Compare HELOC rates in Rochester.

Introduction to HELOC Rates

Welcome to your comprehensive guide to home equity line of credit (HELOC) interest rates in Rochester, NY. Whether you’re considering borrowing funds for a home renovation or another significant expense, this guide is designed to help you make a well-informed financial decision. We’ll cover the factors that influence HELOC interest rates as well as the benefits and risks of opening a HELOC. By the end, you’ll be equipped with the knowledge to understand the current market conditions and qualify for the best available rates.

What Is a HELOC?

In order to make decisions about borrowing, it’s helpful to understand what a home equity line of credit is in the first place. A HELOC is a line of credit that you can borrow against, as needed, up to a certain limit that is set by your lender based on your home equity. Your home is the collateral, which of course means that if you don’t repay what you borrow, you could face foreclosure.

Your equity is the difference between your home’s value and your mortgage balance. To qualify for a HELOC, you typically need 15% equity, and you can borrow up to 90% of your equity. HELOC interest rates are often lower than those of unsecured loans. A HELOC has two main periods:

The Origin of HELOC Interest Rates

Lenders peg the interest rates for HELOCs and different types of home equity loans to the prime rate, a figure that moves up or down with the Federal Reserve’s economic maneuvers. Each lender then tacks on a margin, which is why rates can vary among lenders. This is why it’s so important to seek out rate quotes from multiple lenders if you decide to apply for a HELOC. Your personal financial profile, including credit score, debts, and the amount of equity in your home, also play a role in the interest rate you’ll be offered. A higher credit score and more equity can tip the scales in your favor.

How Interest Rates Impact HELOC Affordability

You’ll invest time and energy shopping around for the best HELOC interest rate, but the rate makes a big difference in what you’ll pay. Even a small shift in the rate can mean a lot more interest over the life of the HELOC. For example, if you used $50,000 from a HELOC during your 10-year draw period, the difference in the monthly interest payment based on an 8.50% versus a 9.50% rate is $42 per month (monthly payments would be $354 and $396, respectively).

If you were repaying principal plus interest on the same $50,000 during a 20-year repayment period, your monthly payments would be $620 at the lower interest rate and $647 at the higher rate. That may not seem like such a large difference, but over the entire repayment term, getting the lower interest rate would save you more than $3,000. Of course, HELOCs have variable interest rates so real-world numbers may differ somewhat.

HELOC Interest Rate Trends

While it’s no crystal ball, the prime interest rate can be a helpful gauge for HELOC rates. Since 2018, the prime rate has seen its share of ups and downs, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023. Having this history can give you perspective on the current rates you’re seeing in Rochester.

Adjustable vs. Fixed Interest Rates

HELOCs often come with adjustable interest rates. While these rates generally start lower than fixed rates, they can go up or down in response to market conditions. If you move forward with a HELOC, you can examine a lender’s offer to see the specifics of how often rates may change and where the rate might be capped. But if you’re someone who can handle a bit of financial ebb and flow, this might be the right choice for you.

Helpful Tools & Calculators

Before you apply for a HELOC, you can use online tools to help you get an estimate of what your monthly payments and interest costs might be. These tools can help you understand the impact of HELOC rates on your budget and plan accordingly.

How to Qualify for a Competitive HELOC Rate

To land a top-notch HELOC rate in Rochester, it pays to prepare your finances for scrutiny before you begin the application process. Here’s your to-do list.

Improve Your Credit Score

Keeping your credit score at 700 or above can help you obtain the best HELOC interest rate. To get there, focus on making debt payments on time and chipping away at credit card balances. This will paint a nice picture of creditworthiness that lenders will love. Try not to open new credit accounts or close old ones in the months leading up to your HELOC application, as this can send the wrong signals. Keep an eye on your credit report, too, as catching and disputing errors can give your score a nice boost over time.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is a simple division: Add up your monthly debt payments and divide by your gross monthly income. HELOC lenders generally prefer a DTI under 50%, but the lower, the better, and for the best HELOC rate you’ll want a DTI ratio below 36%. A lower DTI tells lenders you can manage more payments and your debt load is under control. To boost your DTI, consider paying off some debts or finding ways to increase your income.

Application Process for a HELOC in Rochester

The application process for a HELOC in Rochester is quite straightforward, especially if you prequalify online. This preliminary step lets you view the rate you might qualify for. If you decide to move forward with a full application, it’s a matter of gathering the necessary paperwork and submitting an application. Here’s the full process:

Closing Costs and Fees

HELOC closing costs are typically lower than what you’d face with a traditional home purchase or a mortgage refinance. The appraisal fee is often the most significant expense. You might also encounter a title search fee (ranging from $100 to $450), application fees, origination fees, and administrative costs. Annual maintenance fees could be up to $250. Some HELOCs have transaction fees or inactivity charges so keep an eye out for those when reading your HELOC agreement.

Tax Benefits and Considerations

You can usually deduct HELOC interest if you’re using the funds to improve your residence. To confirm that your use of the HELOC qualifies for deductions and discuss how this deduction might affect your taxes in future years, talk to a tax advisor. You’ll have to itemize your tax return in order to obtain this deduction, but knowing about these benefits can help you get the most out of your HELOC and possibly lower your overall tax bill.

Alternatives to HELOCs

Before you decide firmly on a HELOC, it’s a good idea to consider all the ways to get equity out of your home, as well as another common borrowing option, the personal loan. Here’s a look at each:

The Takeaway

When considering a HELOC in Rochester, it’s important to weigh both the potential benefits and the possible risks. HELOCs offer financial flexibility and potentially present more attractive interest rates compared to some other borrowing options, which make them well-suited for managing large and ongoing expenses. However, they also come with the risk of losing your home if you fall into default. Always take the time to assess your overall financial situation. If you think a HELOC is right for you, seek out rates from multiple lenders.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

View your rate

Compare HELOC rates in Albany.

Introduction to HELOC Rates

Welcome to our comprehensive guide to home equity line of credit (HELOC) rates in Albany, New York. We’re here to help you, as a homeowner, understand how to access and manage your home equity effectively. We’ll walk you through the factors that influence HELOC rates, the benefits and risks of HELOCs, and how to compare different lenders to find the best deal. Whether you’re planning a home renovation, consolidating debt, or funding another major expense, this guide will equip you with the knowledge to make informed financial decisions.

What Is a HELOC?

A home equity line of credit (HELOC) is a type of second mortgage that uses your home as collateral for a line of credit that you can borrow from, as needed, up to a certain limit. The key to qualifying for a HELOC is having enough home equity. (Home equity is the difference between your home’s value and how much you owe on it.) Most lenders require that you have at least 15% equity in your home before you can qualify. Qualified borrowers can borrow up to 90% of their equity with a HELOC.

Where Do HELOC Interest Rates Come From?

The chief influencer of HELOC interest rates is the prime rate, which in turn is influenced by policy decisions of the Federal Reserve. Lenders start with the prime rate, then add their own margin to this rate, which is why you’ll find varying HELOC rates among different lenders. (And why you should shop around and get multiple rate quotes before settling on a lender.) Your individual rate will be determined by a few key factors, such as your credit score, debt-to-income ratio, income, and the amount of equity you have in your home.

How Interest Rates Impact HELOC Affordability

You’ve seen firsthand, as you’ve paid down your home loan, that the interest rate you secure for a loan can have a big impact on how much you pay. The same is true for the rate on a HELOC. Even a small difference in your initial rate can have a big impact on how much interest you pay over time.

HELOCs’ variable rates makes it hard to pinpoint the exact amount the HELOC will cost, but if you borrowed $50,000 with a HELOC that had a 20-year repayment term, you would have the following monthly payment amounts at 7.00%, 8.00%, and 9.00% interest: $388, $418, and $450, respectively, and total interest paid of $43,036, $50,373, and $57,967, respectively.

HELOC Interest Rate Trends

While it’s no crystal ball, watching the prime rate can give you a sense of where HELOC rates are headed, and having a sense of the history of the prime rate can give you some perspective on current rates. Since 2018, we’ve seen the prime rate fluctuate from a low of 3.25% in 2020 to a high of 8.50% in 2023.

Variable vs. Fixed Interest Rates

HELOCs often come with variable rates. These rates may initially be lower than those of fixed-rate loans, which can make them appealing. But variable rates can go up or down over time based on market conditions, at intervals and according to caps that are spelled out in the HELOC agreement. Being aware of the potential changes in your interest rate is crucial for staying on top of your financial game. If you know you’re someone who needs a steady monthly payment, a home equity loan might be a better fit for you. More on those below.

Helpful Tools & Calculators

As you explore how to get equity out of your home, you can use online tools to help you estimate monthly payments and interest costs. Here are three calculators you will likely find helpful during your borrowing journey.

How to Qualify for a Competitive HELOC Rate

To improve your chances of qualifying for a great HELOC rate, you’ll want to make sure you have at least 15% equity in your home (and ideally 20%). Here are the other important things you can do before you begin the application process:

Improve Your Credit Score

To land a desirable HELOC rate in Albany, you’ll want to keep your credit score at 640 or above. Some lenders may even look for a 700+ score. The good news is, you have the power to polish your credit score by making on-time payments and chipping away at credit card balances. Regularly checking your credit report for inaccuracies and disputing them can also give your score a nudge in the right direction.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is a simple equation: your total monthly debt payments divided by your gross monthly income. Most HELOC lenders prefer a DTI below 50%, but the lower, the better and for the most competitive interest rates you’ll want a DTI of 36% or lower. A reduced DTI can boost your chances of HELOC approval and snag you a more attractive interest rate. Calculate your DTI by tallying up your monthly debt payments and dividing by your gross monthly income.

Application Process for a HELOC in Albany

Applying for a HELOC is similar to applying for different types of home equity loans. Some lenders offer the convenience of prequalifying online, which can expedite the process. When you’re ready to apply, follow these steps:

Tax Benefits and Considerations

Homeowners, you’re in luck: You can deduct HELOC interest payments on your federal taxes, provided the borrowed funds are used to make improvements to your primary residence. You’ll need to itemize your return (and save your receipts showing how you spent the funds on renovations). To confirm your eligibility for HELOC-related deductions, it’s always a good idea to chat with a tax pro.

Closing Costs and Fees

HELOC closing costs are generally lower than those associated with a home purchase or refinance. The most significant expense is often the appraisal fee, which can range from $300 to $610 or more. A title search, if required, might set you back $75 to $200. You could also face application, origination, and administrative fees, as well as annual maintenance fees (up to $250), transaction fees, or inactivity fees.

Alternatives to HELOCs

There are other ways to tap into your home equity besides a HELOC, and it’s worth taking a closer look at these before making a firm decision.

The Takeaway

When you’re contemplating a HELOC, it’s crucial to consider the pros and cons. A line of credit offers flexibility and potentially lower initial rates, making it a smart choice for managing significant expenses or consolidating debt. Yet HELOCs do carry the risk of variable interest rates and the potential of losing your home if you’re unable to make payments. For Albany residents, it’s wise to explore HELOC rates in Albany with multiple lenders so you can make a well-informed choice.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

View your rate

Compare home equity loan rates in Anchorage.

Introduction to Home Equity Loan Rates

Home equity loans are a powerful financial resource for homeowners seeking to leverage the equity they’ve built in their homes by making consistent home loan payments. In this guide, we will take a deep dive into home equity loan rates in Anchorage, Alaska, and explain how these rates are shaped by both economic forces and each borrower’s personal characteristics. We’ll also explore the advantages and potential pitfalls of home equity loans, and provide guidance on how to secure the most favorable rates.

Whether you’re gearing up for a home renovation or have your sights set on other major expenses, a grasp of home equity loan rates can empower you to get equity out of your home in the most cost-efficient way.

How Do Home Equity Loans Work?

The first step toward being a wise borrower is to understand what a home equity loan is, exactly. Technically, a home equity loan is a second mortgage. Your home serves as collateral and your lender gives you a lump sum. You then immediately begin to repay that loan in monthly installments over a period that can range from five to 30 years.

Because your home secures the loan, the interest rates are usually more favorable than those of unsecured personal loans. But of course, securing a loan with your home means that if you don’t make payments, the lender could foreclose.

Many lenders will let you borrow up to 85% of your equity. Home equity loans tend to have fixed interest rates, which means monthly payments remain the same for the life of the loan. A home equity loan calculator can help you determine what you might be able to borrow and what your monthly payments might be.

Recommended: What Is a Home Equity Line of Credit?

The Origin of Home Equity Loan Interest Rates

Home equity loan interest rates are the result of a complex interplay of economic and personal factors. The Federal Reserve’s monetary policy has a major impact on the broader lending market. Lenders typically set their base interest rates by adding a margin to the prime rate, which moves in tandem with the Fed’s decisions.

Your financial profile, including your credit score and debt-to-income (DTI) ratio, also plays a crucial role in determining the home equity loan rates you’ll be offered. Additionally, the loan amount and repayment term can affect rates, as can competition between lenders in some local markets.

How Interest Rates Impact Home Equity Loan Affordability

Interest rates are a big deal when it comes to how much it will cost to pay back your home equity loan. Even a fraction of a percentage point can make a significant difference in the long run. Imagine you’re taking out a $100,000 home equity loan with a 15-year repayment term. At an 8.50% interest rate, your monthly payment would be around $985, with a total interest paid of $77,253. But if the rate was instead 9.50%, your monthly payment would jump to $1,044, and the total interest paid would be $87,960. That’s roughly $10,700 you’d be shelling out in extra interest. The loan term and rate together can influence what you’ll pay each month, as this chart shows:

Home Equity Loan Rate Trends

The rise and fall of interest rates can be a bit like a rollercoaster ride, but by taking a look at recent history, you can gain some valuable perspective. The prime rate in 2020 was as low as 3.25%, but by 2023 it had climbed to 8.50%. These changes can make a big difference in the rates you’re offered, so it’s wise to keep an eye on the market and explore your options to secure the best rates for your home equity loan.

How to Qualify for the Lowest Rates

You may not be able to do anything to control the prime rate, but you can have an impact on the interest rate you’re offered by taking a few crucial steps before submitting your home equity loan application. Here’s what to do:

Maintain Sufficient Home Equity

To be eligible for a home equity loan, you need at least 20% equity in your home. Calculating your equity is easy: Subtract your current mortgage balance from your home’s estimated value (find the value on a real estate site). The result is your home equity. Next step: Divide your equity number by the estimated value to get a percentage of equity. By keeping a healthy cushion of equity, you’re setting yourself up for the most favorable home equity loan rates.

Build a Strong Credit Score

Lenders typically favor credit scores of 680 or higher for home equity loans, with many looking for 700 or above. A robust credit score is a testament to your financial acumen and can positively impact the rates you’re eligible for in Anchorage. To bolster your credit score, ensure you’re paying bills promptly and maintain low credit card balances. Refrain from opening new credit accounts in the months leading up to your loan application. Regularly review your credit report for inaccuracies and address them.

Manage Debt-to-Income Ratio

Your DTI ratio is a key driver where interest rates are concerned. To learn your DTI ratio, add up your monthly debts and divide by your gross monthly income. The DTI requirement for a home equity loan is typically below 50%, but the real magic number is 36% or lower. A low DTI ratio tells lenders you’re a pro at managing monthly payments, and that can lead to more attractive home equity loan rates. To reduce your DTI, think about paying down those lingering debts, finding ways to increase your income — or even better, both.

Obtain Adequate Property Insurance

Property insurance protects your investment in your home. It also safeguards your lender’s investment when you have a home equity loan. Having good coverage can positively impact the rates you’re offered, as well-insured properties are seen as lower risk by lenders. If you’re not sure how much coverage is needed, ask a lender what would meet its requirements.

Recommended: Different Types of Home Equity Loans

Useful Tools & Calculators

Tools and calculators are your friends when it comes to making sound decisions about home equity loans. A home equity loan calculator can help you estimate monthly payments, and there are calculators that help homeowners with a home equity line of credit (HELOC), too.

Closing Costs and Fees

The typical range for closing costs on home equity loans is 2% to 5% of the loan amount. The list of fees often includes the appraisal, credit report, document preparation, origination, notary, title search, and title insurance. While no-closing-cost home equity loans are an option, they typically come with higher home equity loan rates. By comparing these costs across multiple lenders, you can find the most cost-effective option for your situation.

Tax Deductibility of Home Equity Loan Interest

The interest on home equity loans could be tax-deductible if you’re using the funds for significant home improvements. Couples filing jointly can deduct interest on up to $750,000 of qualified home equity loans; for single filers, it’s loans of up to $375,000. To claim this deduction, you’ll need to itemize your deductions on your tax return so you may need to work with a tax advisor.

Alternatives to Home Equity Loans

While home equity loans are very popular, there are two other options to consider: a home equity line of credit (HELOC) and a cash-out refinance. HELOCs offer more flexibility by allowing you to draw funds as needed up to a set limit. A cash-out refinance replaces your existing mortgage entirely. Let’s take a closer look:

Home Equity Line of Credit (HELOC)

A home equity loan gives you a lump sum in one payment. A HELOC, on the other hand, is more like a credit card. It gives you a credit limit, and you can borrow as much as you need (up to that limit) whenever you need it. You only pay interest on the amount you actually borrow, and during the loan’s initial draw period (often 10 years), you usually don’t have to repay the principal. (A HELOC interest-only calculator can help you see what you might owe depending on how much of the credit line you use.) After the draw period, a repayment period begins. You’ll repay what you owe plus interest. (This is when a HELOC repayment calculator is useful.)

HELOCs usually have variable interest rates. To qualify, you’ll typically need a credit score of 680 or higher (700 is better) and a DTI of 50% or less (below 36% is the ideal). HELOCs are a good choice if you’re not sure how much you’ll need to borrow. Many lenders let you borrow up to 90% of your home’s equity.

Here’s a quick look at a HELOC vs. a home equity loan:

Cash-Out Refinance

Imagine doing a mortgage refinance, borrowing more than you currently owe, and walking away with the difference between your old loan and your new one in cash. That’s a cash-out refinance, and it’s another way to access a lump sum based on your home equity. Borrowers can typically get a loan for up to 80% of their equity, so long as they have a minimum credit score of 620 and a debt-to-income ratio below 43%.

Because you’re getting a new loan, you can choose a fixed or variable interest rate. But you’ll want to make sure current rates are an improvement on the rate you had with your original home loan, so that you aren’t spending unnecessarily on the loan. One plus of a cash-out refinance vs, a home equity line of credit or home equity loan is that after a refi, you’ll only have one monthly payment to make.

The Takeaway

While you’re mulling over a home equity loan, remember to shore up your credit score, keep your DTI ratio in check, and ensure your property insurance is up to snuff. These are the factors that can sway the rates you’re offered and bolster your financial standing. Crunch the numbers with online tools to get a handle on your potential monthly payments and closing costs, and make sure you have a plan in place to cover those monthly bills. Shop around, compare lenders’ offers, and you’re sure to get the best possible rate for your home equity loan.

SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.

Compare home equity loan rates in Madison.

Introduction to Home Equity Loan Rates

When it comes to borrowing against the value of your home, home equity loan rates are a critical factor to consider. This article will help you understand home equity loan rates in Madison, Wisconsin, and how they are influenced by broader economic conditions and your personal financial factors.

We’ll also cover the different types of home equity loans available, their benefits, as well as the potential risks involved. Whether you’re planning a major home renovation project or thinking about consolidating existing debt, if you’re looking to get equity out of your home to fund your dreams, this information will help you make informed decisions.

How Do Home Equity Loans Work?

First off, make sure you know what a home equity loan is, exactly. A key fact is that a home equity loan is a second mortgage. You’ll use your home as collateral, and a lender will provide you with a lump sum of money that you will immediately begin to repay in fixed monthly installments over a period of five to 30 years. Because these loans are secured by your home’s equity, they typically come with lower interest rates than unsecured personal loans. The flip side? This means that if you don’t make payments, you risk losing your home to foreclosure.

The interest rate on home equity loans is usually fixed, which can be a plus for those who like to plan ahead. To qualify, you’ll generally need to have at least 20% equity in your home. Equity is the difference between the current value of your home and the amount you still owe on your mortgage. Many lenders will let you borrow up to 85% of your home’s equity. A home equity loan calculator can help you quickly figure out how much you might be able to borrow.

Where Do Home Equity Loan Interest Rates Originate?

Home equity loan rates are influenced by a variety of economic and personal financial factors. The Federal Reserve’s policies have a direct impact on the lending market, with the prime rate (which is linked to the Fed’s policy) serving as a foundational benchmark for lenders. But your credit score, debt-to-income (DTI) ratio, the amount you’re borrowing, and the term over which you’ll repay the loan can all influence the rate you’re offered. Each lender interprets this data slightly differently so it’s important to shop around and compare rates and terms from multiple lenders during your application process.

How Interest Rates Affect Home Equity Loan Affordability

Your interest rate plays a significant role in the total cost of your loan. What might seem like a small interest rate variance — even a fraction of a percentage point — can result in a noticeably greater interest payment over time. Take a look at the chart below, which shows you how different loan terms and rates affect monthly payments for a $75,000 loan that is repaid over 20 years.

Home Equity Loan Rate Trends

Home equity loan interest rates are ever-changing, influenced in part by the prime rate. As you can see from the chart, the prime rate dropped to 3.25% in 2020, only to rise to 8.50% by 2023. The prime rate can serve as a barometer for different types of home equity loans in Madison. So it’s wise to keep an eye on economic conditions as you prepare to file your loan application. Some buyers try to time their application to a dip in the rate, but it’s not always possible. What can you do? Maximize your credit score and other personal metrics to present the best possible profile on your application.

How to Qualify for the Lowest Rates

To qualify for the most competitive home equity loan rates, you’ll need to put your best financial foot forward. By paying attention to the factors below before you file your home equity loan application, you can boost your chances of getting the best home equity loan rates in Madison.

Maintain Sufficient Home Equity

You need to keep at least 20% equity in your home to be eligible for a home equity loan. To figure out your home equity, simply subtract your mortgage balance from your home’s current value. For instance, if your mortgage balance is $400,000 and your home is valued at $550,000, your equity is $150,000. Then divide this equity number by your home value to arrive at a percentage. If it’s 20% or above, you’re ready. If it isn’t quite there, you can boost your equity by making extra payments toward your loan principal.

Build a Strong Credit Score

To secure the most attractive home equity loan rate, a robust credit score is your best ally. Lenders typically favor those with a score of 680 or above, but for some the gold standard is 700 or higher. A higher credit score showcases your money-management skills and potentially unlocks more favorable loan terms. To give your score a boost, focus on making timely payments, keeping credit card balances in check, and steering clear of new debt. Regularly check your credit report and dispute any errors you find.

Manage Debt-to-Income Ratio

Your DTI ratio is a key metric if you’re concerned about your home equity loan eligibility. Lenders generally look for a DTI below 50%, with the best position being under 36%. To determine your ratio, add up your monthly debts and divide by your gross monthly income. To keep your DTI in check, think about chipping away at existing debts, finding ways to boost your income, or both.

Obtain Adequate Property Insurance

Property insurance is often a must-have for home equity loans, especially if you live in an area prone to flooding or other natural disasters. Lenders want to be sure that the property securing the loan is well protected. Having the right insurance can give you peace of mind and might even affect the home equity loan rates you’re eligible for.

Useful Tools & Calculators

Online calculators can help you determine how much you can borrow, what your monthly payments might look like, and how different factors — like your loan amount or term — can impact your home equity loan rates. Here are three you’ll want to use throughout your life as a homeowner.

Closing Costs and Fees

The closing costs for home equity loans are generally between 2% and 5% of the loan amount. These fees include the appraisal, credit report, document preparation, origination, notary, title search, and title insurance, among other charges. While no-closing-cost loans are an option, they often come with higher interest rates. It’s a good idea to compare fees and terms from different lenders to find the most cost-effective choice for you.

Tax Deductibility of Home Equity Loan Interest

Here’s some good news: The interest on home equity loans can be tax-deductible if the funds are used to significantly improve your home. If you’re married and filing jointly, you could potentially deduct interest on up to $750,000 of qualified home equity loans. For single filers, the limit is $375,000. To take advantage of this deduction, you’ll need to itemize your deductions when you file your tax return. It might be worth consulting a tax advisor to see how this could benefit you based on your financial situation.

Alternatives to Home Equity Loans

In addition to home equity loans, a home equity line of credit (HELOC) and a cash-out refinance are also good ways to leverage your home equity. It’s worth considering both of these options if you’re looking into a home equity loan.

Here’s a quick guide comparing a cash-out refinance vs. a home equity line of credit and a home equity loan.

The Takeaway

When you’re ready to take the leap into borrowing based on your home equity, remember to keep your credit score in good shape, your debt-to-income ratio low, and your property insured. Use online tools to make sure you understand what your monthly payments would be, so you can plan for these costs. Consider rate and loan offers from multiple lenders to help you get the best available terms in Madison.

SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.