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• Home equity loan rates are influenced by the prime rate, economic conditions, and a borrower’s personal qualifications.
• Home equity loans have fixed rates, which offer the stability of consistent monthly payments.
• Comparing multiple lenders can lead to significant savings.
• The interest on a home equity loan could be tax-deductible if funds are used for home improvements.
• A home equity line of credit and a cash-out refinance are other ways to borrow based on home equity.
Introduction to Home Equity Loan Rates
Home equity loans are a popular borrowing option for homeowners looking to get equity out of their home. These loans often offer more favorable interest rates than unsecured loans. This guide provides a comprehensive look at home equity loan rates in Indianapolis. You’ll gain insight into how these rates are determined and what factors affect the rate you may be offered. We’ll also explore the application process and tools you can use to estimate costs. Ultimately, you’ll be equipped to secure the best home equity loan rates and leverage them to your benefit.
How Home Equity Loans Work?
A home equity loan is a lump-sum loan that is secured by the equity in your home. It’s important as you are learning what a home equity loan is to understand that this loan is technically a second mortgage (assuming you’re still paying off your initial home loan) and that if you can’t make payments, you risk foreclosure.
The amount you can borrow is based on your equity, which is the difference between the market value of your home and the amount you owe on your mortgage. Lenders will typically let you borrow up to 85% of your equity. A home equity loan calculator can help you see how much you might be able to borrow. Home equity loans typically have a fixed interest rate, which means you’ll have the same monthly payment for the life of the loan.
Where Do Home Equity Loan Interest Rates Come From?
The interest rates on different types of home equity loana are influenced by both economic and personal factors. Decisions by the Federal Reserve can impact the prime rate, which lenders use to set interest rates on home equity loans. Each lender adds a margin to the prime rate to determine the interest rate they will charge, and adjusts the rate up or down based on borrower factors such as your credit score and debt-to-income (DTI) ratio.
How Interest Rates Impact Home Equity Loan Affordability
Your interest rate is a big deal when it comes to a home equity loan. Even a small difference in rates can mean significant savings or added costs over the life of the loan. A $100,000 home equity loan with a 15-year repayment term at 8.50% interest would have a monthly payment of $985, and a total interest payment of $77,253. But at 9.50%, the monthly payment jumps to $1,044, and the total interest paid increases to $87,960. That’s a $10,700 difference in interest over the life of the loan.
Home Equity Loan Rate Trends
Since interest rates for home equity loans tend to follow the prime rate, it can help to have a sense of the rate’s ups and downs over time. The prime rate dropped as low as 3.25% in 2020 and then hit 8.50% in 2023. Some borrowers try to time their home equity loan application to lower rates, but it’s not always possible. What you can do: Compare offers from different lenders to find the lowest available rate and best terms at whatever time you do apply.
To get the most competitive home equity loan rate, you need to show that you’re a good risk for a lender. Lenders will be looking at your credit score, DTI ratio, and your level of equity in your home. Take these steps before you apply.
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 straightforward: Simply subtract your mortgage balance from your home’s current estimated value, then divide the result by the home value to arrive at a percentage. For instance, if your mortgage balance is $400,000 and your home is valued at $550,000, your equity is $150,000, or 27%. If you don’t have 20% equity, you can make more mortgage payments or make improvements in your home to increase its value.
Build a Strong Credit Score
A robust credit score will help you land the most competitive home equity loan rates in Indianapolis. Lenders often look for a minimum of 680 or 700, but the higher, the better. A high score shows lenders you’re a safe bet and could lead to friendlier terms and lower interest rates. To get there, make all your payments on time, don’t max out your existing credit lines, and periodically review your credit report for any errors and straighten out any you find before you apply for a home equity loan.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is another vital figure in the world of home equity loans. Lenders often seek a DTI ratio below 50%, but the golden number is 36% or less. To find your DTI ratio, add up all your monthly debt payments and divide by your gross monthly income. To bolster your DTI, consider chipping away at existing debts or exploring opportunities to boost your income. By doing so, you’re not only enhancing your financial profile but also improving your chances of securing a loan with favorable terms.
Obtain Adequate Property Insurance
Property insurance is a must-have, especially if you’re in an area that’s no stranger to natural disasters, such as flooding. Lenders will want to be sure that your property, which is the collateral for the loan, is insured in the event of damage. Before you apply, it’s a good idea to touch base with your insurance provider to make sure your coverage is up to snuff and meets your lender’s requirements.
Current home equity loan rates by state.
Compare current home equity loan interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
Useful Tools & Calculators
When you’re considering a home equity loan or home equity line of credit (HELOC) in Indianapolis, an online calculator can be a big help. These are a few of our favorites:
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. Ain payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for Indianapolis home equity loans range from 2% to 5% of the loan amount. These costs cover a variety of things, including 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 interest rates.
Tax Deductibility of Home Equity Loan Interest
Here’s a tip: The interest on home equity loans could be tax-deductible if you’re using the funds to buy, build, or significantly improve your home. If you’re married and filing jointly, you can deduct interest on home equity loans up to $750,000; for single filers, it’s up to $375,000. Remember, to claim this deduction, you’ll need to itemize your tax return. If you’re not sure if or how this applies to you, a quick chat with a tax advisor can help you understand the benefits you might be missing.
Alternatives to Home Equity Loans
While home equity loans are a popular choice, there are other options to consider, such as a home equity line of credit (HELOC) and a cash-out refinance. Both of these options allow you to tap into your home equity, but they have different features and requirements.
Home Equity Line of Credit (HELOC)
A HELOC is a bit like having a credit card with your home equity determining the spending limit. The credit line is there for you to tap into as needed, and you pay interest only on what you actually use. In fact, during the initial draw period of the HELOC (often 10 years) you can make interest-only payments. You might find a HELOC interest-only calculator helpful during this time.
You’ll only have to repay the principal plus interest after the draw period ends and you enter the repayment period. This is when you might use a HELOC monthly payment calculator. Keep in mind that HELOCs typically come with variable interest rates, so costs may change over time. To qualify, most lenders will want you to have a credit score of 680 (700 is even better) and a debt-to-income ratio below 50% (aim for below 36% if you can).
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
A cash-out refinance is when you replace your mortgage with a new, larger loan and take the difference in cash. The amount you can borrow depends on your home equity; most lenders let you borrow up to 80%. You’ll need a minimum 620 credit score and a DTI ratio under 43%. Because it’s a complete mortgage refinance, you can choose from fixed or variable rates with a cash-out refi. Qualifying is often easier than with home equity loans or HELOCs. Be sure to compare rates to find the best option for you.
When it comes to scoring the best home equity loan rates in Indianapolis, there are a few key factors to keep in mind. Good credit, a low DTI ratio, and good property insurance coverage will help you obtain the lowest available rate. Home equity loans are perfect for those big, one-time expenses, with a lump sum and fixed payments. But don’t forget about the alternatives, like HELOCs and cash-out refinances. Whatever type of loan you choose, be sure to shop around and compare lenders to find the best deal.
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.
A home equity loan can be a smart way to finance big expenses, whether you’re looking to make home renovations, consolidate high-interest debt, or cover other large purchases. The flexibility of these loans makes them a popular choice for homeowners. But it’s important to use the funds wisely and consider the long-term financial impact.
What’s the monthly payment on a $50,000 home equity loan?
The monthly payment for a $50,000 home equity loan varies with the interest rate and the term of the loan. At an 8.00% interest rate, for instance, a 20-year loan would have you paying $418 a month. Choose a 10-year term, and that monthly commitment rises to approximately $607. Let your budget and goals guide you to the term that suits you best.
What is the monthly payment for a $100,000 HELOC?
A HELOC, or home equity line of credit, is a revolving line of credit, so your monthly payment will depend on how much of the credit line you’ve used. During the draw period, which is typically the first 10 years, you’ll only be on the hook for the interest. For example, with a 6.00% interest rate, if you’ve drawn $50,000, you’d be looking at an interest-only payment of about $250 per month.
What might disqualify you from getting a home equity loan?
There are a few things that could prevent you from securing a home equity loan. Lenders typically require a minimum credit score of 680, a debt-to-income (DTI) ratio of 50% or less, and at least 20% equity in your primary residence. If you don’t meet lenders’ minimum qualifications, you might be denied. Inadequate property insurance can also be a barrier.
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*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.
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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.
• Home equity loan rates in Minneapolis are determined by your credit score, your debt-to-income ratio, and other factors.
• Prepare to secure the best rates by aiming for a credit score of 700 and a debt-to-income (DTI) ratio under 36%.
• The rates lenders offer you are impacted by the prime rate and, more distantly, Federal Reserve policy, as well as your personal financial profile.
• Even a small difference in your home equity loan interest rate can add up to substantial savings over the life of the loan.
• The interest you’ll pay on a home equity loan might be tax-deductible if you use the money to fund home improvements.
• Other options are out there, such as HELOCs and cash-out refinances. They come with their own perks and pitfalls.
Introduction to Home Equity Loan Rates
What is a home equity loan? It’s a smart way for homeowners to access the value they’ve built in their homes. It is also a loan option used by many to relieve some of the pressure when they need cash.
In this article, we’ll cover everything you’ll want to know about home equity loans. We will discuss factors affecting loan rates and strategies for getting the very best rates in Minneapolis. We’ll also explain the fine points of different types of home equity loans, including home equity lines of credit (HELOCs) and cash-out refinances, so you’ll be aware of the alternatives and their pros and cons.
Whether you are gearing up for a long-awaited home renovation, planning to consolidate the high-interest debt you’ve been carrying, or preparing to make a major family purchase, understanding Minneapolis home equity loan rates can help you make the best financial decisions and prepare you for an economically successful future.
How Do Home Equity Loans Work?
A home equity loan is a second mortgage. It allows you to tap into your home’s equity and turn it into a lump sum of cash. You then repay it, usually in fixed monthly installments over a period of five to 30 years. The loan is secured by your home, and that may allow you access to lower interest rates than you would get with an unsecured personal loan.
One key thing to note: In order to draw on the equity in your home, you need to have equity in your home. You can be working to pay off your mortgage, but the money you still owe should not be more than your house is worth. Generally, lenders want you to have a minimum of 20% equity in your home in order to qualify for a home equity loan.
HELOCs vs. Home Equity Loans
Here is a comparison of the two financing options you may use to take equity from your home.
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
If you’ve been paying your mortgage consistently and on time, and now wonder how to get equity out of your home, a home equity loan may be an appropriate option for you.
The Origin of Home Equity Loan Interest Rates
Multiple factors are constantly driving what the home equity loan rates in and near Minneapolis look like. These are not only big-picture economic conditions, but variables within your individual financial profile as well.
Federal Reserve policies impact lenders’ base rates, with adjustments to the federal funds rate sending ripples through the lending market and impacting the prime rate. When the prime rate moves up or down, so do home equity loan rates. Understanding these important influences can enable a borrower to anticipate rate fluctuations and make informed decisions about all different kinds of home loans, including home equity loans.
Your credit score and debt-to-income ratio can strongly influence the rates you’re offered by lenders. Additionally, the amount of your loan and the length of your repayment term will factor into the rate you get. Generally, the larger the loan and the longer the term, the higher your rate — this is due to the increased risk lenders take on.
How Do Interest Rates Impact Home Equity Loan Affordability?
Whether you’re shopping for a home equity loan or a HELOC, there’s no question — your interest rate will be a major factor determining the affordability of your loan. As of July 2025, the average home equity loan interest rate was 8.26%.
The chart shows the numbers for a $75,000 home equity loan with a 20-year repayment term, with the payments and the interest to be paid calculated at various interest rates. If you have an 8.00% interest rate, your monthly payment would be $627, and the interest you’d pay over the loan term would be $75,559. With a rate just one percentage point lower, at 7.00%, your monthly payment would be $581, and total interest would be reduced to $64,554. The lower rate could ultimately save you $11,005 in interest over the loan’s life.
Interest Rate
Monthly Payment
Total Interest Paid
8.00%
$627
$75,559
7.50%
$604
$70,007
7.00%
$581
$64,554
Fixed vs Adjustable Interest Rates
Considering a HELOC vs. a home equity loan? You’ll want to know that the latter tends to have a fixed interest rate. Monthly payments will stay the same for the entire length of the loan. A fixed rate may start off higher than adjustable rates you see advertised, but it’s usually still an optimal choice because of its stability. With a fixed rate, your payments won’t suddenly spike.
Adjustable rates can seem attractive at first glance, but after a defined period, the rates “adjust” to follow a market index. At this point, they may jump higher than the initial rate. Since rates can fluctuate over the life of an adjustable-rate loan, the future of your payments can feel unpredictable.
When you decide between the two kinds of rates, think carefully about how flexible your budget tends to be and how much risk you’re comfortable with, along with your long-term financial goals.
Home Equity Loan Rate Trends
If you are thinking about how to get equity out of your home, you can try to time your loan application to achieve the lowest possible rate. But unfortunately, predicting the prime rate is like playing a slot machine: Lucky hits are elusive. And not all borrowers have time to wait for the prime rate to dip. It has certainly seen its fair share of ups and downs, as you can see from the graphic.
If you need a loan, focus on comparing offers from several different lenders. Also, work on positioning yourself to get the best possible rate by staying in control of your credit.
How to Qualify for the Lowest Rates
To secure the most competitive home equity loan rates in Minneapolis, you should keep a few factors in mind, regardless of what type of loan you’re shopping for. Take the following steps before beginning the application process and you’ll be positioned to land a home equity loan with an interest rate and term that are favorable and manageable.
Maintain Sufficient Home Equity
You should have at least 20% equity in your home before trying to qualify for a home equity loan. To figure out how much equity you’ve accrued, subtract your outstanding mortgage balance from your home’s estimated value. Divide the answer by that estimated home value from the last step to arrive at a percentage of equity. A higher percentage is better in this case.
Build a Strong Credit Score
To get the best home equity loan rate out there, you’ll want to have a robust credit score. Lenders tend to look for a score of 680 or higher, with many preferring a score above 700. Higher credit scores are a sign of financial savvy — they can often open doors to more favorable loan terms for borrowers. Focus on timely payments, reducing credit card balances, and avoiding new debt. You’ll boost your chance to qualify for a lower interest rate.
Manage Debt-to-Income Ratio
DTI ratio is an important factor when you want to qualify for a home equity loan and get a good rate. Lenders typically want to see your DTI ratio at 50% or less — and if yours is 36% or lower, it will help you qualify for the lowest interest rates. Manage your DTI effectively by paying down your existing debt or increasing your income. Even better if you can achieve some combination of the two.
Obtain Adequate Property Insurance
Property insurance is a must-have if you’re trying to get a home equity loan. Homeowners’ insurance is a safety net for both you and the lender should damage occur, so make sure your coverage is comprehensive and up-to-date.
Current home equity loan rates by state.
Compare current home equity loan interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
Tools & Calculators
Before you take the steps to borrow against your home, you might want to do some math to understand what borrowing opportunities will be available to you and how much you can expect to spend over the life of your loan, just for the convenience of having the money you need now.
A home equity loan calculator can help you figure out just how much of a home equity loan you can qualify for. Other online tools and calculators can help you determine what your payments will be, and what sort of interest you’ll pay at the best rates you qualify for. These useful calculators make the math a cinch.
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
If you’re wondering about closing costs for a home equity loan, they typically range from 2% to 5% of the loan amount. The table below shows you some common closing costs and about how much they will set you back.
Service
Typical Fees
Appraisal
$300-$500
Credit report
$30-$50 or more
Document preparation
$100-$500 (may be billed on an hourly basis if attorney involvement is required, or built into the loan origination fee)
Loan origination
0.5%-1.0% of the loan amount
Notary
$20-$100
Title insurance
0.5%-1.0% of the loan amount
Title search
$75-$250 or more
While some lenders may offer no-closing-cost loans, they frequently come with higher rates, making them less desirable over the term of the loan.
Tax Deductibility of Home Equity Loan Interest
Interest on your home equity loan may be tax-deductible if you’re using the funds to improve your home. For single filers, interest on the first $375,000 of loan debt is deductible. Married couples who file jointly can deduct interest on up to $750,000 of debt. You’ll need to itemize if you want to take advantage of this. A tax advisor can help you figure out what will make the most sense for you.
Home Equity Loan Alternatives
Home equity loans are just one way to leverage your home’s value. You might decide to consider a home equity line of credit (HELOC) or a cash-out refinance.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC is a lot like a credit card, offering homeowners freedom to borrow, paying interest solely on what they use up to a set limit. Usually, during an initial “draw” period, they can withdraw funds. This is followed by a repayment period, in which they repay principal and remaining interest. Rates are generally adjustable.
Unlike a home equity loan, a HELOC is designed to be flexible. But bear in mind that with an adjustable interest rate, payments can fluctuate, potentially impacting your costs down the line.
Qualifying for a HELOC will most likely require a credit score of at least 680 (700, ideally) and a DTI ratio under 50% (below 36% is best). HELOCs often permit you to borrow up to 90% of the home equity you’ve accrued. Check out a HELOC repayment calculator to help you see what the loan would look like as you pay it down.
Want to calculate how much interest you’d have to pay during the “draw” period of a HELOC? Try out a HELOC interest-only calculator.
Cash-Out Refinance
A cash-out refinance is a strategic mortgage refinance. You swap your original mortgage for one that’s larger than what you owe now, and take the difference as a lump sum. Cash-out refi rates can be fixed or adjustable.
If you are evaluating the benefits of a cash-out refinance vs. a home equity line of credit, it’s worth noting that qualifying for a cash-out refi is usually easier than it is for a home equity loan or a HELOC. Lenders can have different standards, but cash-out refinances tend to require a 630 minimum credit score and a 43% or lower DTI ratio.
The Takeaway
To get the best home equity loan rates in Minneapolis, you’ll want to work to build your credit, manage your debt-to-income ratio, and secure reliable property insurance. You can use online tools to estimate your payments and the amount you can borrow, but be sure to factor in closing costs as you make your decision. If a home equity loan isn’t right for you, a HELOC or a cash-out refinance might be an option. Weigh the benefits and risks of each. The goal is to find the one that works best for your financial goals and best suits your needs.
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.
Popular reasons why people apply for home equity loans are to fund home improvements and to consolidate high-interest debt. If you choose to pursue a home equity loan, remember to use the funds wisely and make sure the loan fits into your overall financial picture.
What would monthly payments look like on a $50,000 loan?
Your monthly payment on a $50,000 home equity loan will vary depending on the interest rate and loan term. For example, if your loan had a 7.00% interest rate over 15 years, your monthly payment would be about $449. At a 9.00% interest over 15 years, the payment would be around $507. Experiment with a loan calculator to figure out what your payments would be with different variables.
What would a monthly payment be on a $100,000 HELOC?
A $100,000 home equity line of credit would likely come with a variable interest rate. During the draw period, you might need to pay interest only, based on the funds you use. When the draw period concludes, you’d start repaying both the principal and interest. If you repaid the full $100,000 over 20 years, and the interest rate held at 8.00%, you’d have an $836 monthly payment. But remember, the variable rate can make predicting payments down the line difficult.
What are the benefits of a home equity loan?
Home equity loans offer a fixed interest rate, so monthly payments stay predictable. A home equity loan is secured by your home, so it will typically come with a lower interest rate than a personal loan, since those are generally unsecured. Bonus: The interest you pay may be tax-deductible if you’re borrowing funds to pay for major home improvements (consult a tax advisor to know for sure).
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.
• Home equity loan rates are influenced by both larger economic factors and the individual financial profile of the borrower.
• A strong credit score and a low debt-to-income ratio can help you secure lower rates.
• Home equity loans usually have fixed interest rates, which mean predictable monthly payments.
• Home equity loans, home equity lines of credit (HELOCs), and cash-out refinances can be convenient ways to access cash, but they all involve the possibility of foreclosure if you don’t make your payments.
• Lender terms can differ, so it’s worth shopping around for a loan to see who offers you the best deal.
Introduction to Home Equity Loan Rates
This guide is your go-to resource for understanding Ventura County home equity loan interest rates. You’ll get the lowdown on how they function, the factors that determine them, and the steps you can take to secure the lowest rates. From the different types of home equity loans to the importance of maintaining a healthy level of home equity, we’ll cover everything you need to know. Whether you’re eyeing a home renovation, planning a debt consolidation, or thinking about other significant expenses, this guide will empower you to make a savvy financial choice. By the time you’re through, you’ll be ready to tackle this major financial decision with confidence.
A home equity loan is a second mortgage on your home that you receive as a lump sum of cash. You get the money all at once and repay it in equal monthly installments over a term between five and 30 years.
Because the loan is secured by your home’s equity, you’ll likely qualify for a lower interest rate than you would with an unsecured personal loan. Most home equity loans have a fixed interest rate, which means your monthly payment will remain the same for the life of the loan, making it easier to budget. Most lenders will require you to have at least 20% home equity to qualify.
If you’ve been paying your mortgage diligently and you’re wondering how to get equity out of your home, a home equity loan may be a great option for you.
Where Do Home Equity Loan Interest Rates Come From?
In Ventura County, home equity loan rates are influenced by a variety of factors, including both the economic climate and your personal financial situation. The Federal Reserve’s policies have a significant impact on the lending market, since lenders often base their rates on the prime rate, which is influenced by the Fed. When the prime rate goes up, home equity loan rates are likely to follow.
Your credit score and debt-to-income (DTI) ratio also drive the rates that will be available to you. The amount and term of the loan are important too, since larger loans and longer terms generally mean higher rates due to the increased risk they present for lenders. Understanding these elements can empower you to anticipate changes and make well-informed loan decisions.
How Interest Rates Impact Home Equity Loan Affordability
The interest rate you secure can make a big difference in the cost of your home equity loan over time. Even a slight difference in rates can mean big savings – or costs.
For example, let’s say you have a $100,000 home equity loan with a 15-year repayment term. At 8.50% interest, your monthly payment would be about $985, and you’d pay a total of $77,253 in interest over the life of the loan. But at 9.50%, your monthly payment would go up to approximately $1,044, and you’d pay $87,960 in interest. That means the higher rate would cost you an extra $10,707 in interest over the life of the loan. And that’s why the interest rate on your home equity loan is so important.
This chart shows more about how changes in your loan amount, interest rate, and term can result in different monthly payments.
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
Fixed vs Adjustable Interest Rates
Fixed interest rates provide predictability Since the rate never changes, your monthly payments always remain the same. Most home equity loans come with fixed rates, but some lenders may offer them with adjustable rates, and home equity lines of credit (HELOCs) and cash-out refinances often have adjustable rates, too, so it’s smart to think about which might be preferable for you.
Adjustable rates can kick off at a slightly lower interest rate than fixed rates, but after that initial period, they start adjusting to the market and your payments could rise or fall unpredictably. To decide which is right for you, you’ll need to consider your own financial flexibility and tolerance for risk.
Home Equity Loan Rate Trends
Anticipating interest rate shifts can be challenging, given the multitude of factors at play. Yet, by keeping an eye on recent patterns, you can glean some valuable insights. Let’s look at the prime rate, a major contributor to home equity loan rates. It has seen its share of ups and downs: a mere 3.25% in 2020 and a peak of 8.50% in 2023.
These fluctuations underscore the significance of timing your loan application to coincide with a favorable economic climate. Staying abreast of these movements will help you make a move when the time is right, potentially netting you a more competitive rate. But it’s also a good idea to work on your financial profile, which is likewise a major influence on your rate, so that you’ll be ready when the time is right.
How to Qualify for the Lowest Rates
To be offered competitive home equity loan rates, you’ve got to put your best financial foot forward. Lenders will be looking at creditworthiness indicators like your credit score, your debt-to-income (DTI) ratio, and the amount of equity you have in your home.
Want to improve your creditworthiness and potentially get lower home equity loan rates? Even if you’re still considering a HELOC vs. a home equity loan or a cash-out refinance, these strategies can help you prepare.
Maintain Sufficient Home Equity
You’ve generally got to keep at least 20% equity in your home to be eligible for a home equity loan. Calculate your equity by subtracting your mortgage balance from your home’s current value. If, for example, you owe $600,000 on your mortgage and your home is valued at $900,000, your equity is a solid $300,000.
Lenders typically allow you to borrow up to 85% of your equity, depending on your financial situation. In our example, that’s $255,000. A home equity loan calculator can help you estimate how large a loan you may be able to access.
Your home equity assures lenders that you’ve got the collateral to back your loan. Want to build equity faster? Think about making additional mortgage payments or investing in home improvements that will increase the value of your property.
Build a Strong Credit Score
If you’re hoping to be offered the most favorable home equity loan rates, a robust credit score is your best ally. Lenders generally look for a score of 700 or higher, but some may consider a minimum of 680. The higher your score, the higher the level of fiscal responsibility it suggests you have – and the better the loan terms you’re likely to get.
To nurture your score, focus on making timely payments, reducing your credit card balances, and steering clear of new debt. Regularly checking your credit report for errors and disputing any inaccuracies you see may also help.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a key factor in the home equity loan rates you’re likely to be offered. Lenders usually look for a DTI ratio under 50%, with 36% or less being preferred. To calculate your DTI, divide your total monthly debt payments by your gross monthly income. The lower the number, the better it looks to lenders, and the more competitive the rates you might score.
If you’re looking to improve your DTI ratio, consider paying down any lingering debts you still have, finding ways to boost your income, or a combination of both. A well-managed DTI ratio shows lenders you should be able to handle the debt and goes a long way to strengthen your loan application.
Obtain Adequate Property Insurance
Property insurance is a must-have for most home equity loans, especially in areas prone to natural disasters. It’s a safety net for both you and the lender should anything happen to your home.
Depending on where you live, your lender might require specific types of insurance, like flood or earthquake coverage, in addition to a general home policy. Making sure you have the right insurance can boost how responsible you look to potential lenders. Talk to an insurance agent and shop around for policies that offer the best coverage at the most reasonable cost.
Current home equity loan rates by state.
Compare current home equity loan interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
Tools & Calculators
There are many free online tools and calculators that can help you understand home equity loan rates and compare them. A home equity loan calculator can let you estimate how large a loan you may be able to take out. Other tools can help you calculate monthly payments based on a loan’s amount, interest rate, and term, so you can explore how different rates and terms can impact your overall financial picture. Resources like these can help you make more informed decisions as you search for the right loan for you.
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
Home equity loans often require the borrower to pay closing costs, which typically add up to between 2% and 5% of the loan amount. Here are some that you’re likely to see.
Service
Typical Fees
Appraisal
$300-$500
Credit report
$30-$50 or more
Document prep
$100-$500
Loan origination
0.5%-1.0% of the loan amount
Notary
$20-$100
Title insurance
0.5%-1.0% of the loan amount
Title search
$75-$250 or more
Some lenders offer no-closing-cost loans, but those loans may come with higher rates. Lenders may vary in their expectations about closing costs, so it’s worth comparing the costs across multiple lenders to find the best deal.
Tax Deductibility of Home Equity Loan Interest
There’s another potential benefit of home equity loans to consider. If you’re using the loan to improve your home, the interest on your home equity loan may be tax deductible. For single filers, interest is deductible on the first $375,000 of loan debt. Spouses filing together can deduct the interest on up to $750,000 of debt. But remember that you’ll need to itemize if you want to claim this deduction. Talk to your tax advisor to get advice tailored to your financial situation.
Alternatives to Home Equity Loans
Standard home equity loans are a popular choice for homeowners, but it’s worth looking at different types of home equity loans before you make a decision. Let’s dive deeper into home equity lines of credit (HELOCs) and cash-out refinances, a type of mortgage refinance. Each of these has its own unique features and requirements.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC works much like a credit card, but it’s backed by your home equity. It can be a flexible way to borrow up to a set amount of money. In the initial “draw” period, you may have to pay only the interest on what you use. Afterward, during the repayment period, you pay back the principal plus interest. HELOCs usually have variable interest rates, which can be harder to manage if you’re on a strict budget.
Lenders usually look for a credit score of 680 or higher (700 is even better) and a debt-to-income ratio below 50% (though 36% or less is best). They generally allow you to borrow up to 90% of your home equity. If you don’t mind the fluctuations of variable rates, a HELOC may be a viable choice for you.
With a cash-out refinance, you replace your existing mortgage with a larger one, tapping into your home’s equity to get a cash sum in addition to a new home loan. Lenders typically let you borrow up to 80% of your home equity.
If you’re looking at the merits of a cash-out refinance vs. home equity line of credit, note that the standards for borrowing differ. Lenders usually want to see that you have a credit score of 620 or above and a debt-to-income ratio of 43% or less. Cash-out refinances can have either fixed or variable rates, with the latter often offering more equity access.
The Takeaway
When you’re thinking about a home equity loan, building a robust credit score, managing your debt-to-income ratio, and securing adequate property insurance can put you in a good position to nab the best Ventura County home equity loan rates. It’s also smart to leverage free online tools and calculators to estimate monthly payments and total costs so that you can efficiently compare offers. As you’re thinking about how to use your home equity, consider alternatives like HELOCs and cash-out refinances to find the most appropriate option for you. And remember, a sit-down with a financial advisor can help you feel sure that the way you’re thinking of borrowing against your home equity aligns with your long-term financial strategy.
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.
Home equity loans can be a great way to fund large purchases, renovations, or debt consolidation. Their flexibility is one of the main reasons they’re so popular. However, remember that you’re taking on a debt that you’ll be paying back for many years, so it’s important to use it wisely. For example, getting a home equity loan to make home improvements that will increase the value of your home is a smart move. Using a home equity loan to pay for a vacation, on the other hand, is probably not.
What would the monthly payments be on a $50,000 home equity loan?
To calculate your monthly payment on a $50,000 home equity loan, you’ll need to know not just the loan amount, but also the term and interest rate. For example, at an 8.00% interest rate over a 10-year term, your monthly payment would be approximately $607. With a 9.00% rate and a 10-year term, it’s about $633.
What would the monthly payment be on a $25,000 home equity loan?
The monthly payment for a $25,000 home equity loan will be contingent on the interest rate and the loan term. For instance, with a 7.00% interest rate across a 15-year term, the monthly payment would be approximately $225, and the overall interest you’d pay would be about $15,447. Opting for a longer term can make the payment more manageable, but it also means more interest over the loan’s lifetime. So if the term for the same loan were 20 years, the monthly payment would be around $194, but the total interest would be $21,518.
What are the advantages of a home equity loan?
Home equity loans can be a great option for a number of reasons. They provide you with a lump sum of cash that you pay back over a period of years, typically in fixed monthly payments that never change and are easy to budget for. Because your home secures the loan, interest rates are typically lower than you’d find with an unsecured personal loan. And if you use the loan to improve your home, some or all of the interest may be tax-deductible (check with your tax advisor for advice specific to your situation).
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.
• Bend’s home equity loan rates are influenced by your credit score and debt-to-income (DTI) ratio, among other factors.
• Even a small difference in interest rates can translate to substantial savings or costs over the long term.
• To compare loans easily, it can be helpful to use an online loan payment calculator.
• The interest on your home equity loan might be tax-deductible if you’re using it to build, buy, or improve a property.
• Home equity loans usually come with fixed interest rates, so your monthly payments will stay the same over the life of the loan.
Introduction to Home Equity Loan Rates
A home equity loan can be a powerful financial tool for a homeowner, enabling them to borrow against the equity in their homes instead of taking out a higher-interest personal loan.
In this article, we’ll explore Bend home equity loan rates and examine the factors that can influence them. We’ll look at different types of home equity loans, like home equity lines of credit (HELOCs) and cash-out refinances. We’ll also discuss the advantages and potential pitfalls of these loans and offer guidance on how to qualify for the most favorable rates.
Whether you’re gearing up for a home improvement project, trying to consolidate debt, or looking to fund a major purchase, this guide will equip you to navigate the world of home equity loans confidently.
How Do Home Equity Loans Work?
What is a home equity loan? It’s a type of second mortgage that uses your home equity as collateral for a lump sum of cash. You repay it in monthly installments, usually at a fixed rate, over a period of five to 30 years.
Because a home equity loan is secured by your home’s equity, these loans typically offer lower rates than unsecured personal loans. The loan usually has fixed rates, providing you with a predictable payment amount and schedule.
To qualify for a loan, you’ll need at least 20% equity in your home, which is the difference between your home’s market value and your current mortgage balance. Many lenders allow loans for up to 85% of your equity. If you’ve been wondering how to get equity out of your home, a home equity loan is worth consideration.
Where Do Home Equity Loan Interest Rates Originate?
Home equity loan interest rates are influenced by a variety of factors, some of which relate to the economy and some to your personal financial situation. For example, the Federal Reserve’s policies play a big role in the lending market, since many lenders base their rates on the prime rate. When the prime rate rises, you can expect home equity loan rates to follow suit.
Your credit score and debt-to-income (DTI) ratio are also key players in determining the rates you’ll be offered. As a general rule, higher loan amounts and longer repayment terms will likely result in higher rates, too, due to the increased risk for the lender. Understanding these factors can help you anticipate changes and make more informed decisions.
How Interest Rates Impact Affordability
The interest rate on your home equity loan can make a world of difference in how affordable the loan will be for you over time. Even a seemingly small increase in the rate can add up to significant extra interest you’ll need to pay.
For instance, perhaps you get a $100,000 home equity loan with a 15-year repayment term. At an 8.50% interest rate, your monthly payment would be about $986, and the total interest you’d pay over the life of the loan would be $77,253. But with a 9.50% interest rate, your monthly payment would be around $1,044, and the interest would be about $87,960. The higher rate would mean that you’d pay approximately $10,700 more.
This chart shows more examples of how changes in your loan amount, interest rate, and term interact to result in different monthly payments.
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
Fixed vs Adjustable Interest Rates
Fixed rates are a hallmark of home equity loans, but some lenders do offer adjustable rates, and they’re common with home equity lines of credit (HELOCs) and cash-out refinances. So it’s a good idea to think about which kind of interest rate might work better for you.
The advantage of a fixed rate is that it never changes, meaning that you’ll be charged the same amount for all your monthly payments. This predictability can be helpful as you budget and plan ahead – you always know what to expect.
On the other hand, adjustable rates often begin at a lower rate than fixed rates, but after that initial period, they adjust to reflect the market. That could mean that your payments will go up or down, so you’ll need to be comfortable with that kind of potential change. Consider what suits your budget flexibility and how much risk you’re comfortable with as you make your decision.
Home Equity Loan Rate Trends
Predicting the future moves of interest rates is a tricky business at best — there are many variables at play. Looking at just one, the prime rate, we can see it’s been on quite a rollercoaster over the years. In 2020, it was a mere 3.25%, but by 2023, it had risen to 8.50%.
These ups and downs have a direct impact on home equity loan rates in Bend and beyond. Staying in the know about economic shifts and what the prime rate is may help you time your application to catch a more favorable rate.
How to Qualify for the Lowest Rates
If you want to be offered the most attractive home equity loan rates in Bend, or anywhere, you’ll need to present good evidence of your financial responsibility. Lenders will want to inspect your credit score (which should be high), your debt-to-income (DTI) ratio (which should be low), and the amount of equity you have in your home, which must be at least 20%. The good news is that there are ways to work on improving some of the metrics lenders most commonly look at.
Even if you’re still considering a HELOC vs. a home equity loan or a cash-out refinance, you can follow these strategies to secure the most competitive interest rates and loan terms.
Maintain Sufficient Home Equity
To snag those favorable rates, you need to keep at least 20% equity in your home. You can calculate your equity by subtracting your mortgage balance from your home’s current value. For example, if your mortgage balance is $400,000 and your home is now valued at $750,000, you’re sitting on $350,000 in equity. Since lenders may be willing to lend you up to 85% of your home equity, you may be able to access as much as $297,500. (To explore what size loan you might be eligible for with a different amount of equity, try a home equity loan calculator.)
If you’re contemplating a home equity loan down the line, regularly checking in on your home’s worth is a good idea, as many properties appreciate in value. To help boost your equity, stay on top of mortgage payments and, if you can, make extra ones. Home improvements that add value may also help.
Build a Strong Credit Score
Lenders typically favor credit scores of at least 680 or higher for home equity loan applicants, with many preferring 700 or more. A robust credit score is a testament to your financial prudence, which is why it can lead lenders to offer more attractive home equity loan rates.
To elevate your credit score, concentrate on making your payments punctually, keeping credit card balances in check, and avoiding new debt. Regularly monitoring your credit report for inaccuracies and addressing them promptly can also contribute to a healthier score.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio, which compares your monthly debt payments to your monthly income, is a key factor in determining your loan eligibility. Lenders typically look for a DTI ratio below 50% for a home equity loan, and ideally below 36%. A lower DTI ratio shows that you have a better ability to manage your monthly payments, which may influence lenders to offer you more competitive home equity loan rates.
If your DTI ratio could use some work, consider paying down some of your existing debts, increasing your income, or both. This can shift your ratio and make you a more attractive borrower.
Obtain Adequate Property Insurance
Property insurance is a must-have for home equity loans, particularly In a place like Bend, Oregon, where the elements and wildfires are real concerns. This insurance protects both the lender’s investment and your financial security. Lenders will want to see proof of insurance before they greenlight your loan, and it’s vital to keep that coverage throughout the loan term to steer clear of possible problems.
Current home equity loan rates by state.
Compare current home equity loan interest rates by state and find a home equity loan rate that suits your financial goals.
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Tools & Calculators
Utilizing online tools and calculators empowers you to make well-informed decisions about home equity loans. By making use of these resources, you can effectively budget and select the loan that best aligns with your needs.
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
For home equity loans, closing costs typically range between 2% and 5% of the loan amount. These can include many different fees. Here are some of the most common.
• Appraisal fee: $300-$500
• Credit report fee: $30-$50 or more
• Document preparation: $100-$500 (may also be billed on an hourly basis if an attorney is involved or be built into the loan origination fee)
• Loan origination fee: 0.5%-1.0% of the loan amount
• Notary fee: $20-$100
• Title insurance fee: 0.5%-1.0% of the loan amount
• Title search fee: $75-$250 or more
While no-closing-cost options are sometimes available, they generally come with higher interest rates. Be sure to compare lenders to find the most favorable terms, as fees can differ.
Tax Deductibility of Home Equity Loan Interest
The interest on your home equity loan might just be tax deductible if you’re using it to buy, build, or improve your home. For single filers, interest is deductible on the first $375,000 of loan debt. Spouses filing together can deduct the interest on up to $750,000 of debt. Don’t forget: To use this deduction, you’ll need to itemize. Talk to your tax advisor to get the most up-to-date information and advice.
Alternatives to Home Equity Loans
There are other ways to tap your home equity, including home equity lines of credit (HELOCs) and cash-out refinances (a type of mortgage refinance). These options have different features, and one of them could be a good match, depending on your financial needs and goals.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC works a lot like a credit card, but it’s secured by your home equity. In the initial “draw” period, you can borrow money up to a set limit, with interest charges only on what you use. Then there’s a repayment period of several years, during which you pay back the principal and any remaining interest. Most HELOCs come with variable interest rates, which can mean unpredictable payment amounts. Lenders may let you borrow up to 90% of your equity in a HELOC.
For a HELOC, lenders would generally like you to have a credit score of 680 or higher (700+ is even better) and a debt-to-income ratio below 50% (though less than 36% is optimal). If you’re willing and able to cope with the potential uncertainties of variable rates, a HELOC could be a good choice.
This is a way to replace your existing mortgage with a new and larger home loan and receive a lump sum of cash by drawing on your home’s equity. Lenders will generally allow you to borrow up to 80% of your home’s equity.
If you’re comparing the advantages of a cash-out refinance vs. a home equity line of credit, note that requirements for borrowing can be different. It’s generally easier to qualify for a cash-out refi: You’ll typically need a credit score of 620 or higher and a debt-to-income ratio of 43% or lower. You can get a fixed or a variable interest rate, with variable rates potentially allowing access to more equity.
The Takeaway
If you’re considering a home equity loan in Bend, Oregon, there are a few things you should know. First, having a good credit score and a healthy debt-to-income ratio can help you secure the best rates – which is important for the affordability of the loan. Use online calculators to get an estimate of your monthly payments and total interest for different loans. Shopping around and comparing offers from different lenders with the information you now have can help you find the best financial option for you.
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.
Home equity loans can be used for many different reasons, including home renovations, large purchases, and debt consolidation. They’re flexible, but it’s important to be sure you can afford the payments, since your home secures the loan.
What is the payment on a $25,000 home equity loan?
Payments vary, depending on the interest rate and loan term. At a 7.00% interest rate over 15 years, you’re looking at approximately $225 per month. With an 8.00% interest rate over 20 years, it’s about $209. To see what the payment would be with different mortgage conditions, try a mortgage payment calculator.
What’s the monthly payment on a $30,000 home equity loan?
What you’d pay monthly on a $30,000 home equity loan varies, depending on your specific loan term and interest rate. At 7.00% over 15 years, you’re looking at around $270 per month. With an 8.00% rate over 20 years, it’s about $251. You can use an online mortgage payment calculator to find out what the payment would be with different variables.
What might prevent you from securing a home equity loan?
A lender might deny you a home equity loan for many different reasons, including insufficient home equity, a low credit score, a high debt-to-income ratio, or inadequate property insurance. It can be a good idea to look at these areas and work on any weaknesses before you apply to boost your eligibility and, with luck, improve your chances of being offered a good interest rate.
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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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 .
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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.
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