Current Home Equity Loan Rates in Anaheim, CA Today
ANAHEIM HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Anaheim, CA.
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 Anaheim.
Key Points
• Home equity loan rates are influenced by the prime rate and the borrower’s financial circumstances.
• If you have a strong credit score and a low debt-to-income ratio, you’re likely to get a lower interest rate.
• Remember, even a small difference in interest rates can mean substantial extra interest payments (or savings) over the loan term.
• Home equity loans usually come with fixed interest rates, which can offer stability and predictability in your monthly payments.
• Property insurance is a must, especially if you’re in a high-risk area.
• The interest on home equity loans could be tax deductible if you’re using it for home improvements.
Introduction to Home Equity Loan Rates
When you’re researching how to get equity out of your home, interest rates are a major factor in the decision-making process. This guide will give you an overview of home equity loan rates in Anaheim, California, and what influences them on a personal and economic level. We’ll also cover the application process, the risks and benefits of home equity loans, and tips on how to get the best available rates.
Whether you’re planning a home renovation or looking to consolidate debt, understanding home equity loan rates can help you make the best financial decision for your situation.
First up on the agenda: What is a home equity loan?
How Home Equity Loans Work?
A home equity loan is a second mortgage (assuming you’re still paying off your original home loan) that leverages your home as collateral for a lump sum of money. Repayment is then made in fixed monthly installments over a period of five to 30 years. The appeal of these loans lies in their lower interest rates compared to unsecured personal loans, and the predictability of fixed interest rates.
Typically, lenders require you to have at least 20% equity in your home to qualify. Calculating equity is straightforward: It’s the current market value of your home minus the outstanding mortgage balance. For example, if your home is valued at $900,000 and you still owe $700,000, your equity is $200,000. To get a sense of how much you might be able to borrow, use a home equity loan calculator.
Recommended: HELOC vs. Home Equity Loan
Where Do Home Equity Loan Rates Come From?
Home equity loan interest rates are influenced by a variety of factors, including the economy, Federal Reserve decisions, and your personal financial situation. Home equity loan rates often follow the prime rate, the interest rate that banks charge their best customers. Additionally, your credit score and debt-to-income ratio can affect the rate you’re offered. Loan amounts and repayment terms can also influence your rate. Typically, larger loan amounts and longer repayment terms will have higher rates due to increased risk for the lender.
How Interest Rates Impact Home Equity Loan Affordability
Interest rates go a long way to determining how manageable your home equity loan will be. Even a small percentage change can add up to quite a bit over the life of the loan. For instance, a $100,000 home equity loan with a 15-year term at 8.50% would mean a monthly payment of $985 and total interest of $77,253. But bump up the rate to 9.50%, and the monthly payment increases to $1,044 with total interest of $87,960. Getting that lower rate would save you $10,700 in the long run.
Home Equity Loan Rate Trends
Anticipating interest rate shifts is no easy feat, given the multitude of factors at play. However, a glance at recent prime rate history can be illuminating. In 2020, the prime rate hit a low of 3.25%, but by 2023, it had soared to 8.50%. These fluctuations underscore the significance of timing your application to coincide with a favorable economic climate, when that’s possible. By keeping an eye on market movements and your own financial standing, you can better your chances of securing a competitive home equity loan rate.
Source: TradingView.com
| 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
Fluctuations like these strongly impact Anaheim’s home equity loan rates, so it’s a good idea to stay on top of economic trends. Even if you can’t predict the future perfectly, you may be able to time your loan strategically if you have a sense of the market.
How to Qualify for the Lowest Rates
To secure the most competitive rates, focus on boosting your credit score and managing your debt-to-income ratio. By paying attention to these key metrics, you’ll be in a strong position to make your case to lenders and potentially save on your borrowing costs.
Maintain Sufficient Home Equity
You need to have at least 20% equity in your home to be eligible for a home equity loan. To work out your equity, subtract your mortgage balance from your home’s current value. For instance, if you owe $600,000 on your mortgage but your home is valued at $800,000, your equity is $200,000, or 25%.
Lenders typically allow you to borrow up to 85% of your home’s equity, which in this case could mean a potential loan of $170,000. Keeping a healthy amount of equity in your home is a smart way of creating a financial safety net. And it can lead to better interest rates on a home equity loan.
Build a Strong Credit Score
When you’re shopping for a loan, a robust credit score is your best friend. Lenders are often looking for scores of 680 or higher, with many borrowers aiming for 700 or beyond. A higher credit score is a clear sign of financial responsibility, and it reduces risk in the eyes of the lender. This can translate to a more attractive loan package, with lower rates and higher borrowing limits.
To boost your credit score, focus on timely payments, maintaining low credit card balances, and steering clear of new debt. Regularly reviewing your credit report for inaccuracies and disputing any errors is also wise.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a major player in the home equity loan game. To impress lenders, aim for a DTI below 36% (though some lenders will accept up to 50%). Calculate this ratio by dividing your total monthly debt payments — student loans, auto loan, personal loan, and mortgage — by your gross monthly income. The lower your DTI, the better your chances of being offered a competitive loan rate.
To improve your DTI, try chipping away at your debts, finding ways to increase your income, or better yet, both. Mastering your DTI could be the key to unlocking a home equity loan with an interest rate and terms that work for you.
Obtain Adequate Property Insurance
Property insurance is a must for home equity loans, especially if you’re in an area prone to natural disasters. It’s a smart move that not only safeguards your lender’s investment but also ensures your home, the collateral, is well-protected. In some high-risk areas, additional coverage like flood or earthquake insurance might be needed. Failing to meet insurance requirements could lead to disqualification.
Tools & Calculators
Online tools can be really helpful when you’re estimating payments and comparing home equity loan and HELOC offers. It could mean the difference between getting a loan and getting the right loan for you.
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 for home equity loans usually fall into the range of 2% to 5% of the loan amount. Fees include the appraisal, credit report, document preparation, origination, notary, title search, and title insurance. While no-closing-cost loans are an option, they often come with higher rates.
Tax Deductibility of Home Equity Loan Interest
Here’s a tip that might brighten your day: The interest you pay on different types of home equity loans and lines of credit could be tax deductible if you use the funds to buy, build, or significantly improve your home. The current guidelines, which are in place through 2025, allow married couples filing jointly to deduct interest on home loans up to $750,000, and single filers can deduct interest on loans up to $375,000. To claim this perk, you’ll need to itemize your deductions on your tax return. These tax benefits could make a home equity loan even more appealing, and they might just help offset some of the costs.
Alternatives to Home Equity Loans
Now, let’s talk about the alternatives to home equity loans. You’ve got HELOCs, which are like a pot of money you can dip into as needed, with variable rates that can be quite appealing. Then there’s cash-out refinancing, which is a kind of mortgage refinance that swaps out your current home loan for a bigger one, giving you access to the difference in cash.
Home Equity Line of Credit (HELOC)
Even if you’re set on a home equity loan, it’s a good idea to understand what is a home equity line of credit. A HELOC is like having a credit card with a limit that’s based on your home’s equity. It’s a flexible way to borrow because you only pay interest on the amount you actually use. The interest rate is often variable, so it fluctuates with the market.
There are two phases to a HELOC: the draw period and the repayment period. During the draw period, which is typically 10 years, you usually can make interest-only payments on the amount you’re using. (A HELOC interest-only calculator can be a useful tool to estimate bills.) Then in the repayment period, borrowing ends and you repay the full amount with interest over 10 or 20 years. (There’s a HELOC repayment calculator for that).
HELOCs are great if you’re not sure of the total amount you need or if your expenses will be ongoing. You can often borrow up to 90% of your home’s equity, which is a real plus.
Cash-Out Refinance
A cash-out refinance is a strategic move, replacing your existing mortgage with a new one that gives you a lump sum based on your home equity. Most lenders will let you borrow up to 80% of your home equity. You’ll need a credit score of 620 or more and a debt-to-income ratio of 43% or less.
The beauty of a cash-out refinance is that you can choose between a fixed or variable rate, with variable rates sometimes allowing access to even more equity. Unlike home equity loans, cash-out refinances simplify your finances with just one monthly payment and may offer better rates and improved debt management.
Recommended: Cash-Out vs. Home Equity Line of Credit
The Takeaway
When you’re considering a home equity loan, remember to keep your credit score in good shape, manage your debt-to-income ratio, and ensure you have the right property insurance. These factors will play a big role in the interest rates you’re offered. Using online tools and calculators can help you get a sense of what your monthly payments and overall costs might look like. There are other options, too, like HELOCs and cash-out refis, each with their own benefits and requirements. By being informed and prepared, you can make the most of your home equity and potentially get the best rates and terms.
SoFi now offers home equity loans. Access up to 85%, or $350,000, 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.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payments be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan varies depending on the interest rate and the loan term. For example, at 8.00% over 10 years, you would pay approximately $607 a month (principal and interest). If you chose a 20-year term, your payment would be about $418 a month, but you would pay more in total interest. A shorter term means higher payments but less total interest. A longer term means lower payments but more total interest.
What would the monthly payments be on a $100,000 HELOC?
A $100,000 home equity line of credit has a variable interest rate, so the payments can fluctuate with market conditions as well as how much of the credit line you’ve used. For instance, borrowing the full amount at an 8.50% interest rate will mean an interest-only payment of approximately $708 per month during the draw period. Once the draw period ends (usually after 10 years), you’ll enter the repayment phase, which includes both principal and interest. At that point, your monthly payment rises to roughly $868, assuming a 20-year repayment. Be sure to consider how potential payment changes will fit into your budget.
What’s the monthly payment on a $25,000 home equity loan?
The monthly payment for a $25,000 home equity loan is determined by the loan term and the current home equity loan rates. For instance, with a 10-year term and 8.00% interest, you’d be looking at approximately $303 per month. If you extend the term to 20 years, the monthly payment would be around $209. While a longer term might seem attractive for the lower monthly payment, it means you’ll pay more in interest over the life of the loan. It’s all about finding the right balance for your financial goals.
What might prevent you from securing a home equity loan?
There are several factors that can disqualify you from obtaining a home equity loan. Lenders typically require at least 20% equity in your home. A low credit score, generally below 620, can also disqualify you, as it indicates higher risk to the lender. Additionally, a high debt-to-income (DTI) ratio, typically above 50%, can make it difficult to qualify. Lenders also consider the property’s insurance coverage, especially in high-risk areas. If you lack adequate insurance, you may be disqualified. It’s important to review these criteria and understand how they affect your eligibility before applying.
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.
SOHL-Q225-318
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 Des Moines, IA Today
DES MOINES HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Des Moines, IA.
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 Des Moines.
Key Points
• Home equity loan rates in Des Moines are influenced by economic conditions and borrower profile.
• The prime rate serves as a benchmark for determining home equity loan rates.
• Comparing offers from multiple lenders can help you secure the best available rate.
• Online calculators can help you estimate monthly payments and total interest costs.
• Good property insurance is a must and protects you and the lender.
Introduction to Home Equity Loan Rates
A home equity loan is a powerful financial resource for homeowners who want to tap into the value of their property without selling it. In this guide, we’ll explore the current home equity loan rates in Des Moines, Iowa, and help you understand the factors that influence the rate you might be offered. We’ll explain what a home equity loan is and the potential advantages and drawbacks of this type of loan, as well as alternative financing solutions. With this information in hand, you’ll be better prepared to decide if a home equity loan is the right way to get equity out of your home.
How Home Equity Loans Work?
A home equity loan, which is a second mortgage, provides a one-time lump sum that you can use for a variety of expenses. Because the loan is secured by your home, the interest rate you can expect is lower than what you would be offered for a personal loan. Rates are also typically fixed, which make your monthly payments predictable. Most lenders require that you have at least 20% equity in your home to qualify. A home equity loan calculator can help you determine how much you might be able to borrow.
Recommended: What Is a Home Equity Line of Credit?
What Determines Home Equity Loan Interest Rates?
Interest rates for differen types of home equity loans are influenced by a variety of factors, including the economic climate and your personal financial situation. The Federal Reserve’s policies and the prime rate help lenders determine, broadly, the rates they will offer. But lenders also consider each borrower’s credit score and debt-to-income (DTI) ratio, with higher scores and lower ratios typically leading to more favorable rates. The amount you’re borrowing and the length of your repayment term can also impact the interest rate.
How Interest Rates Impact Home Equity Loan Affordability
Your interest rate is an important factor when it comes to the affordability of a home equity loan. Even a small change in percentage can add up to significant savings or costs over time. For instance, a $100,000 loan at 8.50% interest would set you back about $985 a month, with a total interest of $77,253 over 15 years. But increase the rate to 9.50%, and you’re looking at a monthly payment of $1,044 and total interest of $87,960. That’s a more than $10,000 difference in interest alone. So it’s smart to seek out the best possible interest rate and think about how payments fit into your monthly budget and long-term financial goals.
Home Equity Loan Rate Trends
The landscape of home equity loan rates is constantly changing, influenced in part by the prime rate. As you can see here, the prime rate dropped to 3.25% in 2020, only to rise to 8.50% by 2023. These shifts have a ripple effect on home equity loan rates. So it’s wise to keep an eye on economic conditions as you prepare to file a loan application.
Source: TradingView.com
| 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
How to Qualify for the Lowest Rates
To obtain the most favorable home equity loan rates, you need to focus on several key areas: your level of home equity, your credit score, your DTI ratio, and property insurance. The process of applying for a home equity loan is similar to getting a home loan. Let’s take these important qualifying factors one by one:
Maintain Sufficient Home Equity
You need to keep at least 20% equity in your home to qualify for a home equity loan. To determine your equity percentage, subtract your mortgage balance from your estimated home value (find the latter on a real estate site). Then divide the result by your estimated home value to arrive at a percentage. The more equity you have, the better your chances of scoring a loan with favorable terms, and the easier it is to handle your financial commitments.
Build a Strong Credit Score
A credit score of 680 is often the starting point when lenders are considering home equity loan applicants, but the higher, the better. A robust credit score is a sign of financial prudence and can translate to more attractive loan rates. Those with a history of timely payments, low credit balances, and a diverse credit portfolio are more likely to secure favorable terms. Focusing on your credit score before you apply for a home equity loan is a smart move that can lead to long-term savings on interest.
Manage Debt-to-Income Ratio
Your DTI ratio will be carefully considered by a potential lender. They generally accept a DTI under 50%, but a ratio below 36% is preferred. You can determine your DTI by totaling your monthly debts and dividing by your gross monthly income. To manage your DTI, consider chipping away at your current debt, boosting your income, or both. A lower DTI not only increases your likelihood of approval but also sets the stage for more favorable loan terms.
Obtain Adequate Property Insurance
It’s a good idea to give your property insurance a checkup before you apply for a home equity loan. This is especially important if you live in an area that’s prone to natural disasters, like tornados or severe winter storms. Having solid coverage not only protects your investment but also gives your lender peace of mind. Check that your policy is up to date and meets your lender’s requirements, which may include flood insurance, depending on your location.
Useful Tools & Calculators
Running the numbers on a home equity loan can help you get a feel for how borrowing might affect your financial situation. Fortunately, online tools can do the math for you. Here are a few of our favorite calculators.
Run the numbers on your home equity loan.
-
Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment
CalculatorPunch 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 for home equity loans usually fall between 2% and 5% of the loan amount. These fees cover a long list of expenses, from an appraisal to the title search and more. While no-closing-cost home equity loans are out there, they often come with higher interest rates. It’s crucial to include a comparison of closing costs when you are looking at offers from multiple lenders to find the best deal.
Tax Deductibility of Home Equity Loan Interest
Here’s a potential tax break: The interest on your home equity loan might be tax-deductible if you use the money to make significant home improvements, or to buy or build a home. Married couples filing jointly can deduct the interest on up to $750,000 of qualified home equity loans, while single filers can deduct the interest on loans up to $375,000. To claim this deduction, you’ll need to itemize your deductions on your tax return, so you may want to consult a tax advisor to get advice tailored to your financial situation.
Alternatives to Home Equity Loans
A home equity lines of credit (HELOC) and a cash-out refinance are two popular alternatives to home equity loans. Each of these options has its own unique features and eligibility requirements — and both use your home as collateral.
Home Equity Line of Credit (HELOC)
A HELOC is like a credit card in the sense that it allows you to borrow up to a certain limit, and for the 10-year “draw” period, you only have to pay interest on the amount you’ve drawn. (You can use a HELOC interest-only calculator to see what those payments might look like.) After the draw period you’ll enter a repayment period when you pay back what you have borrowed, plus interest. A HELOC repayment calculator will be useful then.
Interest rates for HELOCs are usually variable, meaning your costs may increase or decrease with market forces. To qualify for a HELOC, you’ll typically need a credit score of 680 (700 is preferred) and a debt-to-income ratio of less than 50% (ideally 36% or lower). HELOCs are a great option if you’re not sure how much you need to borrow.
Cash-Out Refinance
A cash-out refinance is like hitting the reset button on your mortgage and getting a lump-sum loan at the same time. You can borrow up to 80% of your home’s equity in cash. To qualify, a credit score of 620 or more and a DTI ratio under 43% are generally the benchmarks. Because this is a mortgage refinance, you get to choose between fixed or variable interest rates.
Here’s one thing to consider with a cash-out refinance vs. a home equity line of credit: With a cash-out refi, you’ll only have one monthly payment, making life—and your finances—a tad simpler.
Take a quick look at a HELOC vs. a home equity loan and a cash-out refi:
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| Borrowing Limit | Up to 85% of borrower’s equity | Up to 90% of borrower’s equity | 80% of borrower’s equity for most loans |
| Interest Rate | Fixed | Generally variable | May be fixed or variable |
| Type of Credit | Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments. | Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest, followed by a repayment period (10-20 years) to repay the principal plus interest. | Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms. |
| Repayment Term | Generally 5-30 years | A draw period of 5-10 years, followed by a repayment period of 10-20 years | Generally 15-30 years |
| Fees | Closing costs (typically 2-5% of the loan amount) | Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees) | Closing costs (typically 2-5% of the loan amount) |
The Takeaway
Home equity loans can help you capitalize on your home’s equity to get cash you can use to pay for home improvements or debt consolidation. But they also come with risks. If you miss payments, you could experience foreclosure. To get the best home equity loan rate, focus on building a strong credit score, managing your DTI ratio, and making sure you have enough property insurance. Shop around and check rates at multiple lenders to find a loan that aligns with your long-term financial goals.
SoFi now offers home equity loans. Access up to 85%, or $350,000, 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.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What can a home equity loan be used for?
Home equity loans are versatile and can be used for all sorts of needs, such as large purchases, home renovations, and debt consolidation. The funds are typically distributed as a lump sum, which can be beneficial if you know how much money you will need and when you will need it. If you aren’t sure, a home equity line of credit might be a better fit.
What would the monthly payment be on a $25,000 home equity loan?
The payment on a $25,000 home equity loan is calculated using the loan’s interest rate and term. For example, at a 7.00% interest rate over 15 years, the monthly payment would be approximately $225. This fixed-rate payment includes both principal and interest, making it easier to budget.
What’s the monthly payment on a $30,000 home equity loan?
The payment on a $30,000 home equity loan is based on the interest rate and loan term. For a 15-year fixed-rate loan at 7.50%, the monthly payment would be $278. If you choose a 30-year term at the same rate, the monthly payment would be about $210. This fixed-rate payment would cover both the principal and interest. Longer terms offer lower monthly payments but increase the total interest paid over the life of the loan.
What might prevent you from getting a home equity loan?
There are a few things that might stop you from securing a home equity loan. Most lenders look for a credit score of at least 680. Your debt-to-income (DTI) ratio should not exceed 50% (and ideally be closer to 36%) to ensure you can comfortably handle the additional financial responsibility. And you’ll need to have at least 20% equity in your home.
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.
SOHL-Q225-320
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.
Decoding Markets: Round Two
It’s a TACO Summer
Trade policy is back in the news again. In a move that echoes the Liberation Day announcement, the Trump administration has begun sending out formal letters to countries outlining the “reciprocal” tariff rate they can expect to pay starting August 1.
Unlike the first go around, however, the latest trade news has been met with little more than a collective shrug from investors. The S&P 500 is less than 1% from its all-time high (which it recently set), while the VIX is at its lowest level since mid-February.
It’s unclear how much of the potential economic impact from tariffs has been priced in, but it’s hard to argue that the risks have fully been internalized. Bloomberg Economics estimates that the 2025 tariffs would reduce GDP by 2.9% and raise core PCE prices by 1.7%. Including the sectoral tariffs on strategically important goods such as semiconductors, copper, and pharmaceuticals that are planned in the future, the GDP and core PCE estimates intensify to 3.7% and 2.2%, respectively.
Estimated Impact of 2025 Tariffs
Yet calm prevails. The dominant explanation for the market tranquility — or complacency depending on who you ask — is the widespread belief in “TACO”, which stands for “Trump Always Chickens Out”. In a nutshell, it’s the idea that the administration has a very low tolerance for significant economic pain and will back down from its most aggressive threats when faced with a sharp negative market reaction.
The belief isn’t without precedent. The first 90-day delay on tariff implementation came after stocks began falling into bear market territory and Treasury yields surged. This pattern of threat, market tantrum, and policy retreat has been repeated in dealings with China and the European Union, reinforcing investor belief that when push comes to shove, de-escalation will inevitably be the default outcome.
The TACO concept poses some risks, however, as it has contributed to a market environment “priced for perfection”. Investors expect that an economically damaging trade war will be averted, which creates a highly asymmetric risk profile. The best-case scenario – a negotiated de-escalation – is already priced in, which limits the potential market upside from a positive trade resolution, while the downside is largely written off.
Thus, a paradox emerges. TACO depends on the administration responding to severe market pressure, but because investors are so confident it will happen, they’re not selling. The absence of a negative market reaction removes the feedback loop that makes TACO work. This could inadvertently enable the very outcome investors are betting against, as the administration may feel less pressure to de-escalate without a market panic to react to.
Dollar Doldrums
Complicating the tariff calculus is the dramatic shift in the value of the U.S. dollar. Unlike previous trade disputes where a strong dollar acted as a buffer, the dollar has actually been in a steep decline.
In the first six months of 2025, the index plunged 10.7%, marking its worst first-half performance since 1973. The DXY is trading below 98, near its lows of the last three years. The weakness is being driven by a confluence of factors, including unpredictable U.S. policy and growing fiscal deficits, which are prompting foreign investors to reduce their holdings of dollar-denominated assets.
Importantly, this is the inverse of what happened during the 2018 trade upheaval. At that time, the dollar strengthened after tariffs were announced, which provided a buffer against the inflationary impact of tariffs. A weaker dollar on its own is inflationary because it takes more dollars to purchase the same amount of foreign goods. But when combined with tariffs, the inflationary impact is amplified and creates a double whammy for consumers and businesses.
This puts the Federal Reserve in a tough spot. On one hand, the clear upward pressure on prices would normally dictate a hawkish policy response. On the other hand, the tariffs are widely expected to act as a drag on economic growth and employment, which would normally call for lowering interest rate cuts to support the economy. The tensions between the Fed’s goals makes the future path of monetary policy uncertain.
U.S. Dollar Index
Earnings Showdown
For the large multinational corporations that dominate the S&P 500, the weak U.S. dollar is actually a positive. There are two primary benefits. First, a weaker dollar makes U.S. exports cheaper and more competitive for foreign buyers, which can help stimulate demand and drive top-line revenue growth.
Second, it creates a positive translation effect on earnings. Any revenue and profit generated in foreign currencies are converted into dollars for reporting purposes, and because the dollar has weakened, that conversion results in a higher dollar value.
That brings us to the second quarter earnings season, where the dominant narrative is one of a lowered bar. Consensus earnings estimates fell for most of the quarter, with Q2 EPS for the S&P 500 index now expected to increase by just 4.1% year-over-year after beginning April at 8.3%. It wouldn’t be much of a surprise if companies are able to beat expectations, considering how much estimates have come down. Still, that might not be enough to secure positive price reactions.
Given how fast the economic landscape is shifting, the main focus this earnings season probably won’t be the backward-looking Q2 results, but the forward-looking guidance that companies provide. In this regard, consensus expects EPS to ramp up in the second half of 2025, with this expected pickup in profitability a crucial pillar supporting the market’s current valuation. Beats on earnings will get overshadowed quickly if a company’s outlook for the third quarter and beyond is cautious or fails to validate the optimism baked into its stock price.
S&P 500 EPS Consensus
With markets priced for perfection, a lot is riding on the upcoming earnings season and what companies tell us about the outlook. Any failure to confirm the lofty expectations for an earnings acceleration in the second half of the year could serve as the catalyst that shatters the TACO-fueled calm. While this doesn’t necessarily mean a return to the frenetic swings we saw in April, a period of heightened market choppiness could be on the horizon.
Want more insights from SoFi’s Investment Strategy team? 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. Mario Ismailanji 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.
Read moreCurrent Home Equity Loan Rates in Columbia, SC Today
COLUMBIA HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Columbia, SC.
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 Columbia.
Key Points
• Home equity loan rates are influenced by the Federal Reserve’s policies and the borrower’s credit score and debt-to-income ratio.
• Elevating your credit score to 680 or above and keeping your DTI ratio under 36% can land you lower rates.
• Fixed rates offer the peace of mind of consistent and predictable monthly payments.
• Property insurance is a must-have for most home equity loans.
• The interest on your home equity loan may be tax-deductible if used for home improvements.
Introduction to Home Equity Loan Rates
Home equity loan interest rates are a key consideration when you’re thinking about how to get equity out of your home in Columbia, South Carolina. We’ll help you understand what they are, how they can affect your finances, and what you can do to get the best rate and find the right type of home equity loan for your personal situation.
First step? Make sure you understand what a home equity loan is and how it differs from other ways of borrowing against your home’s equity.
How Do Home Equity Loans Operate?
A home equity loan is technically a second mortgage that uses your home as collateral. The loan is disbursed in one lump sum, and you immediately begin repaying it in monthly installments over the loan term, typically five to 30 years. Because the loan is secured by your home’s equity, these loans usually offer lower interest rates than unsecured personal loans. The interest rate tends to be fixed, which can make it easier to budget for monthly payments. To qualify for a home equity loan, you’ll need at least 20% equity in your home.
To get a sense of how much you might be able to borrow, use a home equity loan calculator.
Where Do Home Equity Loan Interest Rates Originate?
Home equity loan interest rates are the result of a variety of economic and personal factors. The policies of the Federal Reserve have a significant impact on the cost of borrowing. Lenders adjust their rates based on the prime rate, which is influenced by the Federal Reserve’s decisions. Your credit score and debt-to-income (DTI) ratio are also important; generally, the better your credit score, the lower the interest rate you’ll receive. Loan amount and the repayment term you choose also play a role.
How Interest Rates Impact Affordability
The interest rate you lock in can make a world of difference in how manageable a home equity loan is over time. Even the slightest change in rates can add up to significant extra interest. Consider a $100,000 home equity loan with a 15-year repayment period. At an 8.50% rate, your monthly payment would be $984, and the total interest paid would amount to $77,253. But, at 9.50%, that monthly payment jumps to $1,044, and the total interest paid skyrockets to $87,961. That’s an extra $10,700 in interest alone over the life of the loan. Both the interest rate and the loan term are important factors. Take a look at the chart below, which shows you how different loan terms and rates affect monthly payments for varying loan amounts.
| 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 trends in home equity loan rates can be a bit like the weather — blowing hot and cold. The prime rate, a key benchmark for home equity loan rates, has seen some significant ups and downs. For example, it was as low as 3.25% in 2020 and as high as 8.50% in 2023. These changes have a direct impact on the rate you qualify for. Just like when you obtained your original home loan, if you have the flexibility to wait for a lower rate, keeping an eye on economic conditions and the prime rate can help you time your application to the moment that feels right for you.
Source: TradingView.com
| 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
How to Qualify for the Lowest Rates
To snag the lowest possible home equity loan rate, you need to be proactive. Take these steps before applying for a home equity loan.
Maintain Sufficient Home Equity
To be eligible for a home equity loan, it’s important to have at least 20% equity in your home. Calculating your equity is simple: Subtract your outstanding mortgage balance from your home’s estimated value, then divide the result by your home value to arrive at a percentage of equity. For instance, if your mortgage balance is $400,000 and your home is valued at $550,000, your equity totals $150,000. Divide that by $550,000, and you have an equity level of 27%.
Most lenders permit borrowing up to 85% of your equity, which in this case could mean a potential loan of $127,500. It’s a smart move to ensure you have ample equity not only for favorable loan rates but also to steer clear of foreclosure risks. If you’re close to 20% equity but not quite there, making extra payments toward your loan principal can help you hit the mark faster.
Build a Strong Credit Score
To snag enviable home equity loan rates, set your sights on a credit score of 680 or higher. Many lenders even look for 700 and above. A track record of timely payments shows lenders you’re the responsible sort they love to work with. If your score isn’t quite stellar, chip away at your debts, challenge any credit report errors, and keep your credit card balances in check.
Manage Debt-to-Income Ratio
Your DTI ratio is a significant piece of the puzzle when it comes to qualifying for a home equity loan. Lenders generally look for a DTI ratio under 50%, with an even better chance of approval if it’s 36% or lower. You can calculate this ratio by dividing your total monthly debt payments by your gross monthly income. To improve your DTI, consider strategies like paying off high-interest debts, boosting your income, or a combination of both. Not only will this make you a more appealing borrower, but it could also lead to a lower interest rate.
Obtain Adequate Property Insurance
Property insurance is a must-have for most home equity loans, as it is for most mortgages. It’s a safety net for you and your lender in case of damage. Lenders often ask for proof of insurance before giving the green light on your loan, and it’s crucial to keep that coverage throughout the loan term. In Columbia, having the right insurance can not only help you meet lender requirements but may also help you snag the best home equity loan rate.
Useful Tools & Calculators
Online calculators can help you estimate your monthly payments and total interest costs, making a comparison of different home equity loan offers a breeze. Try a home equity loan calculator or, if you’re exploring a home equity line of credit, a HELOC 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
Closing costs for home equity loans typically range from 2% to 5% of the loan amount. The itemized tab tends to include the usual suspects: appraisal, credit report, document preparation, origination, notary, title search, and title insurance.
Recommended: HELOC vs. Home Equity Loan
Tax Deductibility of Home Equity Loan Interest
The interest you pay on a home equity loan may be tax deductible if the proceeds are used to buy, build, or substantially improve the home. If you’re married and filing jointly, you can deduct interest on up to $750,000 of qualified home equity loans. For single filers, the loan limit is $375,000. To claim the deduction, you must itemize your deductions on your tax return. This tax benefit is currently set to expire after 2025, but it could be extended. Consult a tax advisor to see how this deduction may apply to your specific financial situation.
Alternatives to Home Equity Loans
There are other ways to tap into your home’s equity, so it’s worth considering these if you’re thinking about a home equity loan. A home equity line of credit (HELOC) or a cash-out refinance could be a good fit.
Home Equity Line of Credit (HELOC)
A HELOC is a bit like having a credit card with a spending limit that’s secured by your home. You only pay interest on the amount of the credit line that you actually use, and during the “draw” period of the HELOC, you only pay interest — no principal. This is when a HELOC interest-only calcuclator comes in handy.
Once the draw period ends, you’ll start paying back both the principal and interest, which likely means higher monthly payments. The interest rate on a HELOC is usually variable, meaning it can fluctuate with the market. (A HELOC repayment calculator can help you figure out how much you might owe at different rates.) HELOCs are especially useful for borrowers who aren’t sure exactly how much they might need to borrow, or who need to borrow in increments versus all at one time.
Cash-Out Refinance
A cash-out refinance is a type of mortgage refinance that lets borrowers replace their current mortgage with a larger one and pocket the difference between the two in cash. The amount you can access is tied to your home equity, with most lenders capping it at 80% of your home’s value. You’re looking at a minimum 620 credit score and a DTI ratio under 43% to qualify. These refinances come with the choice of fixed or variable rates, and variable rates might just open the door to more equity. Unlike a home equity loan, a refi leaves you with one monthly payment to manage instead of two.
Here’s a quick look at a cash-out refinance vs. a home equity line of credit and a home equity loan:
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| Borrowing Limit | Up to 85% of borrower’s equity | Up to 90% of borrower’s equity | 80% of borrower’s equity for most loans |
| Interest Rate | Fixed | Generally variable | May be fixed or variable |
| Type of Credit | Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments. | Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest (a HELOC interest-only calculator is useful then). Then there is a repayment period (10-20 years) to repay the principal plus interest. | Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms. |
| Repayment Term | Generally 5-30 years | A draw period of 5-10 years, followed by a repayment period of 10-20 years | Generally 15-30 years |
| Fees | Closing costs (typically 2-5% of the loan amount) | Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees) | Closing costs (typically 2-5% of the loan amount) |
The Takeaway
If you’re thinking about a home equity loan, start by getting your financial house in order. That means building a strong credit score and managing your debt-to-income ratio. You’ll also need to make sure you have adequate property insurance, as that can affect the rates you’re offered. Use online tools to estimate costs, and consider alternatives like a HELOC or a cash-out refinance before you commit. With a little research and good credit habits, you should be well positioned to obtain a loan that’s friendly to your finances.
SoFi now offers home equity loans. Access up to 85%, or $350,000, 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.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What can you use a home equity loan for?
A home equity loan can be used for large purchases, home renovations, and consolidating higher-interest debt. The flexibility of these loans makes them a popular choice for homeowners. However, it’s important to use the funds responsibly and consider the long-term financial effects. Compare home equity loan rates and terms from several lenders to ensure you’re getting the best deal for your needs.
What’s the monthly payment on a $50,000 home equity loan?
The monthly payment for a $50,000 home equity loan will depend on the interest rate and the term of the loan. At an 8.00% interest rate, for instance, a 10-year loan would have a $607 monthly payment. Choose a 20-year term, and that monthly amount drops to about $418. Consider your budget and goals to pick the term that suits you best.
What would monthly payments look like on a $30,000 home equity loan?
For a 15-year fixed-rate loan at 7.50%, the monthly payment would be about $278. If you choose a 30-year term at the same rate, the monthly payment would be roughly $210. The monthly payment on a $30,000 home equity loan is affected by the home equity loan rates and the loan term. These payments include both principal and interest. Longer terms offer lower monthly payments but increase the amount of interest paid over the life of the loan.
What are the benefits of a home equity loan?
Home equity loans have a few advantages, like a fixed interest rate and monthly payments you can count on. They’re perfect for big-ticket items such as home improvements, debt consolidation, or a major purchase. With your home as collateral, you’ll often obtain a lower interest rate than you would with an unsecured loan, and this can translate to significant savings over time. Plus, if you’re using the loan for qualifying home improvements, you might be able to deduct the interest on your taxes.
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.
SOHL-Q225-321
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 Modesto, CA Today
MODESTO HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Modesto, CA.
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 Modesto.
Key Points
• Home equity loans in Modesto offer a lump sum and typically have fixed interest rates.
• Rates are influenced by the prime rate and the borrower’s credit score and debt-to-income ratio.
• To qualify for a home equity loan, you’ll need to have at least 20% equity in your home.
• The interest on home equity loans may be tax-deductible if you’re using the money you borrow for home improvements.
• Online tools, such as a home equity loan calculator, can help you estimate monthly payments.
Introduction to Home Equity Loan Rates
Welcome to our comprehensive guide to home equity loan rates and how to get equity out of your home in Modesto, CA. We’re here to help you understand the factors that influence the rate you might be offered and share tips on how to secure the best deal. Home equity loans are a valuable financial tool for homeowners, allowing you to borrow money for renovations, education, and debt consolidation. We’ll break down the process, from understanding the interest rates to comparing offers from different lenders, to help you make informed decisions about your financial future.
How Do Home Equity Loans Work?
Your first step: understand exactly what a home equity loan is. A home equity loan is a type of second mortgage that uses your home as collateral, providing a lump sum of money for large purchases or debt consolidation. Funds are disbursed all at once and repaid in equal monthly installments over a term ranging from five to 30 years. Because home equity loans use the equity in your home as collateral, they usually offer lower interest rates than unsecured personal loans. The interest rate is typically fixed, which is good for borrowers who prefer a consistent and predictable repayment structure.
To qualify, homeowners should have at least 20% equity in their primary residence. A home equity loan calculator can give you a sense of how much you might be able to borrow.
The Origin of Home Equity Loan Interest Rates
Interest rates on different types of home equity loans are determined by a variety of factors, including the current economic climate and your personal financial situation. The Federal Reserve’s policies can affect lending rates. Lenders set home equity loan rates based on the prime rate, which is driven largely by the Fed’s decisions. Any change to the prime rate can have a direct impact on the interest rates for home equity loans.
How Interest Rates Impact Home Equity Loan Affordability
As with the rate you obtained on your original home loan, the interest rate you secure for your home equity loan plays a pivotal role in the loan’s long-term affordability. Even a seemingly minor difference in rates can add up to significant extra costs. A $100,000 home equity loan with a 15-year repayment term at 8.50% interest would mean a monthly payment of $984 and a total interest of $77,253. Bump that rate up to 9.50%, and the payment jumps to $1,044, with a total interest of $87,961. The takeaway? The borrower with the higher rate ends up shelling out $10,700 more in interest over the life of the loan.
The numbers change depending on how much you borrow, but the importance of the rate remains the same. Here are different monthly payment amounts and total interest costs for a $75,000 home equity loan that is repaid over 20 years.
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
Home Equity Loan Rate Trends
Predicting the exact trajectory of interest rates is a bit like forecasting the weather — there are many moving parts. The prime rate, which is the reference point for home equity loan rates, has seen its fair share of ups and downs. In 2020, it was a mere 3.25%, while in 2023, it peaked at 8.50%. These fluctuations can have a real impact on the rates you encounter in Modesto. To capitalize on the current market, be sure to compare offers from different lenders. Having a sense of the prime rate’s history can give you some perspective on current rates.
Source: TradingView.com
| 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
Fluctuations like these strongly impact Modesto’s home equity loan rates, so it’s a good idea to stay on top of economic trends. Even if you can’t predict the future perfectly, you may be able to time your loan strategically if you have a sense of the market.
How to Qualify for the Lowest Rates
To secure enviable home equity loan rates, you need a game plan. Consider this your to-do list:
Maintain Sufficient Home Equity
To be eligible for a home equity loan, you need to have at least 20% equity in your home. Calculating your equity is as simple as subtracting your mortgage balance from your home’s estimated value, which you can find on a real-estate site. Let’s say your mortgage balance is $400,000 and your home is now valued at $550,000. That means you’ve got $150,000 in home equity. Divide your equity number by your home’s estimated value to arrive at a percentage of equity. That’s the magic number to keep in mind if you’re aiming for the best home equity loan rates. You can boost your equity over time by making regular mortgage payments and sprucing up your home.
Build a Strong Credit Score
To snag an enviable home equity loan rate, a robust credit score is key. Lenders are often looking for a score of 680 or even 700. A high score speaks volumes about your financial prudence and reassures a lender about your risk level. The result? Sweeter interest rates. So make timely payments, keep credit card balances in check, and steer clear of new debt. Also give your credit report a regular once-over to catch any errors — disputing them can nudge your score in the right direction.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a big deal when it comes to securing a home equity loan. Lenders typically look for a ratio that’s under 50%, with 36% or less being the sweet spot. This ratio is a comparison of your monthly income to your monthly debt commitments. (To compute your DTI ratio, tally all your monthly debt payments and divide by your gross monthly income.) A lower DTI is a sign that you’re in a good place to manage monthly loan payments. If your ratio is around 50%, consider paying down your existing debts or finding ways to increase your income before you apply.
Obtain Adequate Property Insurance
Property insurance is a standard requirement for home loans, so if you haven’t updated yours in a while, give it a look to make sure you are fully protected. Having the right insurance coverage not only safeguards you from extra expenses but also streamlines the loan application process. If you happen to reside in a high-risk area, it’s wise to explore insurance policies that align with your potential lender’s requirements.
Useful Tools & Calculators
Using online resources like a home equity loan calculator can help you get a rough idea of how much you might be able to borrow and what your monthly payments could look like. These are three useful calculators if you’re considering a home equity loan or its cousin, a home equity line of credit (HELOC).
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 for home equity loans, you’re typically looking at a range of 2% to 5% of the loan amount. These costs include some things that you’ll be familiar with from your original home purchase process: fees for the appraisal, credit report, document preparation, loan origination, notary, title search, and title insurance.
Tax Deductibility of Home Equity Loan Interest
You’ll be pleased to know that the interest on a home equity loan could be tax-deductible if the funds are used to buy, build, or significantly improve your home. As of 2025, those filing jointly can deduct interest on up to $750,000 of qualified home equity loans, and single filers can claim up to $375,000. To take this deduction, you need to itemize when filing your taxes. Chat with a tax advisor about future tax years and to see how this could play out in your specific situation.
Alternatives to Home Equity Loans
In addition to a HELOC, a cash-out refinance is another option when you’re looking to borrow against your equity. The latter is a special kind of mortgage refinance. Here are the details:
Home Equity Line of Credit (HELOC)
A HELOC is like a credit card: You’re approved to borrow up to a certain amount and you borrow as needed up to that amount. During the initial “draw” period on the HELOC, which can be up to 10 years, you only have to pay interest on the money you borrow. You can use a HELOC interest-only calculator to get a sense of what those payments might look like.
Once the draw period ends, you repay all that you have borrowed, plus interest, over a period of 5 to 20 years. At this point, you might be using a HELOC repayment calculator to help keep tabs on estimated payments.
HELOCs have variable interest rates, which means your payment can go up or down as the market changes. Lenders typically require a 680+ credit score (700 is ideal) and a DTI ratio of 50% or less (36% is the ideal). A HELOC is a good option if you’re not sure how much you need to borrow or if you don’t need to borrow everything at once. Here’s a quick look at a HELOC vs a home equity loan:
| 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 plus interest; 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 |
Cash-Out Refinance
With a cash-out refinance, you’re swapping your current mortgage for a larger one and pocketing the difference between the old and new mortgage in cash to use as you wish. The exact amount depends on your home equity, with most lenders green-lighting up to 80%. To qualify, a credit score of 620 or above and a DTI of 43% or less are typically the benchmarks. You can choose between fixed or variable interest rates, with variable rates potentially offering access to more equity. When you compare a cash-out refinance vs. a home equity line of credit, one difference is that the refi leaves you with just one monthly payment to keep track of.
The Takeaway
When you’re ready to apply for a home equity loan in Modesto, take the time to build your credit, manage your debt-to-income ratio, and secure property insurance. These factors can all impact the rates you’re offered. Use online calculators to estimate your monthly payments and understand the financial impact of taking on a new loan. Keep in mind that closing costs for home equity loans can be 2% to 5% of the loan amount. You may also be able to deduct the interest you pay on a home equity loan from your taxes. Consider the benefits of a HELOC or cash-out refinance, and weigh the pros and cons of each option to help you secure the best home equity loan rates for your financial goals.
SoFi now offers home equity loans. Access up to 85%, or $350,000, 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.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What can you use a home equity loan for?
Home equity loans are very versatile and can be used to cover major expenses, home improvements, or to pay off higher-interest debt. The adaptability of these loans makes them a good resource for homeowners who are in need of a substantial sum but who don’t want to part with their property. When contemplating a home equity loan, it’s crucial to employ the funds smartly and in a manner that supports your financial goals.
What would the monthly payments be on a $50,000 home equity loan?
Crunching the numbers for a $50,000 home equity loan is a breeze with an online calculator. The monthly payment will depend on the loan term and interest rate. For instance, a 15-year fixed-rate loan at 7.50% would mean a monthly payment of approximately $464. Opting for a 30-year term at the same rate would lower the monthly payment to around $350. It’s important to note that the total interest paid over the life of the loan is usually higher with a longer term.
What’s the monthly payment on a $30,000 home equity loan?
The monthly payment on a $30,000 home equity loan is determined by the loan’s interest rate and term. For a 15-year fixed-rate loan at 7.50%, the monthly payment would be about $278. If you choose a 30-year term at the same rate, the monthly payment would be roughly $210. These payments include both principal and interest. Longer terms offer lower monthly payments but increase the total interest paid over the span of the loan.
What might prevent you from securing a home equity loan?
There are a few things that might raise a red flag with lenders, such as not having at least 20% equity in your home, or having a credit score that’s less than stellar (below 680). If your DTI ratio is under 36% that could also be a dealbreaker. Understanding these requirements can help you present your best profile to a potential lender.
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.
SOHL-Q225-322
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.
Stay up to date on the latest business news and stock market happenings.