Auto Loan Payment Calculator
Auto Loan Payment Calculator
By Jennifer Calonia | Updated July 2, 2025
If you’re contemplating car financing, you likely want to compare your options. Whether you’re in the hot seat at a dealership’s financing office or doing research at home, you need to quickly and easily find the best car loan for an upcoming vehicle purchase.
This auto loan payment calculator gives you a clear view of the monthly payment you can expect and total interest you’ll pay, just by entering a few loan details.
Key Points
• To estimate auto loan payments, input the total loan amount, term length, and interest rate into the calculator.
• Adjust the variables to match your budget and available loans.
• Evaluate different scenarios to find the best loan offer.
• Review the breakdown of principal and interest to understand payment structure.
• Calculate the estimated total interest to be paid over the loan term.
Calculator Definitions
When using the auto loan payment calculator, you’ll want to understand these terms:
• Down payment: An out-of-pocket portion of the vehicle purchase price that you pay upfront. This figure reduces the loan amount you’ll borrow.
• Principal: The base loan amount that’s borrowed for the vehicle purchase.
• Interest rate: This is the cost of borrowing the loan. The interest rate is expressed as a percentage of the principal. (You might see it sometimes shown as an APR, or annual percentage rate, which includes the cost of interest plus fees.)
• Loan term: The length of time, expressed in months or years, that you’ll repay the loan.
• Monthly payment: The amount that you’re required to pay each month as a loan installment. It includes a portion of the principal and interest charges.
How to Use the Auto Loan Payment Calculator
You can get started with the auto loan payment calculator in three simple steps.
1. Enter the Loan Amount
Use the slider to enter the loan amount you intend on borrowing. You can also type the amount into the field provided. The amount can be as low as $5,000 up to $100,000.
2. Enter the Loan Term
Enter the loan term, or repayment duration, in years using the slider or by typing it into the text field. Available loan terms are usually between one and 10 years.
Some loan terms are expressed as months. If this is the case with your loan, divide its repayment term by 12 to get the number of term years. For example, a 72-month term, divided by 12, is a 6-year loan term.
3. Enter the Interest Rate
Input the interest rate for the loan into the “interest rate” text field.
As you make changes to each loan detail field, you’ll see the auto loan payment calculator dynamically update your estimated monthly payment information on the right. You’ll see insightful breakdowns, like your monthly payment amount, how much of that payment is applied to the loan principal vs. interest, and the total interest you’ll pay over the loan term.
As you may have noted, this is not an auto loan calculator with credit score. It will calculate payments and total interest based on an interest rate vs. a score.
Benefits of Using an Auto Loan Payment Calculator
Using an auto loan payment calculator empowers you to make informed decisions before financing your next vehicle. It helps you:
• Budget your monthly finances by offering concrete estimates.
• Compare auto loan financing offers.
• Visualize how loan terms impact your monthly payment.
• Understand how much of each payment goes toward the principal balance.
• See how much you’re paying in total interest charges.
How to Use the Auto Loan Payment Calculator to Compare Scenarios
A practical way to use the auto loan payment calculator is by adjusting each variable — loan amount, loan term and interest rate — to guide you toward your ideal loan offer.
Scenario 1. Say you check your budget and use a money tracker app and determine that you can spend $500 a month for a car payment. You are considering making a down payment of $10,000 toward a $40,000 car.
This means the loan amount you’d finance is $30,000. Assuming a five-year term at 6%, your estimated payment is $1,079.99. This estimated monthly payment is more than twice your budgeted amount, so this loan isn’t financially feasible.
Scenario 2. To get closer to your preferred monthly payment budget, you consider buying a more affordable car and extending your loan term. The next car you consider requires a loan amount of $20,000, and you choose a 7-year term at 6%. Now, your estimated monthly auto payment is $530.27 — much more in line with your desired budget.
By using the auto loan payment calculator in this way, you can find which particular vehicle and loan suits you best.
Recommended: Why Did My Credit Score Drop After a Dispute?
What Is a Credit Score?
A credit score is a three-digit number that summarizes your creditworthiness, based on your past and current borrowing and repayment habits. The Fair Isaac Corporation (FICO®) is a popular credit scoring model that’s used by lenders to assess how risky lending to you might be, however, the VantageScore is another commonly used model. One key similarity between the VantageScore vs. FICO is that both generally use a credit score range from 300-850.
These two models also consider similar factors in their credit score calculations:
• Payment history
• Credit utilization
• Credit length/age
• Credit mix
• New credit
Although each scoring model looks at similar data points, they differ in how impactful each factor is in their respective calculations. Your credit score updates regularly (often monthly), based on your most recently reported repayment and borrowing activity.
How to Build Credit
Understanding how to build credit and what affects your credit score can help you maintain a strong credit profile. Building your credit isn’t a precise science — instead, practicing responsible borrowing and payment behavior can positively impact your score overall. Paying at least the minimum payment due on your credit cards and loans each month can have a major influence on your FICO score; it makes up 35% of your score calculation.
Credit utilization, which is the amount of credit you use compared to your available credit, determines 30% of your FICO score. Keeping your credit utilization under 30% or ideally 10% of your available credit can help build your score. (A spending app might help you take control of this figure if yours is running high.)
Responsibly managing a mix of credit types and not opening multiple new credit accounts in a short period can also positively impact your score.
If you are working on building your score to qualify for more favorable terms, you might use a credit score auto loan calculator to gauge the impact of this activity.
Recommended: How Long Does It Take to Build Credit?
Types of Credit
There are different types of credit that come together to form your credit file. The main credit types include:
• Revolving credit. A revolving account typically provides you with the ability to borrow against a credit line up to a predetermined credit limit. Common examples include credit cards, retail cards, gas station cards, and home equity lines of credit (HELOCs).
• Installment credit. Installment credit offers a fixed payout that is disbursed upfront as a lump sum. Then, you’ll make smaller installment payments over multiple months until the principal balance, plus interest and fees, are repaid. Auto loans, student loans, and home loans are examples of installment debt.
• Open credit. With open credit, the full payment is due each month or statement cycle. This type of credit account is typically seen through service providers, like for utilities or your cell phone.
Examples of Credit Score Ranges
Scoring models might have different score ratings and ranges. Below is an example of a basic FICO score range:
• Excellent: 800-850
• Very Good: 740-799
• Good: 670-739
• Fiar: 580-669
• Poor: 300-579
You may be curious about your starting credit score. It’s not typically 300, the lowest possible score. Rather, once you have several months of credit history, if it’s responsible, you might be in, say, the good range.
Credit Score Tips
Before you shop around for an auto loan, knowing where your credit stands and addressing any areas to positively impact your score can help you secure a more favorable financing offer.
• Credit score monitoring can help you track new credit inquiries, account openings, and flag issues, like fraudulent activity. This in turn can protect your score.
• Tapping into ways to check credit score without paying might make it easier to stay on top of your credit health.
• Learning lower credit card utilization can build your credit score in a meaningful way.
Recommended: Refinancing a Car Loan: What to Consider
The Takeaway
An auto loan calculator can help inform your search for financing that aligns your budget and long-term financial goals. An important step in getting favorable loan terms can be maintaining or building your credit score. Tracking and managing your money can help you in that pursuit.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights—all at no cost.
FAQ
What credit score do you need for a car loan?
There’s no gold-standard score that automatically qualifies you for a car loan. Generally, a minimum credit score of 670, which is considered good under FICO’s scoring model, can help qualify a person for a loan. However, the higher your score, the better your chances at getting approved for an auto loan.
What APR will I get with a 700 credit score for a car?
Borrowers with prime credit, which includes a 700 credit score, have an average new auto loan rate of 6.70% APR and 9.06% APR for a used car loan as of June 2025.
Can I get a $30K car with a 650 credit score?
A 650 FICO score is considered “fair” which is slightly lower than the average U.S. consumer. Lenders might be willing to finance a $30K car loan based on this score or might require a cosigner on the loan agreement.
How much does a credit score go down when applying for an auto loan?
Applying for an auto loan involves a hard inquiry into your credit history. This inquiry can temporarily lower your score by several (say, five) points.
Why did my credit score drop 100 points after paying off my car?
Identifying why your credit score might drop 100 points after paying off an auto loan is complex since your score is comprised of multiple factors. For example, the drop could be a result of the account now being closed, which shortens your credit history; changes in your credit mix; or other reasons.
What interest rate can I get with a 750 credit score for a car?
The average auto loan rate for consumers with prime credit (661-780) is 6.70% for a new car loan to 9.06% for a used car loan, according to June 2025 Experian® data.
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
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.
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 .
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Free Monthly Budget Calculator
Free Monthly Budget Calculator
By Kevin Brouillard | Updated July 1, 2025
Budgeting can be a very valuable way to keep tabs on your money and make sure you are moving toward your financial goals. By using a personal monthly budget calculator, you can better understand your income, spending, and savings to stay on track or make adjustments as needed.
Here, you’ll learn how to use this free monthly budget calculator, plus gain valuable insights into budgeting techniques and tips.
Key Points
• With a free monthly budget calculator, you can start by entering monthly income before taxes and then input income taxes from pay stubs.
• Adding all monthly expenses, including fixed and variable costs, can help you track spending.
• The calculator determines net monthly savings by subtracting total expenses from income.
• Experiment with different budget scenarios to plan for financial goals.
• Use budgeting methods like 50/30/20, zero-sum, and envelope systems to find the right fit and gain better financial management.
Calculator Definitions
When using your free monthly budget calculator, you’ll want to have your financial details available to enter. Here’s a selection of the information you’ll need handy:
• Income: Enter your monthly income before taxes
• Income taxes: Account for federal, state, and municipality income taxes, which will vary depending on your total earnings and qualifying deductions or exemptions
• Housing: Include rent or mortgage payments, utilities, property tax, insurance, and home maintenance expenses
• Groceries: Tally food, toiletries, and household supplies
• Entertainment: This spending category is where you account for dining out, events (movies, plays, concerts), streaming services, sports tickets, books, and hobby-related costs
• Debt payments: This includes monthly payments on credit cards or to lenders for student loans, mortgages, personal loans, auto loans, or other types of loans or lines of credit
How to Use the Monthly Budget Calculator
A free monthly budget calculator can help you take control of your money and reach both short- and long-term financial goals. This tool can show you how your spending shapes up and reveal how much you are able to save each month.
Step 1. Enter Your Monthly Income
The first step is entering your total monthly income before taxes. You can check your pay stubs to find your pretax earnings. If you’re paid weekly or biweekly rather than monthly, you can multiply your pretax earnings by the number of paychecks you receive annually (52 or 26) and then divide by 12 to determine your monthly income.
Step 2. Enter Your Income Taxes
To find this information, rather than finding your tax bracket and crunching the numbers yourself, you can check your pay stubs to see how much you’re paying toward income taxes. Then multiply that amount like you did above for income to find your annual income taxes and divide by 12 to get the monthly figure. This will be subtracted from your income by the monthly budget calculator.
Step 3. Add Your Monthly Expenses
There are a good number of spending categories (such as health care, clothing, education, and transportation) included in the monthly income budget calculator. You can consult your credit card or bank statements to tally up the totals for each category. (Some financial institutions give you a snapshot of your spending categories; double-check that they align with what you are inputting into the calculator.)
As you enter this information, you are likely to see how your needs vs. wants compare. You may be surprised, for instance, to see how your grocery bill (reflecting your needs) and your dining out expenses (which are wants) stack up.
Step 4. Determine Your Net Monthly Savings
After entering your income taxes and other expenses for the month, the monthly budget calculator will reveal your spending and your net savings (your income minus everything that is deducted from it). Note that one of the calculator’s categories captures any deposits you are already making into savings accounts, so what you see under “net savings” is essentially the additional funds you have to apply toward your financial goals. Those might include paying off credit card debt or saving for a wedding.
Benefits of Using a Budget Calculator
There are several benefits to using a budget calculator. Consider the following:
•
A budget calculator automatically determines where you stand in terms of your earnings, spending, and savings, without you having to use a calculator or pencil and paper.
• The free monthly budget calculator can provide a clear view of your income, spending, and savings, so you can retool your budget as needed, such as reducing a category of spending (a money tracker can help with this, too).
• The monthly personal budget calculator can help you improve financial management. It gives you a relatively quick and simple way to view the money going in and out of your checking and savings accounts. You can use this information to plan well for the future.
When using this monthly budget calculator, note that the output will only be as accurate as the information you put in. It can be worthwhile to do some upfront work to tabulate your income and expenses to make sure you aren’t guesstimating.
How to Use the Monthly Budget Calculator to Compare Scenarios
It can be helpful to experiment with different dollar values to see how extra earnings, additional debt payments, or changes in expenses will impact your monthly budget. For example:
• You could check whether picking up a side hustle would give you some extra wiggle room in your budget to accrue savings without cutting expenses.
• Alternatively, you might forecast what your future budget will look like after eliminating recurring debt, such as a car loan or student loans.
What Is a Budget?
Simply put, a budget is a plan for how you will save and spend your money you earn for a specific period of time. Personal budgets are usually structured monthly to account for bills and expenses due each month, including rent or mortgage payments and student loans, as well as buying your favorite breakfast burrito on Saturday mornings.
Budgets can be used to track spending to help prevent you from going into “bad” debt or to work toward specific savings goals, such as an emergency fund. Whatever your intention, budgets can be a helpful tool for better managing your finances.
How to Budget
There’s no one-size-fits-all approach to budgeting. Start by asking yourself key budgeting questions to identify your needs and goals. For instance, are you prepared for unexpected expenses? Would it benefit you to allocate enough time to really understand where every dollar of your income goes? Are you advancing toward your long-term plans, like homeownership?
Making a budget involves repeating the steps outlined above: adding up your income, calculating your income taxes, tallying up your expenses across spending categories, and allocating money to savings.
In addition to this monthly budget calculator, there are apps and strategies to help streamlining budgeting. Check to see if your financial institution offers an online budget planner that can help track spending and even spot unwanted expenses like subscriptions. If you don’t find a tool you like there, try third-party options, some of which may have free versions.
Recommended: How to Make a Budget
Types of Budgeting Strategies
If you want to delve more deeply into budgeting once you’ve compiled all the essential information on income and expenses, there are multiple types of budgeting methods to consider using. Here are a few budgeting plans to look into.
• 50/30/20 budgeting: This method divides your monthly income into three buckets: 50% for needs, 30% for wants, and 20% for savings, like retirement or short-term savings targets, and additional debt payments. It offers some built-in flexibility, making it ideal for beginners.
• Zero-sum budgeting: Every dollar you earn is accounted for with this method, and it’s assigned a specific purpose, such as savings, debt repayment, expenses, or discretionary spending. This involves more effort to track how money is being used, but could yield richer insights about exactly where your money goes.
• Envelope-system budgeting: With this technique, you create envelopes for each spending category at the start of the month and put the allotted amount of cash inside the envelopes. The idea here is that you only spend the allocated amount of cash. If you wind up short on entertainment money on the 20th of the month, for example, then you need to hold out without any more entertainment spending until the next month starts, or you can borrow funds from an envelope where you have a surplus.
• Line-item budgeting: To implement this approach, create a column naming all income, expense categories, and savings, followed by one column for each month of the year. You’ll enter all your earnings, spending, and saving, and track your progress. It’s helpful to set targets for each category and leverage a spreadsheet on your computer to adjust as needed.
• Pay-yourself-first budgeting: Also known as reverse budgeting, this method automates savings from your paycheck. After paying yourself first (putting aside a certain amount for savings), the remaining money is intended to cover both nonnegotiable expenses and discretionary spending.
Recommended: How to Make a Budget in Excel
Budgeting Tips
Coming up with a budgeting plan that works for you can take some trial and error. Here are a few tips to create an effective budget and stick to it.
• Track spending: Using an app can help automate this process. Not having a system to track spending is one of the most common budgeting mistakes.
• Plan for unexpected costs: Building up an emergency fund that can cover up to six months’ worth of expenses is recommended so you are prepared for medical bills, car repairs, or gaps in employment.
• Overestimate your expenses: It’s better to err on the side of caution and anticipate more spending on budget categories that aren’t fixed, such as groceries and transportation. (Don’t forget: Inflation is often a factor to contend with.)
• Don’t forget about those occasional expenses: It’s common to overlook infrequent expenditures like birthday and holiday gifts for loved ones and charitable donations during the year. Make sure to account for them.
• Involve a friend or relative: Accounting for all income and expenses in your household is essential to a budget. If you’re budgeting for one, finding an accountability buddy can help you both stay on track toward your financial goals.
Recommended: Credit Monitoring
The Takeaway
Using a monthly budget calculator can give you a clear picture of how you’re earning, spending, and saving each month. After recording all your income, taxes, and expenses and checking your monthly status, using a budget strategy can help you progress toward your financial goals. A money tracker and other tools can also benefit you in this pursuit.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights—all at no cost.
FAQ
How do I calculate my monthly budget?
Calculating your monthly budget involves balancing your income, expenses, and savings. There are different techniques to do this, such as the 50/30/20 budget rule or the zero-sum system, but the ultimate goal is to optimize your money and reach your financial goals.
What is the 50/30/20 rule for budgeting?
The 50/30/20 rule for budgeting calls for using 50% of income for needs, 30% for wants, and 20% for savings and additional debt payments.
What is the 70/10/10/10 budget rule?
The 70/10/10/10 budget rule divides income between four buckets: living expenses (70%), savings (10%), investments (10%), and charitable donations (10%).
How do I find my monthly budget?
To calculate your monthly budget, you need to find your income, expenses, and savings. Check pay stubs for a breakdown of your income and taxes, and consult statements from your bank, credit card, loan servicers, and investment accounts to get an idea of spending and saving every month. Then experiment with different systems, such as the 50/30/20 budget rule or the envelope system to land on a method that works for you.
How do beginners budget monthly?
Beginners can budget monthly using several methods. The 50/30/20 rule is an easy and flexible budget plan for beginners to follow. Others may prefer the envelope system since it’s a very tactile, hands-on way to see where your money is going.
What is the best free budgeting app?
The best free budgeting app depends on your needs and goals. You might start by seeing what tools your financial institution offers and then move onto third-party options. Using a monthly budget calculator can give you a valuable snapshot of your earning, spending, and savings before choosing a specific app.
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
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.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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Current Home Equity Loan Rates in Idaho Falls, ID Today
IDAHO FALLS HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Idaho Falls, ID.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Idaho Falls.
Key Points
• Home equity loan interest rates in Idaho Falls are influenced by your credit score and debt-to-income ratio.
• Fixed rates offer the peace of mind of consistent, predictable monthly payments.
• To secure the best rates, aim for a credit score of 700 or higher and a debt-to-income ratio below 50%.
• The interest on home equity loans may be tax deductible; consult a tax advisor for the latest guidelines.
• Use our calculators to estimate your monthly payments and total costs before you apply.
• Consider other options, like a home equity line of credit, to see if it might be a better fit for your financial goals.
Introduction to Home Equity Loan Rates
When you’re thinkin about how to get equity out of your home, interest rates are top of mind. In this guide to home equity loan interest rates in Idaho Falls, ID, we’ll dive deep into the current rates: how they’re determined, and what you can do to qualify for the best available deal.
Whether you’re looking to fund home renovations, consolidate debt, or finance a significant purchase, understanding home equity loan rates can help homeowners save thousands of dollars in interest. We’ll also cover the risks of such loans and the alternatives to consider, ensuring you have a complete picture of the home equity loan landscape in Idaho Falls.
But first we’ll answer the question, what is a home equity loan, anyway?
How Home Equity Loans Function
A home equity loan is a lump-sum loan with a fixed interest rate. You’ll make regular monthly payments over a set amount of time, typically five to 30 years. Because the loan is secured by your home, interest rates are usually lower than unsecured personal loans and credit cards — sometimes much lower. That’s a big reason why these home loans are so popular.
To qualify for a home equity loan, you’ll need at least 20% equity in your home. This is the difference between your home’s value and what you owe on your mortgage. Many lenders will let you borrow up to 85% of your equity.
Let’s look at an example based on the average home value in Idaho Falls, which is just under $400,000. If your mortgage balance is $300,000, your equity stake is $100,000. If you qualify to borrow 85% of that, your maximum home equity loan amount would be $85,000. A home equity loan calculator can help you calculate how much you might qualify to borrow based on your equity.
Many people have difficulty distinguishing home equity loans from their cousin, the home equity line of credit (HELOC). This chart gives you the basics of HELOCs vs. home equity loans in an at-a-glance format.
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow plus interest; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment |
| Disbursement | Charge only the amount you need | Lump sum |
Where Do Home Equity Loan Interest Rates Come From?
Interest rates are influenced by a variety of economic and personal finance factors, and home equity loan rates are no different. Lenders base home equity loan rates on the prime rate, which is the rate at which banks lend money to their most creditworthy customers. Your credit score and debt-to-income ratio will also influence the rate you receive. Typically, the higher your credit score and the lower your debt-to-income ratio, the lower the rate you will be offered.
How Interest Rates Impact Affordability
Interest rates play a pivotal role in the affordability of your home equity loan. Even the slightest variance in rates can lead to significant savings or added costs. For instance, a $100,000 loan at 8.50% over 15 years would mean a $985 monthly payment and $77,253 in total interest. Bump up that rate to 9.50%, and you’re looking at $1,044 each month. But here’s the kicker: Over time, that slightly higher monthly payment balloons into $87,960 in total interest — $10,700 more than with the lower rate. Surely, most of us could find a better use for that cash.
Home Equity Loan Rate Trends
The charts here give you an indication of how the prime rate has fluctuated over time. The prime rate was as low as 3.25% in 2020, reflecting the Federal Reserve’s efforts to bolster the economy during the pandemic. By 2023, the prime rate had surged to 8.50%, having a big impact on borrowing costs. Such variations are a normal part of economic ups and downs. Savvy homeowners get to know the signs of when rates may rise or dip, and can time their home equity loan accordingly.
Source: TradingView.com
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
How to Qualify for the Lowest Rates
To be eligible for the most favorable home equity loan rates, you’ll want to present a robust financial profile. Lenders will scrutinize your home value and equity level, credit score, and debt-to-income ratio to establish your rate. Here are a few tasks to take on before you apply.
Maintain Sufficient Home Equity
Before you shop around for a home equity loan, make sure you have at least 20% equity in your property. Calculating your equity is simple: Just subtract your mortgage balance from your home’s current value. For instance, if your mortgage balance is $400,000 and your home is valued at $550,000, your equity is $150,000. Most lenders will allow you to borrow up to 85% of your equity, which would be $127,500 in this scenario.
If your equity doesn’t quite hit the 20% mark, think about ways to boost it, like making extra mortgage payments or making strategist improvements that increase your home’s value.
Build a Strong Credit Score
Lenders generally look for a credit score of 680 or higher for home equity loans, with many favoring 700 or more. A robust credit score is a badge of financial responsibility and can lead to more attractive home equity loan rates. To boost your score, focus on timely payments, keeping credit card balances in check, and steering clear of new debt. Regularly reviewing your credit report for inaccuracies is also key.
By maintaining a high credit score, you’re not only proving your financial mettle but also increasing your chances of securing a home equity loan with a lower interest rate, which can translate to significant savings.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio compares your gross monthly income to your monthly debt obligations. To calculate your DTI, add up all your monthly debt bills — student loans, auto loan, personal loans, mortgage — and divide the total by your income before taxes. For a home equity loan, the DTI requirement is usually less than 50%, with an ideal target of 36% or lower.
To improve your DTI, consider paying down your existing debts, increasing your income, or both. Lenders will review your DTI to ensure you can handle the additional financial responsibility of a home equity loan without putting your financial stability at risk.
Obtain Adequate Property Insurance
Property insurance is a must-have for home equity loans, especially in flood-prone areas. It’s a safety net for both your lender’s investment and your home in the face of unexpected damage. In Idaho Falls, where the whims of nature can affect home values, having the right property insurance is key.
Tools & Calculators
Before you take the leap, consider using some of our handy tools and calculators. They can help you get a sense of your monthly payments and the overall costs of the loan. This way, you can be sure you’re making the right decision for your financial situation.
Run the numbers on your home equity loan.
-
Home Equity Loan
CalculatorEnter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment
CalculatorPunch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for different types of home equity loans tend to be 2% to 5% of the loan amount. These costs can include appraisal, credit report, document preparation, origination, notary, title search, and insurance fees. Be aware that while you can find “no-closing-cost” home equity loan offers, lenders tend to pass along those costs in other ways, like additional fees.
Tax Deductibility of Home Equity Loan Interest
The interest on home equity loans can be tax deductible if the funds are used to buy, build, or improve your home. Married couples filing jointly can deduct interest on up to $750,000 in loans; single filers can deduct interest on up to $375,000. To claim this deduction, taxpayers must itemize their deductions. For personalized advice, consult a tax advisor.
Alternatives to Home Equity Loans
There are a few other ways to tap into your home’s equity, such as a home equity line of credit (HELOC) or even a mortgage refinance. Each of these options has its own unique features and requirements. Before you decide, compare the rates and terms of each to find the best fit for your financial goals.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC is a bit like a credit card. It gives you the flexibility to borrow up to a certain limit, and you only pay interest on what you actually use. But here’s the thing: The interest rate is variable, which means it’s tied to the market and could go up, potentially increasing your costs. Typically, a 680 credit score is required (though 700 is preferred), and your debt-to-income ratio should be below 50% (but ideally under 36%).
A HELOC interest-only calculator can show you how much you’ll pay during the initial “draw period,” which lasts 5-10 years and usually requires interest-only payments. Then a HELOC repayment calculator will estimate your full payment amount during the repayment period, which lasts 10-20 years. Make sure to keep an eye on the total interest you’ll pay over time, to get a better sense of which home equity financing works best for you.
Cash-Out Refinance
A cash-out refinance is a strategic move that can replace your existing mortgage with a larger one, granting you a lump sum based on your home equity. Lenders typically allow borrowing up to 80% of your home’s value. To qualify, you’ll need a 620+ credit score and a DTI ratio under 43%. You can opt for a fixed or variable rate, with the latter potentially offering more equity access.
If you’re choosing between a cash-out refinance vs. home equity line of credit, know that a cash-out refinance streamlines your payments into one. With a HELOC or home equity loan, you’ll still have your original mortgage payment plus the new home equity financing payment.
The Takeaway
When you’re thinking about a home equity loan, it’s a good idea to make sure you have a strong credit score, a manageable debt-to-income ratio, and property insurance. These factors can affect your loan rates and costs. Use our tools to estimate your monthly payments and overall interest costs to help you make the right decision for you. And remember, the interest on a home equity loan may be tax deductible, so it’s a good idea to consult a tax advisor.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What can a home equity loan do for you?
A home equity loan can be used for a variety of things, such as making home improvements, funding a child’s education, consolidating high-interest debt, or even taking a belated honeymoon. The loan is distributed as a lump sum, has a fixed interest rate, and is repaid in fixed monthly payments. The main draw of home equity loans is that the interest rate is usually much lower than for unsecured personal loans and credit cards.
What would the monthly payment be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan can vary based on the interest rate and loan term you choose. For instance, at a 9.00% interest rate over a 15-year term, your monthly payment would be around $507. If you opt for a 20-year term, your monthly payment drops to $450, but you’ll pay more in interest over the course of the longer repayment period.
What would a $100,000 home equity loan payment look like?
A $100,000 HELOC typically comes with a draw period and a repayment period. During the draw period, you might only pay interest. At 8.00% interest, your monthly interest-only payment would be about $667. Once the draw period ends, you’ll start repaying both principal and interest, which will increase your monthly payment. Assuming the same 8.00% rate and a repayment term of 20 years, your full HELOC payment could be around $836.
What is the payment on a $25,000 home equity loan?
The payment for a $25,000 home equity loan varies with the interest rate and loan term. For instance, at an 8.00% interest rate across a 15-year term, you’re looking at roughly $239 per month. If the rate is 9.00%, the payment increases to $254 monthly. Use a mortgage payment calculator to get a more precise estimate based on different interest rates and repayment periods.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOHL-Q225-315
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loan Rates in Summerville, SC Today
SUMMERVILLE HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Summerville, SC.
Disclaimer: The prime rate directly influesces the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Summerville.
Key Points
• Home equity loan rates are influenced by the Federal Reserve, local market conditions, and borrower profiles.
• To ensure you get the best deal, research and compare rates from multiple lenders.
• Work on boosting your credit score, keeping your debt-to-income ratio low, and building up your home equity.
• Fixed interest rates are a great way to secure stability and predictability in your monthly payments.
• The interest on your home equity loan might be tax-deductible if used for home improvements.
• Explore other options, such as HELOCs and cash-out refinances, for your financial needs.
Introduction to Home Equity Loan Rates
Home equity loan interest rates are a major consideration when tapping into your home’s equity. We’re here to walk you through home equity loan rates in Summerville, South Carolina, and shed light on how these rates are affected by economic conditions and personal financial profiles. You’ll gain insights on how to get equity out of your home, weigh the potential risks and rewards, and uncover strategies to meet the criteria for the most favorable terms. By the end of our journey, you’ll be better equipped to determine if a home equity loan is the right choice for you and how to secure the best rates available.
Before we get into rates, let’s make sure we’re on the same page about What is a home equity loan.
How Home Equity Loans Work
A home equity loan is a second mortgage (assuming you’re still paying off your original home loan) that allows you to borrow against the equity in your home. These loans typically have a fixed interest rate, which provides predictable monthly payments for the life of the loan. Lenders will generally let you borrow up to 85% of your equity.
For example, if your home is appraised at $400,000 and you owe $100,000 on your mortgage, you might be able to borrow up to $255,000. A home equity loan calculator can help you determine how big a loan you qualify for.
Home equity loans are a good option for borrowing a large sum to cover big expenses, such as home renovations or debt consolidation.
Recommended: HELOC vs. Home Equity Loan
Where Do Home Equity Loan Interest Rates Originate?
Home equity loan interest rates are influenced by a variety of factors, including Federal Reserve policy and your personal financial situation. Lenders calculate home equity loan rates by adding a margin to the prime rate, which is reserved for a bank’s best customers. The borrower’s credit score and debt-to-income ratio are also key; the better these metrics are, the better the rates you can secure. Loan amount and repayment term also come into play, with larger loans and longer terms typically carrying higher rates due to the increased risk for the lender.
How Interest Rates Impact Affordability
Interest rates are a big deal when it comes to home equity loans. Even a fraction of a percentage difference can mean significant savings or added costs over the life of your loan. For instance, take a $50,000 home equity loan with a 15-year repayment term. At an 8.50% interest rate, your monthly payment would be around $492, and you’d pay a total of $38,627 in interest. But if the rate rose to 9.50%, your monthly payment jumps to $522, and you’d end up paying $43,980 in interest. That’s $5,300 more over the loan’s life. You can see why getting the best possible rate you can is key.
Take a look at how term and rate affect monthly payments for a number of different loan amounts.
Home Equity Loan Rate Trends
Forecasting the direction of interest rates is like predicting the weather — difficult to do with certainty. But by looking at recent trends and historical data, you can get an idea of what a good rate is. The prime rate, the benchmark for home equity loan rates, has varied widely in recent years. It was as low as 3.25% in 2020 and as high as 8.50% in 2023. Some borrowers will try to wait for a dip in rates, but it’s not always doable. When you need funds to renovate, catch up on medical bills, or consolidate debt, you can’t always wait for rock-bottom. A “good enough” rate is the best one you can secure.
Source: TradingView.com
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
How to Qualify for the Lowest Rates
To qualify for the best available rates on a home equity loan or HELOC, you’ll want to focus on a few key areas. First up, your credit score. Next, your debt-to-income ratio. And finally, your home equity stake. Adequate property insurance is also key, especially if you live in a flood-prone area. By paying attention to these details, you can boost your chances of scoring a home equity loan with terms that work for you.
Maintain Sufficient Home Equity
To be eligible for a home equity loan, you need to maintain at least 20% equity in your home. Calculating your equity is simple: Just subtract your mortgage balance from your home’s current value. For instance, if your mortgage balance is $400,000 and your home is valued at $550,000, your equity is $150,000. Most lenders permit borrowing up to 85% of your home’s equity, meaning you could potentially access $127,500.
Build a Strong Credit Score
To land attractive home equity loan rates, set your sights on a credit score of 700 or more. A robust credit score is within reach by simply paying your bills on time, keeping credit card balances in check, and steering clear of new debt. By showcasing your history of sound financial decisions, you’re in a prime position to negotiate better terms on your home equity loan.
Manage Debt-to-Iscome Ratio
Your debt-to-income (DTI) ratio is a critical number when you’re looking to qualify for a home equity loan. Most lenders want to see a DTI under 50%, but the lower the better. A DTI of 36% or less is considered ideal. To help manage your DTI, consider paying down your existing debt or increasing your income. A lower DTI can help you qualify for a home equity loan with better terms and a lower interest rate.
Obtain Adequate Property Insurasce
Property insurance is a must-have for different types of home equity loans, especially if you’re in a flood-prone area. It’s a safety net for both you and the lender in case of property damage. Make sure you’re covered with a policy that meets your lender’s standards. This proactive step will not only expedite your loan application but also give you peace of mind, knowing your home is protected.
Recommended: What Is a Home Equity Line of Credit?
Tools & Calculators
Online tools and calculators can help you get a better idea of what to expect when it comes to your monthly payments and the total interest you’ll pay on a home equity loan. These tools can also help you see how much equity you have in your home and how much you can borrow, so you can make the best financial decisions for you.
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Push in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for home equity loans are generally between 2% and 5% of the loan amount. These may include appraisal, credit report, document preparation, origination, notary, title search, and title insurance fees. While no-closing-cost loans are an option, they often come with higher home equity loan rates. It’s wise to compare lenders and their fees to secure the most favorable terms.
Tax Deductibility of Home Equity Loan Interest
The interest you pay on a home equity loan may be tax-deductible. If you’re married and filing jointly, you can deduct the interest on loans up to $750,000, and for single filers, it’s up to $375,000. Remember to itemize your deductions when filing your tax return to claim this benefit. It’s always a good idea to chat with a tax professional to ensure you’re making the most of the current tax laws.
Alternatives to Home Equity Loans
Homeowners have several options to consider when it comes to tapping their home equity, including home equity lines of credit (HELOCs) and mortgage refinance. Each option has its own set of terms and risks, so it’s important to compare them and find the one that best fits your financial needs and goals.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? It’s like a credit card with your home equity as the spending limit. You can borrow up to a certain amount, and you only pay interest on what you use. HELOCs typically have a variable interest rate, which means it can change based on the market. You can often borrow up to 90% of your home equity.
A HELOC interest-only calculator can show you how much you’ll pay during the initial “draw period,” which lasts 5-10 years and usually requires interest-only payments. Then a HELOC repayment calculator will estimate your full payment amount during the repayment period, which lasts 10-20 years.
Cash-Out Refinance
A cash-out refinance is a strategic move that could replace your current mortgage with a larger one, giving you a chunk of cash to work with. The amount you can borrow depends on your home equity, with lenders typically capping it at 80% of your ownership stake. To qualify, you need a 620+ credit score and a debt-to-income ratio under 43%. Unlike a home equity loan, a cash-out refinance streamlines your payments into one.
Recommended: Cash-Out Refinance vs. a Home Equity Line of Credit
The Takeaway
If you’re considering a home equity loan in Summerville, SC, here’s the lowdown: Strengthen your credit score, keep an eye on your debt-to-income ratio, and make sure your property insurance is up to snuff. These steps will help you land the best available interest rate and make the application process easier. Don’t forget to check out other options like HELOCs and cash-out refis to see what suits your situation best. It’s always a good idea to shop around and compare offers from multiple lenders, so you can be sure you’re making the right choice for your financial goals.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What can you do with a home equity loan?
Home equity loans are versatile tools. They can be used for large purchases, home renovations, medical bills, and debt consolidation. Offering a lump-sum payment, they’re designed to cover significant expenses. Plus, the interest on these loans may be tax-deductible, up to certain limits. Always review the rates and terms from multiple lenders to ensure you get the best available deal and understand the risks involved.
What would the monthly payments be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan varies with your interest rate and repayment term. For instance, a 10-year fixed-rate loan at 8.00% interest would mean a monthly payment of approximately $607. If you choose a 15-year term, your payment drops to $478, but you’ll pay more in interest over the life of the loan. To get a more tailored estimate, consider using a loan payment calculator and comparing rates from different lenders.
What is the monthly payment on a $100,000 HELOC?
A $100,000 HELOC provides flexibility, but be prepared for potential payment changes. During the draw period, you might only pay interest, which is $667 per month at 8.00% interest. Once the draw period ends, you’ll pay both principal and interest. Although HELOC rates fluctuate, we’ll keep it simple by assuming the same 8.00% rate. Over a 20-year repayment term, your full payment would be $836. Use a HELOC calculator to estimate your payments and plan ahead.
What might prevent you from securing a home equity loan?
There are several factors that could prevent you from securing a home equity loan. Lenders typically look for at least 20% equity in your home, a solid credit score of 680 or higher, and a debt-to-income ratio that’s below 50%. If your home’s value has taken a hit, you might not meet the equity requirement. A less-than-stellar credit history or high levels of debt could also be red flags. And don’t forget about property insurance — if it has lapsed, especially in areas prone to flooding, that could be a barrier, too.
What are the benefits of a home equity loan?
Home equity loans offer lower interest rates than unsecured loans and a lump-sum payment for large expenses. Fixed interest rates mean predictable monthly payments, which can make budgeting easier. They’re a great option for home renovations, debt consolidation, or significant purchases. And if you use the loan for home improvements, the interest may be tax-deductible, up to certain limits. Be sure to compare rates and terms from multiple lenders and understand the risks involved before you sign on the dotted line.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOHL-Q225-317
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loan Rates in Anaheim, CA Today
ANAHEIM HOME EQUITY LOAN RATES TODAY
Current home equity loan
rates in Anaheim, CA.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Anaheim.
Key Points
• Home equity loan rates are influenced by the prime rate and the borrower’s financial circumstances.
• If you have a strong credit score and a low debt-to-income ratio, you’re likely to get a lower interest rate.
• Remember, even a small difference in interest rates can mean substantial extra interest payments (or savings) over the loan term.
• Home equity loans usually come with fixed interest rates, which can offer stability and predictability in your monthly payments.
• Property insurance is a must, especially if you’re in a high-risk area.
• The interest on home equity loans could be tax deductible if you’re using it for home improvements.
Introduction to Home Equity Loan Rates
When you’re researching how to get equity out of your home, interest rates are a major factor in the decision-making process. This guide will give you an overview of home equity loan rates in Anaheim, California, and what influences them on a personal and economic level. We’ll also cover the application process, the risks and benefits of home equity loans, and tips on how to get the best available rates.
Whether you’re planning a home renovation or looking to consolidate debt, understanding home equity loan rates can help you make the best financial decision for your situation.
First up on the agenda: What is a home equity loan?
How Home Equity Loans Work?
A home equity loan is a second mortgage (assuming you’re still paying off your original home loan) that leverages your home as collateral for a lump sum of money. Repayment is then made in fixed monthly installments over a period of five to 30 years. The appeal of these loans lies in their lower interest rates compared to unsecured personal loans, and the predictability of fixed interest rates.
Typically, lenders require you to have at least 20% equity in your home to qualify. Calculating equity is straightforward: It’s the current market value of your home minus the outstanding mortgage balance. For example, if your home is valued at $900,000 and you still owe $700,000, your equity is $200,000. To get a sense of how much you might be able to borrow, use a home equity loan calculator.
Recommended: HELOC vs. Home Equity Loan
Where Do Home Equity Loan Rates Come From?
Home equity loan interest rates are influenced by a variety of factors, including the economy, Federal Reserve decisions, and your personal financial situation. Home equity loan rates often follow the prime rate, the interest rate that banks charge their best customers. Additionally, your credit score and debt-to-income ratio can affect the rate you’re offered. Loan amounts and repayment terms can also influence your rate. Typically, larger loan amounts and longer repayment terms will have higher rates due to increased risk for the lender.
How Interest Rates Impact Home Equity Loan Affordability
Interest rates go a long way to determining how manageable your home equity loan will be. Even a small percentage change can add up to quite a bit over the life of the loan. For instance, a $100,000 home equity loan with a 15-year term at 8.50% would mean a monthly payment of $985 and total interest of $77,253. But bump up the rate to 9.50%, and the monthly payment increases to $1,044 with total interest of $87,960. Getting that lower rate would save you $10,700 in the long run.
Home Equity Loan Rate Trends
Anticipating interest rate shifts is no easy feat, given the multitude of factors at play. However, a glance at recent prime rate history can be illuminating. In 2020, the prime rate hit a low of 3.25%, but by 2023, it had soared to 8.50%. These fluctuations underscore the significance of timing your application to coincide with a favorable economic climate, when that’s possible. By keeping an eye on market movements and your own financial standing, you can better your chances of securing a competitive home equity loan rate.
Source: TradingView.com
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Fluctuations like these strongly impact Anaheim’s home equity loan rates, so it’s a good idea to stay on top of economic trends. Even if you can’t predict the future perfectly, you may be able to time your loan strategically if you have a sense of the market.
How to Qualify for the Lowest Rates
To secure the most competitive rates, focus on boosting your credit score and managing your debt-to-income ratio. By paying attention to these key metrics, you’ll be in a strong position to make your case to lenders and potentially save on your borrowing costs.
Maintain Sufficient Home Equity
You need to have at least 20% equity in your home to be eligible for a home equity loan. To work out your equity, subtract your mortgage balance from your home’s current value. For instance, if you owe $600,000 on your mortgage but your home is valued at $800,000, your equity is $200,000, or 25%.
Lenders typically allow you to borrow up to 85% of your home’s equity, which in this case could mean a potential loan of $170,000. Keeping a healthy amount of equity in your home is a smart way of creating a financial safety net. And it can lead to better interest rates on a home equity loan.
Build a Strong Credit Score
When you’re shopping for a loan, a robust credit score is your best friend. Lenders are often looking for scores of 680 or higher, with many borrowers aiming for 700 or beyond. A higher credit score is a clear sign of financial responsibility, and it reduces risk in the eyes of the lender. This can translate to a more attractive loan package, with lower rates and higher borrowing limits.
To boost your credit score, focus on timely payments, maintaining low credit card balances, and steering clear of new debt. Regularly reviewing your credit report for inaccuracies and disputing any errors is also wise.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a major player in the home equity loan game. To impress lenders, aim for a DTI below 36% (though some lenders will accept up to 50%). Calculate this ratio by dividing your total monthly debt payments — student loans, auto loan, personal loan, and mortgage — by your gross monthly income. The lower your DTI, the better your chances of being offered a competitive loan rate.
To improve your DTI, try chipping away at your debts, finding ways to increase your income, or better yet, both. Mastering your DTI could be the key to unlocking a home equity loan with an interest rate and terms that work for you.
Obtain Adequate Property Insurance
Property insurance is a must for home equity loans, especially if you’re in an area prone to natural disasters. It’s a smart move that not only safeguards your lender’s investment but also ensures your home, the collateral, is well-protected. In some high-risk areas, additional coverage like flood or earthquake insurance might be needed. Failing to meet insurance requirements could lead to disqualification.
Tools & Calculators
Online tools can be really helpful when you’re estimating payments and comparing home equity loan and HELOC offers. It could mean the difference between getting a loan and getting the right loan for you.
Run the numbers on your home equity loan.
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Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for home equity loans usually fall into the range of 2% to 5% of the loan amount. Fees include the appraisal, credit report, document preparation, origination, notary, title search, and title insurance. While no-closing-cost loans are an option, they often come with higher rates.
Tax Deductibility of Home Equity Loan Interest
Here’s a tip that might brighten your day: The interest you pay on different types of home equity loans and lines of credit could be tax deductible if you use the funds to buy, build, or significantly improve your home. The current guidelines, which are in place through 2025, allow married couples filing jointly to deduct interest on home loans up to $750,000, and single filers can deduct interest on loans up to $375,000. To claim this perk, you’ll need to itemize your deductions on your tax return. These tax benefits could make a home equity loan even more appealing, and they might just help offset some of the costs.
Alternatives to Home Equity Loans
Now, let’s talk about the alternatives to home equity loans. You’ve got HELOCs, which are like a pot of money you can dip into as needed, with variable rates that can be quite appealing. Then there’s cash-out refinancing, which is a kind of mortgage refinance that swaps out your current home loan for a bigger one, giving you access to the difference in cash.
Home Equity Line of Credit (HELOC)
Even if you’re set on a home equity loan, it’s a good idea to understand what is a home equity line of credit. A HELOC is like having a credit card with a limit that’s based on your home’s equity. It’s a flexible way to borrow because you only pay interest on the amount you actually use. The interest rate is often variable, so it fluctuates with the market.
There are two phases to a HELOC: the draw period and the repayment period. During the draw period, which is typically 10 years, you usually can make interest-only payments on the amount you’re using. (A HELOC interest-only calculator can be a useful tool to estimate bills.) Then in the repayment period, borrowing ends and you repay the full amount with interest over 10 or 20 years. (There’s a HELOC repayment calculator for that).
HELOCs are great if you’re not sure of the total amount you need or if your expenses will be ongoing. You can often borrow up to 90% of your home’s equity, which is a real plus.
Cash-Out Refinance
A cash-out refinance is a strategic move, replacing your existing mortgage with a new one that gives you a lump sum based on your home equity. Most lenders will let you borrow up to 80% of your home equity. You’ll need a credit score of 620 or more and a debt-to-income ratio of 43% or less.
The beauty of a cash-out refinance is that you can choose between a fixed or variable rate, with variable rates sometimes allowing access to even more equity. Unlike home equity loans, cash-out refinances simplify your finances with just one monthly payment and may offer better rates and improved debt management.
Recommended: Cash-Out vs. Home Equity Line of Credit
The Takeaway
When you’re considering a home equity loan, remember to keep your credit score in good shape, manage your debt-to-income ratio, and ensure you have the right property insurance. These factors will play a big role in the interest rates you’re offered. Using online tools and calculators can help you get a sense of what your monthly payments and overall costs might look like. There are other options, too, like HELOCs and cash-out refis, each with their own benefits and requirements. By being informed and prepared, you can make the most of your home equity and potentially get the best rates and terms.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payments be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan varies depending on the interest rate and the loan term. For example, at 8.00% over 10 years, you would pay approximately $607 a month (principal and interest). If you chose a 20-year term, your payment would be about $418 a month, but you would pay more in total interest. A shorter term means higher payments but less total interest. A longer term means lower payments but more total interest.
What would the monthly payments be on a $100,000 HELOC?
A $100,000 home equity line of credit has a variable interest rate, so the payments can fluctuate with market conditions as well as how much of the credit line you’ve used. For instance, borrowing the full amount at an 8.50% interest rate will mean an interest-only payment of approximately $708 per month during the draw period. Once the draw period ends (usually after 10 years), you’ll enter the repayment phase, which includes both principal and interest. At that point, your monthly payment rises to roughly $868, assuming a 20-year repayment. Be sure to consider how potential payment changes will fit into your budget.
What’s the monthly payment on a $25,000 home equity loan?
The monthly payment for a $25,000 home equity loan is determined by the loan term and the current home equity loan rates. For instance, with a 10-year term and 8.00% interest, you’d be looking at approximately $303 per month. If you extend the term to 20 years, the monthly payment would be around $209. While a longer term might seem attractive for the lower monthly payment, it means you’ll pay more in interest over the life of the loan. It’s all about finding the right balance for your financial goals.
What might prevent you from securing a home equity loan?
There are several factors that can disqualify you from obtaining a home equity loan. Lenders typically require at least 20% equity in your home. A low credit score, generally below 620, can also disqualify you, as it indicates higher risk to the lender. Additionally, a high debt-to-income (DTI) ratio, typically above 50%, can make it difficult to qualify. Lenders also consider the property’s insurance coverage, especially in high-risk areas. If you lack adequate insurance, you may be disqualified. It’s important to review these criteria and understand how they affect your eligibility before applying.
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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.
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.
SOHL-Q225-318
More home equity resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare
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