Compare HELOC rates in Pennsylvania.

Introduction to HELOC Rates

If you’re thinking about how to get equity out of your home in Pennsylvania and starting to look at interest rates for a home equity line of credit (HELOC), this guide is for you. We’ll help you understand what is a home equity line of credit and how it’s different from other borrowing methods. And we’ll equip you with the information you need to submit an application for a HELOC that will help you get the best possible interest rate. You’ll learn how to meet eligibility requirements and what credit score and debt-to-income stats will get you in the lender’s door. Ready? Let’s start with HELOC 101.

What Is a HELOC?

A HELOC is like a credit card with a credit limit that’s based on your home equity. HELOCs are secured by your home, so they often offer lower interest rates than unsecured personal loans. And because they have a variable interest rate, the entry level rate on a HELOC is usually lower than the fixed rate you would get on a home equity loan. From there, though, it can rise or fall according to market conditions.

Qualified borrowers are often able to borrow as much as 90% of their equity with a HELOC. Of course, securing a loan with your home also means that defaulting can lead to foreclosure. It’s important to weigh the pros and cons of the HELOC to determine whether it suits your financial needs.

A HELOC has two phases: draw and repayment. Get to know them better.

The Draw Period

During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit, make payments to pay down your balance, and borrow the money again. The beauty of a HELOC is that if you don’t want to borrow your full credit line, you don’t have to. And you only pay interest on the amount of the credit line that you are using.

The borrower is usually required to make interest payments during the draw period, but payments toward the principal may be optional. This flexibility makes HELOCs attractive to many borrowers.

The Repayment Period

During the repayment period (usually 10 to 20 years), borrowers repay what they have borrowed with interest. The variable interest rate will fluctuate, but using a HELOC repayment calculator can help you understand what your monthly payments will be.

Where Do HELOC Interest Rates Come From?

HELOC rates track the prime rate, which in turn tends to follow rates set by the Federal Reserve. The prime rate is the benchmark that banks charge their most creditworthy customers.

How Interest Rates Impact HELOC Affordability

Your interest rate can make a big difference in affordability over the course of a HELOC. It’s important to consider current HELOC rates in Pennsylvania when making your decision. A HELOC interest calculator can help you understand the impact of different rates on your payments. If you were to borrow $50,000 with a HELOC and had a 10-year repayment period, the table below shows your payments at different interest rates:

HELOC Interest Rate Trends

Given that HELOC rates are tied to the prime interest rate set by banks and other lenders, getting a sense of the history of the average prime rate (shown in the chart and graphic below) can help you understand where today’s HELOC rates in Pennsylvania fall on the spectrum.

Since 2018, the prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. You’ll want to weigh interest rate variability in any HELOC vs. home equity loan considerations, in part because while HELOC rates are variable, home equity loan rates are typically fixed.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

The prime rate is a starting point for the HELOC rate you may be offered, but lenders adjust the rates they offer applicants based on several crucial factors, including the presence of sufficient home equity and the maintenance of a favorable credit score. It’s helpful to know what lenders are looking for before filing an application.

Home Equity

Making steady payments on your home loan has helped you build up equity in your property. But how much equity? And do you have enough of a stake to leverage it with a HELOC? Typically, you’ll need at least 15% to 20% equity in your property to qualify for a HELOC, and the more the better.

Credit Score

A credit score of 680 or higher will help you secure a HELOC, and some lenders prefer a credit score of 700 or higher. A higher credit score is a clear indicator of lower risk, which often leads to more favorable terms and rates.

Stable Income

A steady income serves as a reliable indicator of a reduced likelihood of default, which can potentially translate into more favorable HELOC rates. If your income is erratic, you may be asked to provide additional documentation, such as extra tax returns or a profit and loss statement from your business.

Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (your mortgage balance plus the amount of credit line you are applying for divided by your appraised home value) to be 90% or less. For example, if your home value is $500,000, your mortgage balance is $300,000, and you want a $100,000 home equity line of credit, then your CLTV ratio is 80%.

Variable vs Fixed Interest Rates

As we’ve seen, HELOCs are characterized by variable interest rates that are subject to change throughout the loan’s duration. Initially, variable interest rates tend to be lower compared to fixed rates, but they can be adjusted upward or downward in accordance with prevailing market conditions. If you feel skittish about a variable rate, you might consider a home equity loan instead.

Tools & Calculators

Online calculators are helpful tools to assist you in understanding how your HELOC or home equity loan interest rate in Pennsylvania might affect your monthly payments and the total amount of interest you’ll pay over the long term. These are three of our favorites.

How to Qualify for a Competitive HELOC Rate

Here are a few steps you can take to increase your chances of obtaining a favorable HELOC rate in Pennsylvania:

Take Good Care of Your Credit Score

Paying your bills on time is key. You’ll also want to avoid maxing out your credit cards. And take a few minutes to check your credit report for errors (and if you find one, correct it). The higher your credit score, the less risky you will appear to lenders.

Assess Your Home Equity

If you’ve made timely mortgage payments, you’ve built up home equity over time. To determine how much equity you have, subtract your mortgage balance from your home’s value, then divide the result by the home value to get a percentage. For this purpose, you can use an online estimate of your home’s value, such as what you see on real estate sites.

Calculate Your Debt-to-Income Ratio (DTI)

Home equity lenders often look for a DTI ratio below 36%, although some allow one as high as 50%. But the lower, the better. To calculate your DTI ratio, take the amount you pay in monthly debt payments (auto loan, student loan, etc.), and divide by your gross monthly income.

Application Process for a HELOC in Pennsylvania

Take the application process a step at a time.

Step 1. Run the Numbers

Check your credit score, determine your DTI ratio, and figure out roughly how much home equity you have before submitting your first HELOC application. Sometimes you can prequalify for a HELOC online, which speeds the application process.

Step 2. Compare Lenders

Look at lender web sites to see what interest rates they have posted. But also compare fees, qualification requirements, and other factors. Does the lender have a minimum and maximum loan amount posted, for example?

Step 3: Gather Your Documents

To apply for a HELOC, you will need personal identification, income verification (pay stubs, W-2 forms) and at least one tax return. If you’re self-employed, lenders may ask for two years’ tax returns. You may also be asked to provide a homeowners insurance declaration page indicating you have adequate coverage.

Step 4: Submit Your Application

Submitting your HELOC application can happen online, by phone, or in person, depending on the lender. Carefully confirm that all of the information provided is accurate and complete, as mistakes slow things down.

Step 5: Get an Appraisal

After you submit your application, the lender will likely request a home appraisal to determine the current market value of your property. If an in-person visit is required, scheduling it quickly will help move along the application process.

Step 6: Prepare for Closing

Before using your HELOC, you’ll need to sign loan documents and pay fees. Some lenders make funds available within three days following this closing process. Make sure that you completely understand all terms and conditions before you finalize the agreement.

Tax Benefits and Considerations

Homeowners can deduct HELOC interest if the borrowed funds are used for buying, building, or significantly improving their primary residence. The deduction is limited to interest on the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consult a tax advisor to help you navigate the specific tax implications and confirm eligibility for deductions related to HELOCs.

Closing Costs and Fees

HELOC closing costs are lower than home-buying or refinancing costs. The appraisal fee, often the highest expense, is in the neighborhood of $300 to $600. Other costs include application, loan origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Lenders who waive closing costs may charge a higher interest rate.

Alternatives to HELOCs

In addition to a HELOC, other types of home equity loans and unsecured loans are available. Consider all your options before you sign any paperwork.

Home Equity Loan

Unlike a HELOC, a home equity loan provides a lump sum and is paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. Here’s a quick look at the HELOC vs. a home equity loan comparison:

Cash-Out Refinance

This is a mortgage refinance that lets you take out a new mortgage that will pay off your old one and leave you with a lump sum to use as you wish. This option often suits those needing a large lump sum. And some borrowers like the cash-out refi option because they like rolling everything into one monthly payment.

When comparing a cash-out refinance vs. a home equity line of creditt, one thing to keep in mind is that with a new mortgage, you’ll also have a new interest rate. If current rates are higher than your existing rate, you’ll want to carefully tally the costs to make sure refinancing makes sense.

Personal Loan

A personal loan is a versatile, typically unsecured loan that you repay in regular, fixed payments over a term of two to seven years. Personal loans are preferred by borrowers who don’t want to use their home as collateral. But because they are unsecured, they usually have higher interest rates than a HELOC or home equity loan.

Credit Cards

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

The Takeaway

When contemplating a HELOC, it is important to understand whether the distinctive features of a line of credit are right for you. If you want to borrow money in increments and are comfortable weathering the ups and downs of a variable interest rate, a HELOC can be a cost-effective solution for financing substantial expenditures. With research and careful preparation of your application, you can get the best available rate in Pennsylvania for your financial situation.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What’s the monthly payment on a $50,000 HELOC?

With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. But exactly how much you’ll pay depends on your interest rate and loan term. An 8.00% interest rate over a 20-year term would cost $418 per month.

Is a HELOC a good idea right now?

Whether a HELOC is a smart move right now depends on your financial needs. HELOCs can be beneficial for home improvements, debt consolidation, or other large expenses. However, it’s important to consider the interest rates and fees before deciding.

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

The monthly payment on a $100,000 home equity line of credit is determined by the interest rate and term. If you draw the full amount, have an 8.50% interest rate, and repay what you borrowed (plus interest) over a 20-year term, your monthly payment should be about $868. Utilizing a HELOC monthly payment calculator can provide an estimate based on your rate and term.

What are the benefits of a HELOC?

A home equity line of credit offers flexible access to funds, competitive interest rates, and you may even be able to deduct interest paid on some or all of what you borrow. One of the most significant benefits is that you don’t have to borrow the entire credit line all at once. You can borrow what you need when you need it, and only pay interest on that amount.

Do you need an appraisal for a HELOC?

Yes, you will likely need an appraisal for a HELOC. The appraisal process assists the lender in accurately determining the value of your home and assessing the amount of equity you possess.

What disqualifies you from getting a home equity loan?

Several crucial factors, such as a low credit score, insufficient home equity, and a high debt-to-income ratio, can disqualify you from securing a home equity loan. This is generally true of a home equity line of credit as well.

How difficult is it to get a HELOC?

Every lender has its own requirements, but generally speaking if you have a credit score of at least 680 and have at least 15% equity in your home, with a debt-to-income ratio of at most 50% and a stable income you may be able to obtain a home equity line of credit.

Does HELOC affect credit score?

When you apply for a HELOC, a hard inquiry may be made on your credit report, which could lead to a temporary decrease in your score. Furthermore, the manner in which you manage your HELOC, including your punctuality in making payments, can have a lasting effect on your credit score over time.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL-Q424-048

Compare HELOC rates in Kentucky.

Introduction to HELOC Rates

Curious about HELOC interest rates in Kentucky? We’re here to help homeowners figure out how to get equity out of your home. We’ll walk you through the current HELOC rates, the factors that influence them, and how to compare offers from different lenders. Armed with this knowledge, you can confidently decide how to finance significant expenses, be it home improvements or debt consolidation.

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

What Is a HELOC?

A HELOC, or home equity line of credit, is a revolving credit line that is secured by the equity in your home. You can access the funds, make payments, and borrow again — thus the “revolving” part. You’ll pay interest only on the amount of the credit line that you actually use. And you may be able to borrow up to 90% of your home’s value, minus your mortgage.

HELOC interest rates are typically variable, so the monthly payment can go up or down. But initial rates on a HELOC are often lower than with fixed rates.

A HELOC has two main phases: the draw period and the repayment period.

The Draw Period

The draw period, which is typically 10 years, is your time to access funds up to your credit limit. You can make payments to reduce your balance and borrow again. Interest-only payments are usually required during this period, but principal payments may be optional.

The Repayment Period

The repayment period for a HELOC is typically 10-20 years. During this time, you can no longer borrow and must pay back the principal with interest. However, it’s important to note that the interest rate fluctuates, meaning payments can be somewhat unpredictable. A HELOC repayment calculator can help you estimate how they will change if your rate rises.

Origin of HELOC Interest Rates in Kentucky

Like many home loan interest rates, HELOC rates in Kentucky are tied to the prime rate, economic conditions, and housing market trends. The Federal Reserve’s policies also play a role in determining these rates. By familiarizing yourself with these details, and keeping an eye on news of rate changes, you can make more informed decisions about the best time to take out a HELOC.

How Interest Rates Impact HELOC Affordability

Now for some numbers. Interest rates play a big role in how affordable a HELOC is. Over a 20-year span, a mere 1% difference in interest rates could mean an extra $11,000 in interest payments. That’s no small change.

The chart below shows what it would be like to enter the repayment phase of a HELOC owing $25,000; $50,000; or $100,000 and how different terms and interest rates would affect your monthly payments and total interest paid. Armed with this knowledge, you can make smart decisions that can save you a bundle and ensure your payments stay well within reach.

HELOC Interest Rate Trends

Now you know that when the prime rate moves, so do the rates for HELOCs. To keep your finger on the pulse of these changes, read up on interest rate news and get familiar with historical prime rate trends.

Historical Prime Interest Rate

The prime interest rate has seen its share of ups and downs over the years. From a low of 3.25% in 2020 to a peak of 8.50% in 2023, the fluctuations have a direct impact on Kentucky HELOC rates. The chart below the table shows a broader view of historical rates over the last 50 years.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

In Kentucky, the prime rate isn’t the only thing influencing HELOC rates. Knowing how the factors below play into your application can help you position yourself for the best rates.

Home Equity

Equity is your home’s value minus what you owe. The more equity you have, the more appealing you are to lenders, which often translates to lower interest rates. Before you apply for a HELOC, you typically need at least 15% equity in your property. So keep building and maintaining that equity — it’s the key to securing competitive HELOC deals in Kentucky.

Credit Score

To get approved for a HELOC, you’ll want to have a credit score of 680 or higher. Some lenders require a minimum score of 700. The higher your credit score, the lower the risk you pose to the lender, which leads to more favorable terms.

Stable Income

Lenders look at your income to see how strong your financial situation is and make sure you can repay the HELOC. A stable income is a good sign that you’re at a lower risk of default. As a result, you may be asked to document not just your salary, but how long you’ve held your current job.

Loan-to-Value Ratio

Lenders typically look for a combined loan-to-value ratio of 85% or lower. For instance, if your home is valued at $500,000, and you have a $300,000 mortgage along with a $100,000 HELOC, your CLTV ratio would be 80%.

Variable vs Fixed Interest Rates

HELOCs often come with variable interest rates, which means the rate can change over the life of the loan. While the initial interest rate is typically lower than a fixed rate, it can go up or down based on the market. This is one way that HELOCs differ from home equity loans. The latter usually have a fixed interest rate, which some homeowners feel more comfortable with.

Tools & Calculators

Our financial calculators are here to help you with your financial planning. Each one is designed to help you understand your financial obligations and make informed decisions about your future. For instance, the HELOC interest-only calculator can estimate your payment during the draw phase.

How to Qualify for a Competitive HELOC Rate

So how do you set yourself up for a competitive HELOC rate? You’ll need to have a good credit score, a stable source of income, and a low loan-to-value ratio.

Strengthen to Your Credit Score

By making all your payments on time and reducing your credit card balances, you can build your credit score so it’s comfortably over 700 before you apply. This will help you get the best HELOC rates.

Assess Your Home Equity

Your home equity grows as you pay down your mortgage over time. You can also increase your equity by making improvements that increase your home’s value. Subtract what you owe on your mortgage from your home’s estimated value (use a real estate site to find that), then divide the answer by your home’s value to arrive at a percentage of equity. Ideally, it’s greater than 20%. The more home equity you have, the better the terms you can get on a HELOC and the larger the line of credit you can obtain.

Recommended: Home Equity Loan Calculator

Calculate Your Debt-to-Income Ratio (DTI)

Your debt-to-income ratio (DTI) is an important number for home equity lenders. They calculate it by looking at your monthly debt payments and dividing them by your gross monthly income. Most lenders want to see a DTI of 36% or lower, but the lower your DTI, the better.

Application Process for a HELOC in Kentucky

Applying for a home equity line of credit in Kentucky is a multi-step process. You’ll need to evaluate your financial situation, compare interest rates, gather the necessary documents, apply for the loan, schedule a home appraisal, and then wait for approval.

Step 1. Run the Numbers

Before you apply for a HELOC, check your credit scores (is it 700+?), calculate your DTI ratio (is it below 36%?), and get a rough idea of your home equity (hopefully, over 15%).

Step 2. Compare Lenders

Now, take a look at what various lenders are offering. It’s not just about the interest rates — compare their qualification requirements, loan terms, fees, and other factors to see which one best suits your needs.

Step 3: Gather Your Documents

When you’re gearing up to apply for your HELOC, having your paperwork in order is key. Think proof of income (w2s, pay stubs), employment history (a resume), and property details (including proof of homeowners insurance). So get those documents in a neat pile and within arm’s reach.

Step 4: Submit Your Application

Ready to take the next step? You can submit your application online, over the phone, or in person. To boost your odds of success, send in your application via your lender’s preferred method, be it online, over the phone, or in person.

Step 5: Get an Appraisal

A home appraisal is an important step in determining what your home is worth. If the appraised value is higher than what you owe, you could have access to a line of credit. It’s a big step in getting a HELOC.

Step 6: Prepare for Closing

Before you can draw on your HELOC funds, you’ll need to sign the loan documents and pay any closing costs. Many lenders will have your funds ready within three business days of this final step, but remember, this can vary depending on the lender and the specific terms of your HELOC.

Tax Benefits and Considerations

You may be able to deduct the interest on your HELOC, but only if you’ve used the funds for home improvements. There’s a limit, though. You can deduct interest on the first $375,000 of the mortgage principal for single filers ($750,000 for married couples filing jointly). It’s a good idea to chat with a tax advisor to get the full scoop on how HELOC loans could affect your tax situation.

Closing Costs and Fees

When it comes to HELOC loans, you’ll be pleased to know that closing costs are typically more affordable than those for home purchases or mortgage refinances. You’re looking at appraisal fees ranging from $150 to $500, and potentially application fees, origination fees, or administrative fees. Some lenders might also have maintenance, transaction, inactivity, or early termination fees. But many lenders are open to reducing or even waiving some of these costs.

Alternatives to HELOCs

Alongside HELOCs, there are different types of home equity loans and unsecured loans. It’s wise to carefully weigh the pros and cons of each before you make your decision.

Home Equity Loan

Even if you’re leaning toward a HELOC, it’s good to know what is a home equity loan. It’s a one-time lump sum with a fixed interest rate, so your monthly payment never changes. You can borrow up to 85% of your home’s equity.

Our HELOC vs home equity loan comparison chart for more on this option.

Cash-Out Refinance

Cash-out refinancing is an option that allows you to leverage your home equity by refinancing your mortgage for more than you currently owe. You take the difference in a lump sum. Typically, homeowners can access up to 85% of their home’s value.

Two things to think about when considering a cash-out refinance vs. a home equity line of credit: A cash-out refi leaves you with one monthly payment, as opposed to two. However, you’ll also have a new interest rate. And if that rate is higher than the rate on your previous mortgage, this method may not be right for you.

Personal Loan

A personal loan is a flexible, usually unsecured loan that you pay back in monthly installments, usually over two to seven years. Personal loan interest rates are usually higher than HELOC or home equity loan rates, but if you are uncomfortable using your home as collateral, you might find a personal loan to be a good alternative.

Credit Cards

While credit cards are well suited to making everyday purchases, they have higher interest rates than HELOCs, making them a more expensive way to carry a large balance.

The Takeaway

HELOCs are a valuable financial tool for Kentucky homeowners, offering competitive rates and flexible repayment terms. By leveraging your home’s equity, a home equity line of credit can help fund significant expenses while potentially offering tax benefits. Comparing rates and understanding the application process are key to securing the best HELOC for your needs.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What is the monthly payment on a $50,000 HELOC?

The monthly payment on a $50,000 HELOC is influenced by the interest rate and repayment terms. With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. The same 8.00% interest rate over a 20-year term will cost you $418 per month, although you’ll pay more total interest with the 20-year term.

Is a HELOC a good idea right now?

The answer to that question is as unique as you are. HELOCs can be a smart move if you’re looking to cover major renovations, consolidate debt, or tackle another big expense. But it’s essential to consider current interest rates and your ability to repay the loan over the long term.

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

With a $100,000 HELOC, if you have drawn the maximum and are paying it off over a 20-year repayment term, your monthly payment would range from $775 to $900 if your interest rate was between 7.00% and 9.00%.

What are the benefits of a HELOC?

HELOCs offer several benefits, including flexible access to funds, competitive interest rates, and potential tax advantages. A home equity line of credit allows you to borrow as needed, and pay interest only on the amount you draw, not the full credit line. Additionally, HELOCs often come with lower interest rates compared to credit cards and unsecured personal loans.

Do you need an appraisal for a HELOC?

Yes, you do. The appraisal helps to establish the value of your home, a key factor in determining the amount of equity you can borrow. Lenders use this figure to set your credit limit, so a precise appraisal is essential to ensure you can access the full amount of funds available through your home equity line of credit.

What disqualifies you from getting a home equity loan?

There are a few factors that might work against you when applying for a home equity loan, such as a less-than-stellar credit history, a high debt-to-income ratio (more than 50%), or not having enough equity in your home.

How difficult is it to get a HELOC?

The challenge of securing a HELOC varies based on your financial standing. Lenders take into account your credit score, home equity, and income. Boosting your credit score and minimizing your debt-to-income ratio can enhance your eligibility. Familiarizing yourself with the application process and having the required paperwork ready can streamline the journey to securing a home equity line of credit.

Does HELOC affect credit score?

When you apply for a HELOC, there may be a temporary decrease in your credit score due to the hard inquiry. Additionally, if you use a large portion of the available credit, your credit utilization ratio may increase, which can also impact your score. The good news is that by making on-time payments, you can see your credit score improve over time.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

SOHL-Q424-027

Compare HELOC rates in Iowa.

Introduction to HELOC Rates

For Iowa homeowners looking to cash in on their home equity, this guide provides an overview of HELOC interest rates. Interest rates are a big deal because they have a significant impact on the affordability of your home equity line of credit. Securing even a slightly lower rate can translate to savings of thousands, or even tens of thousands of dollars.

Of course, understanding your options for how to get equity out of your home is also important. We’ll walk you through different types of home equity loans and mortgage refinancing, and the pros and cons of each. By the end, you’ll understand the application process, the magic numbers to help you qualify, and of course, how to get the best available interest rate.

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

What Is a HELOC?

A HELOC is a revolving credit line secured by your home. The amount you can borrow depends on your home equity position. You can access the funds, make payments, and borrow again. And you’ll pay interest only on the amount of the credit line that you actually use. Lenders typically allow borrowing up to 90% of your home’s value, minus the mortgage principal.

A HELOC has two main phases: the draw period and the repayment period.

The Draw Period

During the draw period, typically lasting 10 years, you can access funds up to your credit limit. Interest payments are usually required during this period, but principal payments may be optional.

The Repayment Period

The repayment period of a HELOC, usually 10 to 20 years, follows the draw period. During this phase, borrowing ends, and you must repay the principal with interest. Interest rates are generally lower than other types of financing because your home serves as collateral. However, variable interest rates can fluctuate, making repayment somewhat unpredictable. Using a HELOC repayment calculator can help you plan for these fluctuations and ensure you can afford the payments.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are tied to the prime rate, which is the benchmark interest rate banks charge their most creditworthy customers. Federal Reserve policy decisions also influence HELOC rates. Understanding these factors can help borrowers anticipate rate fluctuations and make informed decisions about the best time for a HELOC.

How Interest Rates Impact HELOC Affordability

Savvy homeowners know that interest rates matter a lot — that’s why they’re all over your news feed. Interest rates exert a profound influence on the affordability of HELOCs in particular. Over the span of a 20-year term, a seemingly minor 1% increase in interest rate can result in more than $10,000 in additional interest.

For example, below you’ll see the monthly payment and total interest paid for a $75,000 HELOC repaid over 20 years at three different interest rates:

•   At 6.00%: monthly payment $537, total interest paid $53,958

•   At 7.00%: monthly payment $581, total interest paid $64,554

•   At 8.00%: monthly payment $627, total interest paid $75,559

HELOC Interest Rate Trends

Changes in the prime interest rate are especially relevant to HELOC borrowers because of the HELOC’s variable rates. It’s impossible to predict exactly where the rate will go, but looking at average prime rates in recent years will give you an idea of how much they tend to swing. The average prime rate reached a low of 3.25% in 2020 and a high of 8.50% in 2023, as you can see in the chart below. And over the last half-century, rates as low as 2020’s have been rare.

Historical Prime Interest Rate

Since 2018, the prime rate has undergone significant fluctuations, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. These variations directly influence HELOC rates. By utilizing a HELOC interest calculator, you can gain valuable insights into how these historical trends impact the affordability of your HELOC, empowering you to make informed financial decisions. Additionally, understanding the differences between cash refinance vs. home equity line of credit can help you choose the best option for your financial situation.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

Besides the prime rate, many other factors influence HELOC rates in Iowa. By focusing on these key areas, homeowners look out for issues that might prevent them from securing the best available rates.

Home Equity

Having substantial equity in your home makes you appear less risky to lenders, potentially leading to lower interest rates. Homeowners typically need at least 15% equity in their property to qualify for a HELOC. Using a home equity loan calculator can help you determine your equity and plan your financial strategy accordingly.

Credit Score

Maintaining a credit score of 700 or higher is important for securing more favorable interest rates on HELOCs. Some lenders will accept 680, but you may pay a higher rate. A robust credit score serves as a testament to your financial responsibility, effectively mitigating the risk for lenders and potentially unlocking more advantageous terms.

Stable Income

When applying for a HELOC, lenders evaluate your income to ascertain your capacity for repayment. A steady income signifies a diminished probability of default, potentially resulting in more favorable HELOC interest rates. Reinforcing your application with concrete evidence of consistent income, such as pay stubs and tax returns, can significantly enhance your chances of approval.

Loan-to-Value Ratio

Most lenders require your combined loan-to-value ratio (mortgage balance plus desired HELOC divided by your appraised home value) to be 85% or less, although some will allow you to borrow 100% of your home’s value. The ratio is a key metric in determining your credit limit. If your home value is $500,000, your mortgage balance is $300,000, and your HELOC balance is $100,000, then your LTV ratio is 80%.

Variable vs Fixed Interest Rates

HELOCs are characterized by variable interest rates, which are subject to change throughout the HELOC’s duration. These variable rates commence at levels lower than conventional fixed rates but undergo adjustments in accordance with market conditions. This is one important detail that distinguishes HELOCs vs home equity loans. The latter usually have a fixed interest rate, which some homeowners feel more comfortable with.

Tools & Calculators

Online tools can assist you in approximating your payments and comprehending the financial implications of your credit line. For instance, a HELOC interest-only calculator can help you predict your monthly payments during a HELOC’s draw period.

How to Qualify for a Competitive HELOC Rate

So how do you set yourself up for a competitive HELOC rate? You’ll need to have a good credit score, a stable source of income, and a low loan-to-value ratio. Check it out:

Strengthen to Your Credit Score

By consistently paying your bills on time and diligently working to reduce credit card balances, you can significantly enhance your credit score, which plays a pivotal role in securing more favorable HELOC rates. Regularly reviewing your credit report and promptly addressing any inaccuracies or errors can also contribute to improving your overall creditworthiness and financial standing.

Assess Your Home Equity

Regular home loan payments help in building home equity over time. Home equity can be enhanced through renovations that boost the property’s value, too. Increased home equity can lead to better terms and higher amounts when applying for a HELOC.

Calculate Your Debt-to-Income Ratio (DTI)

Your debt-to-income ratio, often abbreviated as DTI, represents the percentage of your monthly income that is allocated toward servicing your debt obligations. When applying for a HELOC, lenders generally prefer applicants with a DTI below 36% (though some will go as high as 50%). Nevertheless, the lower your DTI, the more favorable your terms are likely to be.

Application Process for a HELOC in Iowa

The application process for a HELOC in the state of Iowa entails a series of steps. Lenders will scrutinize your financial records and property-related information to make an informed decision regarding your eligibility for the HELOC and determine the specific terms and conditions that will govern your agreement.

Step 1. Crunch the Numbers

This is really prepwork before you initiate an application: Check your credit scores (over 680?), calculate your DTI (under 36%?), and get a good estimate of your home equity (more than 15%?). If your numbers are on the up and up, you’ve got a green light to apply.

Step 2. Compare Lenders

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

Step 3: Gather Your Documents

Required records typically include income documentation, such as recent W-2 statements, pay stubs, and income tax returns, to demonstrate your ability to manage payments. Additionally, prepare documents related to your home equity and credit history. Proof of homeowners insurance may also be called for.

Step 4: Submit Your Application

Submit your HELOC application online, by phone, or in person. The lender will then assess your eligibility and subsequently determine the specific terms of your HELOC.

Step 5: Get an Appraisal

An appraisal is a crucial step in determining the true market value of your home. If the appraisal comes in higher than your mortgage balance, you may be eligible for a HELOC.

Step 6: Prepare for Closing

Before accessing your HELOC funds, you must sign loan documents and pay necessary fees. Some lenders are known to make funds available within a relatively short time frame, typically around three days following the official closing of the HELOC.

Tax Benefits and Considerations

Homeowners may be able to deduct HELOC interest if the borrowed funds are used for buying, building, or significantly improving their primary residence. Interest deductions are limited to the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consulting a tax advisor is recommended to navigate the specific tax implications and confirm eligibility for deductions.

Closing Costs and Fees

HELOC closing costs are typically lower than home-buying or mortgage refinance costs. The appraisal fee, ranging from $150 to $500, is often the highest expense. Other costs can include application, origination, and administrative fees. Some lenders charge annual maintenance fees, transaction fees for withdrawals, inactivity fees, or early termination fees. Lenders may reduce or waive closing costs but charge higher interest rates to compensate.

Alternatives to HELOCs

Besides HELOCs, your options include home equity loans, cash-out refinancing, and unsecured personal loans. Let’s take a closer look at each.

Home Equity Loan

What is a home equity loan? Unlike HELOCs, home equity loans provide a lump sum amount and are paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity in their home through a home equity loan. This option is suitable for those who need a fixed amount of money for a specific purpose.

Cash-Out Refinance

A cash-out refinance lets homeowners tap into home equity by refinancing for more than what’s owed on their mortgage, taking the difference in cash. It can be beneficial for those needing a large lump sum but may come with higher interest rates. Accessing up to 85% of a home’s value is common.

If you’re considering a cash-out refinance vs. a home equity line of credit, there are two things to keep in mind. First, a cash-out refi leaves you with one monthly payment, as opposed to two with a HELOC and a mortgage. Second, you’ll have a new interest rate. And if that rate is higher than the rate on your previous mortgage, this method may not be right for you.

Personal Loan

A personal loan is a flexible unsecured loan that you pay back in regular monthly payments over a set term of 2-7 years. This option is suitable for those who are less comfortable putting their home on the line in exchange for a lower interest rate.

Credit Cards

Credit cards typically come with much higher interest rates than HELOCs, which can make them impractical if you carry a large balance from month to month. While credit cards offer flexibility for smaller purchases, HELOCs provide a more cost-effective solution for larger expenses such as home renovations or debt consolidation.

The Takeaway

When contemplating a HELOC in Iowa, it’s imperative to conduct thorough research to obtain the most favorable rates in the state. Factors such as credit score, home equity, and loan-to-value ratio exert a significant influence on HELOC rates. By comparing offers from multiple lenders and maintaining a robust credit profile, homeowners can secure highly competitive rates for their borrowing needs.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What is the monthly payment on a $50,000 HELOC?

The monthly payment on a $50,000 HELOC depends on the interest rate and repayment terms. With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. The same 8.00% interest rate over a 20-year term will cost you $418 per month, although you’ll pay more total interest with the 20-year term.

Is a HELOC a good idea right now?

Deciding whether a HELOC is a sound financial decision hinges on your current financial standing. These versatile tools can be advantageous for home improvement projects or debt consolidation. However, homeowners should carefully consider interest rates and your ability to manage an additional financial obligation over the long term.

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

With a $100,000 HELOC, if you have drawn the maximum and are paying it off over a 20-year term, your monthly payment would range from $775 to $900 if your interest rate was between 7.00% and 9.00%.

What are the benefits of a HELOC?

HELOCs provide homeowners with a flexible financial solution, offering convenience in accessing funds as needed. They are particularly beneficial for homeowners seeking to finance substantial expenses, such as extensive home renovations or educational costs. The competitive interest rates and potential tax benefits associated with HELOCs enhance their attractiveness.

Do you need an appraisal for a HELOC?

Yes, an appraisal is usually required for a HELOC. Lenders need to assess the present market value of your home to determine the amount of equity available and set the credit limit accordingly.

What disqualifies you from getting a home equity loan?

Numerous elements can potentially disqualify you from securing a home equity loan, including an unfavorable credit history, inadequate home equity, and an elevated debt-to-income ratio. That’s why it’s important for homeowners to “run the numbers” before they apply: Check your home equity stake, credit score, LTV ratio, and DTI.

How difficult is it to get a HELOC?

The level of difficulty in obtaining a home equity line of credit depends on the financial profile of an individual. Lenders take into consideration various factors such as credit score, the amount of home equity available, and income. Maintaining a strong financial standing can significantly enhance the smoothness of the HELOC application process and increase the likelihood of approval.

Does HELOC affect credit score?

Indeed, HELOCs can have an impact on your credit score. Applying for a HELOC results in a hard inquiry, which may lead to a temporary reduction in your score. Moreover, your credit score can be affected over time by how you manage the HELOC, including whether you make timely payments and keep your utilization low.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

SOHL-Q424-025

Compare HELOC rates in Massachusetts.

Introduction to HELOC Rates

If you’re looking at home equity line of credit interest rates in Massachusetts, congratulations: Chances are good that you’ve been diligently paying off your home loan, you’ve built up some equity in your property, and are looking at ways to get equity out of your home to finance a renovation, cover education costs, or perhaps consolidate debt into one payment with a more reasonable interest rate (smart move).

HELOCs can be a great financial tool, but it’s important to fully understand how they work and what determines the interest rate you’ll be offered, and to assess your financial situation before signing on for the line of credit. Take a few minutes to study this guide and you’ll be better equipped to get the best available HELOC rate and terms in Massachusetts. Step one, understand the basics:

What Is a HELOC?

A HELOC is a revolving line of credit. In practical use, it functions much like a credit card. The amount you can borrow is based on your home equity, which is the difference between your home’s current value and your mortgage balance. Your home serves as collateral for the lender, which often means that a HELOC has a more favorable interest rate than an unsecured loan, such as a personal loan. It’s important to understand that HELOC interest rates are usually variable, meaning that after a period of time (defined in your HELOC agreement), the rate can adjust up (or down) based on prevailing interest rates.

HELOCs typically have two phases: the draw period and the repayment period.

The Draw Period

During the initial draw period, which typically spans a decade, you can withdraw funds, in any increment they desire, up to the established credit limit. Borrowers are responsible for making interest-only payments during this phase, while principal payments often remain optional. This flexible arrangement enables borrowers to conveniently borrow and repay funds within the specified credit limit according to their needs. Best of all, you only pay interest on the amount of the credit line that you are actively using.

The Repayment Period

The repayment period of a home equity line of credit typically lasts 10 to 20 years. During this phase, borrowing ends, and you pay back the principal with interest. Again, interest rates are variable, so borrowers should be prepared for fluctuations.

Massachusetts HELOC rates change over time, so it’s important to stay informed about potential changes. Using a HELOC repayment calculator can help you estimate what monthly payments might be during the repayment phase, and you can plug in different interest rate numbers to see if you have the appetite for rates if they drift to the higher side.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are linked to lenders’ prime rates, which in turn are influenced by the Federal Reserve’s policy decisions. The prime rate is the rate lenders offer customers with the best credit-usage pedigree. That rate is then adjusted for other borrowers based on the lender’s perception of their default risk. Understanding this might have you tuning into the Fed’s movements more closely than you are accustomed to.

How Interest Rates Impact HELOC Affordability

It’s worth spending a little time following news of the Fed and prime rates because the interest rate you obtain on a HELOC (or any type of home equity loan) has a significant impact on your finances.

The chart below shows what it would be like to enter the repayment phase of a HELOC owing $25,000; $50,000; or $100,000 and how different terms and interest rates would affect your monthly payments. Remember that over the life of a HELOC, a difference of $50 or $100 in the monthly payment could equal thousands of dollars in extra interest paid.

HELOC Interest Rate Trends

Given that HELOC rates closely follow the trends of the prime rate, it pays to have some sense of the history of average prime rates if you’re thinking about a home equity line of credit in Massachusetts. As you can see in the chart below, the prime rate has fluctuated in recent years, hitting a low of 3.25% in 2020 and a high of 8.50% in 2023. The graph below shows a deeper historical perspective: average prime rates over more than a half-century.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

The prime rate is important, but it’s not the only thing that determines the HELOC rate you might be offered in Massachusetts. Here’s where personal qualifications come into play. Understanding each of the factors below can be instrumental in securing a competitive rate.

Home Equity

Possessing significant equity in your primary residence elevates your financial standing in the eyes of lenders, potentially resulting in more favorable interest rates. You’ll typically need to meet an equity threshold of 15% to 20% to qualify for a HELOC. But the more equity you have, the better.

Credit Score

You’ll probably need a credit score of 680 or even 700 to obtain a HELOC, and again, a higher number will help you get better rates.

Stable Income

Lenders will ask what you earn, but they’ll also be looking at how consistent your earnings are. A stable income indicates a lower risk of default, potentially leading to better HELOC rates.

Loan-to-Value Ratio

Lenders often require a combined loan-to-value ratio of 90% or less. This means the amount you owe on your mortgage plus the amount of your HELOC can’t add up to more than 90% of your home’s value.

Variable vs Fixed Interest Rates

As we’ve pointed out, HELOCs feature variable interest rates, which will fluctuate during the loan term. Variable interest rates start out lower than typical fixed rates but will adjust up or down with market conditions. It’s important to be aware of that before signing on to a HELOC, and to use a HELOC calculator to look at what your monthly payments might be should interest rates rise.

Tools & Calculators

Online calculators can be an invaluable part of the HELOC process. Using them can help you figure out what your borrowing power might be, and show you the monthly cost and total cost of your line of credit. These are a few of our most useful tools:

How to Qualify for a Competitive HELOC Rate

To secure a favorable HELOC rate in Massachusetts, it helps to have a steady and reliable source of income and a good handle on your debts. Below is a list of things you can do before you apply for a HELOC in Massachusetts to put your best foot forward:

Care for Your Credit Score

Pay your bills on time, don’t use your credit cards to the absolute max, and check your credit report for errors. These three steps will go a long way toward getting you the kind of credit score lenders crave.

Assess Your Home Equity

You can use a real estate site to get a general idea of your property value. Then subtract whatever you owe on your mortgage. Divide the answer by your property value and you’ll have your home equity. Ideally it’s more than 20% (and the more the better), though some lenders allow 15%.

Calculate Your Debt-to-Income Ratio (DTI)

Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments divided by your gross monthly income. It’s a key indicator of your financial health. Lenders prefer a DTI ratio below 36%, though some will go as high as 50%. The lower your DTI, the more attractive your loan application becomes.

Application Process for a HELOC in Massachusetts

There are 6 steps to the HELOC application and approval process. Taking them one at a time and double-checking all the information you supply to ensure accuracy will help prevent bumps along the way. The whole process can take 30 to 60 days:

Step 1. Run the Numbers

Check your credit score, calculate your DTI ratio, and use an online estimate of your home’s value to make sure you have at least 15% home equity before applying for a HELOC.

Step 2. Compare Lenders

Visit lender sites or check in with your bank’s mortgage officer. Don’t just compare interest rates. Look at qualification requirements, minimum and maximum credit lines offered, fees, and the length of the repayment period.

Step 3: Gather Your Documents

You’ll need to have a government-issued I.D. and recent pay stubs, W-2 forms, and a recent tax return at hand for the application process. If you’re self-employed, lenders may ask for two years’ tax returns plus a profit-and-loss statement. There’s a homeowners insurance declaration page as part of most applications, so make sure your insurance on your home is up to date and you have the paperwork. Having these documents ready can expedite the application process and help you secure the best HELOC rates in Massachusetts.

Step 4: Submit Your Application

Submit your HELOC application online or in person, or even over the phone if that’s what the lender recommends. Submitting a complete and accurate application increases your chances of approval without weeks of back-and-forth over missing information.

Step 5: Get an Appraisal

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

Step 6: Prepare for Closing

Once you find a HELOC offer you consider suitable, you’re ready to close on the agreement. Before accessing your HELOC funds, you’ll sign loan documents and pay necessary fees. Lenders can make funds available as quickly as three days after you’ve signed your HELOC agreement.

Tax Benefits and Considerations

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

Closing Costs and Fees

HELOC closing costs are lower than home-buying or refinancing costs. Appraisal fees are usually the highest expense, ranging from $300 to $600. Other costs include application, origination, and administrative fees. Some lenders charge annual maintenance, transaction, inactivity, or early termination fees. Consider these costs when applying for a HELOC.

Alternatives to HELOCs

In addition to HELOCs, other possible financing options include home equity loans, cash-out refinancing, and personal loans. Looking at each of these in detail will help you choose the most suitable method for your specific financial requirements.

Home Equity Loan

Unlike HELOCs which function somewhat like a credit card, a home equity loan provides a lump sum amount and is paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan.

To understand the HELOC vs. home equity loan comparison, take a quick look at the chart below:

Cash-Out Refinance

A cash-out refinance is a mortgage refinance with a twist: Homeowners can refinance their mortgage for more than they owe. They pay off their first mortgage and then take the cash that remains and use it for any purpose.

Two things to think about when considering a cash-out refinance vs. a home equity line of credit A cash-out refi leaves you with one monthly payment, as opposed to two. However, it also leaves you with a brand-new interest rate. And if that rate is not as favorable as the rate on your initial mortgage, this method may not be the best choice for you.

Personal Loan

A personal loan is repaid in regular installments over a predetermined duration, typically two to seven years. Some borrowers like the idea of having a loan that is not secured by their home. However, personal loan interest rates rarely beat out rates for a HELOC or home equity loan, so if you are comfortable using your home as collateral, you might find it to be a more affordable way to borrow.

Credit Cards

While credit cards are well suited to making everyday purchases, they have higher interest rates than HELOCs, making them a more expensive way to carry a large balance.

The Takeaway

HELOCs offer a versatile way to access the equity in your home. You withdraw only what you need at any given time, and can use it for all sorts of purposes. Understanding the terms and rate of a home equity line of credit is crucial for making an informed financial decision. It’s important to realize that HELOCs’ variable rates rise or fall over time, so monthly payments are rarely consistent. Using a HELOC repayment calculator can be a smart way to get comfy with this variability.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

FAQ

What is the monthly payment on a $50,000 HELOC?

Assuming you’re using the entire $50,000 credit line, the monthly payment will vary depending on the interest rate and term. A rate of 7.00% and a 20-year term will get you a $388 monthly payment. A rate of 8.00% and a shorter term of 10 years will equal a monthly payment of $607.

Is a HELOC a good idea right now?

If you need a significant sum of money and have a solid credit score and have built up equity in your home, a HELOC is a good way to borrow money at a lower interest rate than you would find available with many other methods.

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

To calculate the monthly payment on a $100,000 HELOC, it’s best to use a HELOC monthly payment calculator, which will take into consideration how much of the line of credit you have used, your current interest rate, and the repayment term of your HELOC.

What are the benefits of a HELOC?

HELOCs offer several benefits, including competitive interest rates, flexible repayment terms, and the ability to borrow (and pay interest on) only what you need at any given time. A home equity line of credit can be used for various purposes, such as home improvements, debt consolidation, and education expenses. Additionally, the interest paid on a HELOC is sometimes tax-deductible, providing further financial advantages.

Do you need an appraisal for a HELOC?

Yes, you typically need an appraisal for a HELOC. The appraisal helps determine the value of your home, which is crucial for calculating the amount of equity you can borrow.

What disqualifies you from getting a home equity loan?

Several factors can disqualify you from getting a home equity loan. These include a low credit score, insufficient home equity, high debt-to-income ratio, and unstable income. It’s important to assess your eligibility for a home equity loan or home equity line of credit before applying.

How difficult is it to get a HELOC?

The difficulty of getting a HELOC depends on your financial health and the lender’s requirements. Generally, you’ll need a credit score of 680 or more, at least 15% equity in your home, and a debt-to-income (DTI) ratio of 50% or less. If your earnings are not consistent, you may find that you have to provide extra financial documentation so that a prospective lender is comfortable with your ability to repay what you borrow.

Does HELOC affect credit score?

Yes, a HELOC can affect your credit score. Applying for a HELOC may result in a hard inquiry on your credit report, which can temporarily lower your score. Additionally, using a significant portion of your available credit line can increase your credit utilization ratio, which can negatively impact your score. However, making timely payments on your home equity line of credit can help improve your credit score over time.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

SOHL-Q424-031