-Out Refinance vs Home Equity Line of Credit has more details.
The Takeaway
Understanding New Jersey home equity loan rates and the factors that influence them is important. By comparing lenders, using online tools and calculators, considering other financing options, and seeking advice from financial professionals, you can find the best loan for your needs and financial goals.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What’s the monthly payment on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan depends on two key factors: the interest rate and the loan term. 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. To get an idea of what your monthly payment might be, you can use a home equity loan calculator.
What is the monthly payment on a $100,000 HELOC?
The interest rate and the amount of the credit line you use have a big impact on your payment. 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.
What is the payment on a $25,000 home equity loan?
The monthly payment on a $25,000 home equity loan is determined by the interest rate and the loan term. To get an estimate, you can use a home equity loan calculator. But 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?
The monthly payment on a $30,000 home equity loan can vary depending on the interest rate and how long you have to pay it back. But if you had a 7.00% interest rate and repaid the loan over 10 years, you’d pay about $348 per month.
What could disqualify you from getting a home equity loan?
There are a few things that might prevent you from getting a home equity loan. These include not having enough equity in your home, having a poor credit history, a high debt-to-income ratio, or not having enough property insurance coverage. These factors can make it difficult to get a home equity loan, so it’s important to consider them before applying.
What are the benefits of a HELOC?
HELOCs are a popular financial tool for a number of reasons. They offer flexible borrowing options, lower interest rates than most credit cards, and the ability to only pay interest on the amount of money you’ve actually used. Just keep in mind that variable interest rates change with the markets, so your costs could go up unexpectedly.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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-Q324-090
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
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