Free West Virginia Home Equity Loan Calculator
West Virginia Home Equity Loan Calculator
By SoFi Editors | Updated December 23, 2025
For West Virginia homeowners, the value built up in their property represents one of the most significant financial assets available. Tapping into cash through a home equity loan can be a good way to fund major home-improvement projects, consolidate higher-interest debt, or cover other significant expenses. However, the decision to borrow against your home requires careful consideration and a clear understanding of the financial implications — and that’s where a home equity loan calculator comes into play. This guide will help you use the calculator to determine your borrowing power, pinpoint the right balance of loan term and interest rate, and see what your monthly payments might be. In just a few minutes, you can learn how to get equity out of your home with confidence, and at the lowest cost possible.
- Key Points
- • A home equity loan provides a single, lump-sum loan and your home serves as collateral.
- • Home equity loans typically feature a fixed interest rate, resulting in predictable monthly payments.
- • The interest rate borrowers are offered on a home equity loan is influenced by their credit history, equity, income, and debts.
- • Repayment periods for home equity loans generally range from five to 30 years.
- • Interest paid on a home equity loan may be tax-deductible.
Calculator Definitions
• Home Value: This is the current estimated market value of your property, not the original purchase price. You can find it on a real estate website.
• Desired Loan Amount: This is the sum you wish to borrow with a home equity loan.
• Current Mortgage Balance: The amount still owed on your primary home loan plus the balance of any other existing loans secured by the home is your mortgage balance for the purposes of this calculator.
• Home Equity Loan Repayment Term: This is the length of time over which the loan will be repaid, with terms typically ranging from five to 30 years.
• Interest Rate: The lender will charge interest for borrowing the funds. It’s typically a fixed rate for the life of a home equity loan.
• Maximum Loan Amount: The home equity calculator will estimate the highest amount a lender might offer to lend you, based on your home’s value and existing mortgage balance.
• Estimated Monthly Payment: This is the projected amount due each month to repay the loan, according to the home equity payment calculator. It includes both principal and interest.
• Available Equity Amount/Percentage: Your equity is the portion of your home’s value that you own outright. The calculator will show this as a dollar value and a percentage.
How to Use the West Virginia Home Equity Loan Calculator
Using an online home equity loan calculator is a straightforward process that provides a quick snapshot of your borrowing potential.
Step 1: Enter Your Home Value
Input the current market value of your home. If a real estate site shows a range, use the midpoint or your best estimate.
Step 2: Input Your Desired Loan Amount
Enter the amount of money you hope to borrow.
Step 3: Input Your Current Mortgage Balance
Provide the remaining balance on your primary mortgage plus any other loans secured by the house. This figure is essential for calculating your home equity.
Step 4: Select a Home Equity Loan Repayment Term
Choose a repayment period of between five and 30 years. This selection directly impacts the size of your estimated monthly payment.
Step 5: Estimate Your Interest Rate
Enter an estimated interest rate for the loan. To get a realistic estimate, it is advisable to research current market conditions or request quotes from lenders.
Step 6: Review Your Results
The home equity calculator will provide key outputs, such as the estimated monthly payment and the maximum loan amount. Use the payment number to assess the loan’s affordability and determine how the new bill might fit into your household budget.
What Is a Home Equity Loan?
The home equity loan payment calculator gives you a clear and fast result. But before you dive into a home equity loan application, it’s a good idea to make sure you understand what a home equity loan is, exactly. Technically, a home equity loan is a second mortgage, assuming you are still paying your first mortgage. You borrow against the equity you’ve built in your home with your home loan payments. Defining features of a home equity loan are structure and predictability. It provides a one-time, lump-sum payment of cash that you repay over a set period, typically between five and 30 years. Repayment is made through monthly payments. The interest rate on home equity loans is usually fixed, which means your payment amount will not change over the life of the loan.
Because the loan is secured by your home, lenders can often offer more competitive interest rates than those available for unsecured debt like personal loans or credit cards. However, using your home as collateral also means that missed payments could result in foreclosure.
Recommended: What Is a Home Equity Line of Credit?
Home Equity Trends in West Virginia
Like homeowners across the U.S., those in West Virginia have benefited from rising home prices, which have resulted in a significant increase in home equity in recent years. West Virginia saw a more than 400% increase in equity. The average West Virginia homeowner now has around $36,000 in home equity. This is lower than equity amounts in many other U.S. states (Virginia homeowners, for example, have more than $120,000 in home equity). But $36,000 in equity is still adequate to serve as collateral on a home equity loan for many borrowers. The graphic shows how equity levels have risen nationwide in the last five years.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
The outputs from a home equity loan calculator can help you think strategically about borrowing,
The estimated monthly payment figure can help with budgeting. Homeowners can incorporate this estimate into their monthly spending plan to assess the loan’s affordability and feel confident that a new loan payment wouldn’t put a strain on their finances.
The maximum loan amount provides a clear picture of your borrowing potential. This information helps you understand the scale of projects you can realistically undertake, such as a major home renovation, or the amount of high-interest debt you could consolidate. It sets practical boundaries before you kick off a big renovation project.
Running scenarios using the calculator can help you fine-tune your borrowing plan. Try adjusting the amount you plan to borrow or the repayment term up or down to see how this will impact your monthly payment.
Home Equity Loan Scenarios
The decision to take out a home equity loan is often best understood through practical examples. The structure of this loan — a single lump sum with fixed monthly payments — makes it an ideal solution for situations where you have advance notice of how much money you need, as in these scenarios:
Scenario 1: Major Home Remodel
A homeowner is planning a kitchen renovation and has budgeted $50,000 for the contractor, materials, and appliances. The homeowner uses the home equity loan calculator to determine that a $50,000, 15-year loan at 8.15% will yield a monthly payment of $482, which fits within the family’s budget. The home equity loan provides a necessary lump sum, which is helpful in covering upfront costs.
Scenario 2: Consolidating High-Interest Debt
A homeowner has debt piling up across multiple credit cards, and each card has a high, variable interest rate. The unpredictable payments are both costly and difficult to budget for. The home equity payment calculator shows that the homeowner can borrow $35,000, enough to pay off all the credit card debt, and at an interest rate of 8.50%, the 10-year loan will have a steady monthly payment of $434. This is noticeably less than the latest payments on the credit cards, so the homeowner moves forward and consolidates the debt into one loan.
Recommended: HELOC vs. Home Equity Loan
Tips on Home Equity Loans
Securing a home equity loan with favorable terms largely depends on demonstrating your financial responsibility to lenders. The following tips are actionable strategies that can help you present yourself as a strong, low-risk applicant.
• Build a strong credit profile: Lenders view a strong credit history as a testament to your financial prudence. To qualify for a home equity you will likely need a score of at least 680, but for the best interest rates you’ll want to aim for a score of 700 or more.
• Manage your debt-to-income ratio: Your debt-to-income (DTI) ratio is the total of your monthly debt payments divided by your gross monthly income. Lenders want to see that you can comfortably manage another payment, so they typically look for a DTI ratio below 50%, and ideally below 36%. Reducing existing debts before applying can make you a more attractive borrower.
• Maintain sufficient home equity: To qualify for a loan, you will need at least 20% equity in your home. Building this stake comes from making consistent mortgage payments and, when possible, making extra payments toward the principal to demonstrate to lenders that you retain a significant financial interest in the property.
• Compare offers from multiple lenders: It is crucial to shop around. Different financial institutions may offer varying rates, fees, and terms. Comparing offers from several lenders is the best way to ensure you find the most cost-effective loan for your situation.
Alternatives to Home Equity Loans
While a home equity loan is a powerful financial tool, it is not the only option for accessing funds. Take a look at your other options:
Home Equity Line of Credit (HELOC)
There aren’t really different types of home equity loans, but there are different ways to borrow against your equity. A HELOC is another popular option. It’s a revolving line of credit secured by your home; you use it much as you would a credit card. Instead of a lump sum, it provides flexibility to borrow funds as needed up to a set limit during a “draw period.” During the draw phase, you need only pay interest on what you have borrowed (a HELOC interest-only calculator can help you compute what an interest-only payment might be).
After the draw phase, you enter a repayment phase when you repay what you have borrowed, with interest. (A HELOC repayment calculator is handy then.) Unlike the fixed interest rate typical of a home equity loan, HELOCs usually have a variable rate, meaning payments can fluctuate. This option is often more suitable for ongoing projects with uncertain costs or for homeowners who want a financial safety net they can tap into as needed.
Home Improvement Loan
A home improvement loan is a type of unsecured personal loan, meaning it is not backed by your home as collateral. This eliminates the risk of foreclosure if you are unable to make payments. However, because the lender takes on more risk, these loans often come with less competitive interest rates and shorter repayment terms compared to a home equity loan.
Personal Line of Credit
A personal line of credit is another unsecured, revolving credit line that is not tied to your home’s equity. It functions similarly to a HELOC but without using your property as collateral. This can be a viable alternative for those who do not have sufficient home equity or prefer not to risk their home, but the interest rates are typically less favorable than secured options.
Cash-Out Refinance
A cash-out mortgage refinance involves replacing your existing mortgage with a new, larger one and receiving the difference in cash. When you consider a cash-out refinance vs. home equity line of credit or home equity loan, a key difference is that the refinance results in a single, new mortgage. The HELOC or home equity loan are both second mortgages, and with these you will have a second monthly payment to make on top of your first mortgage. A cash-out refinance can be a good option if you can secure a lower interest rate on the new mortgage than you have on your original loan. If not, it may not make sense to refinance.
The Takeaway
A home equity loan payment calculator can help West Virginia homeowners assess their borrowing capacity and understand the potential cost of tapping into their home equity. You can experiment with different combinations of loan amount and loan term to see how these factors affect your monthly payment amount. Seek out rate quotes from multiple lenders to arrive at the mix of interest rate and loan terms that fit your budget and your borrowing needs.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How is a home equity loan different from a home equity line of credit (HELOC)?
A home equity loan provides a one-time lump sum of cash with a fixed interest rate and predictable monthly payments. In contrast, a HELOC is a revolving line of credit with a typically variable interest rate, allowing you to borrow and repay funds as needed. With a home equity loan you will start repaying what you have borrowed immediately, with interest. With a HELOC, you can pay only interest for an initial draw period of up to 10 years.
What can I use home equity loan money for?
Funds from a home equity loan are flexible and can be used for a wide range of purposes. Common uses include major home renovations, consolidating higher-interest debt, or paying a wedding or another significant one-time purchase.
Is the interest rate on a home equity loan fixed or variable?
Home equity loans almost always come with a fixed interest rate. This means the interest rate remains the same for the entire life of the loan, which results in consistent and predictable monthly payments.
Does a home equity loan replace my first mortgage?
A home equity loan is a second mortgage and is an entirely separate loan from your primary mortgage. You will have two separate mortgage payments each month: one for your original mortgage and one for the new home equity loan.
Learn more about mortgages:
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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.
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Can You Afford a $770 Car Payment? Here’s How to Tell
This article appeared in SoFi's On the Money newsletter. Not getting it? Sign up here.
Buying a car should be exciting. But nowadays you can’t ignore the financial burden — or the risk of overextending yourself.
The average price of a new car reached a new record high of over $50,300 last month, a good $10,000 above what it was in 2020, according to Kelly Blue Book estimates. Used cars average more than $26,000, and some of the most affordable ones are the hardest to find.
The real shock, though, is what these stats mean for car payments. By the end of last year, financing a new car cost an average of $772 a month, and 1 in 5 buyers were paying at least $1,000, according to Edmunds, an online car shopping guide. Even used car payments averaged a hefty $570.
The pressure is clearly mounting, too. In order to make the math work, more buyers are stretching loans out over six or seven years — sometimes paying thousands more in interest. Federal Reserve data shows the rate of auto loan delinquencies has risen sharply since the pandemic and is now at its highest level since 2010.
So what?
For many of us, a car is one of the biggest purchases we’ll make, and auto loans make up nearly a third of all non-mortgage household debt in the U.S. If you’re in the market for a car, take the time to run the numbers so you know what you can afford before you start shopping.
Here are three ways to gauge what your budget should be:
• The % of income method: Probably the simplest approach is to keep your payment under a certain percentage of your net monthly take-home pay. Edmunds recommends staying below 15% if you’re buying a new car and 10% if you’re buying a used one (because repairs and maintenance costs add up.)
So if you bring home $4,000 per month, your payment shouldn’t be more than $600 if you’re buying a new car and $400 if you’re buying a used one.
(Of course, you’ll want to consider the cost of auto insurance, too. Edmunds says ideally you don’t want to go above 20% of your take-home to cover all car costs.)
• The debt analysis method: This approach relies on your debt-to-income (DTI) ratio, taking into account not just your income, but your other debts, too. Your DTI is how much of your monthly gross income is used for debts (car loans, student loans, mortgages, credit cards, etc.) and lenders say ideally you shouldn’t go over 36%.
So if your gross income is $12,000 a month, and your current debts total $3,500, a DTI of 36% means you could afford a car payment of up to $800. (Because 36% of $12,000 = $4,300 and $4,300 – $3,500 = $800.)
Pro tip: Work backwards to figure out how much car payment you can afford. Take 36% of your gross monthly income (or check your DTI in SoFi’s free debt tracker) and then subtract your total monthly debt obligations from that number.
• The down payment method: The “20/4/10 rule,” as it’s known, also takes into account your down payment and the length of your loan. This general rule of thumb recommends putting 20% down, taking out a loan of no more than four years, and keeping your payment and other car costs to 10% of your monthly income.
So if you want to buy a $30,000 car, you’d put down $6,000, borrow the other $24,000 over four years, and make sure your car bills didn’t exceed the 10% threshold. (For a benchmark, a $24,000 4-year loan charging 10% interest would cost just over $600 a month.)
Keep in mind that a lot will also depend on the terms of your auto loan, especially the interest rate and how long you have to repay it. You may not have a ton of flexibility with the interest rate (though new cars generally have lower rates,) but you can lower your payment by borrowing for longer. Just remember that you’ll pay a lot more interest over the life of the loan, and if you need to sell before it’s paid off, you could end up owing more than your car is worth.
(To better understand how these levers could play into your payment, try running different scenarios through an auto loan calculator like this one.)
The bottom line: These methods are just meant to guide, and your payment sweet spot may differ. The important thing is to have a clear strategy that you’re comfortable with before you hit the car lot. That starts with understanding how your income, debt obligations, and loan terms factor into your payment.
Related Reading
Americans Are Paying More Than Ever for Cars. Cheap Models Are Disappearing (CNN)
6 Ways to Cut the Cost of Your Car Loan (Investopedia)
$1,000 Car Payments Usher in an Era of Longer Auto Loans (SoFi)
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
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Read moreFree Texas Home Equity Loan Calculator
Texas Home Equity Loan Calculator
By SoFi Editors | Updated December 19, 2025
A home equity loan allows Texas homeowners to borrow against the value they have accumulated in their property. Home equity loans can help fund major expenses, such as significant home improvements, debt consolidation, or other large-scale financial commitments.
A Texas home equity loan calculator is a solid first step before speaking with a lender, as it estimates borrowing capacity and potential monthly payments based on your mortgage balance, current home value, and other financial factors. Keep reading to learn more on what a home equity loan is and how to use the Texas home equity loan calculator.
- Key Points
- • A home equity loan is often referred to as a second mortgage and provides funds as a lump sum.
- • The majority of home equity loans are structured with fixed interest rates, which ensures that monthly payments remain constant for the duration of the loan.
- • A borrower’s credit score and debt-to-income ratio influence the terms of a home equity loan.
- • Your home is used as collateral, which means the lender can foreclose on the property if payments are not made.
- • A home equity loan calculator allows you to estimate your monthly payments and maximum borrowing amount.
Calculator Definitions
• Home Value: Home value refers to the property’s current market value, not the original purchase price.
• Desired Loan Amount: This is the specific lump sum of money the homeowner wishes to borrow against the equity in the home.
• Current Mortgage Balance: The current mortgage balance is the total amount remaining on the primary home loan and any other existing loans secured by the home.
• Home Equity Loan Repayment Term: This is the length of time, typically between five and 30 years, over which the loan will be repaid through fixed monthly installments.
• Interest Rate: The interest rate is the fixed rate charged by the lender for borrowing the money, which determines the cost of the loan over its term.
• Maximum Loan Amount: The maximum loan amount is the highest estimated amount a lender may offer, based on the homeowner’s available equity, credit history, and income.
• Estimated Monthly Payment: This is the consistent, predictable amount paid each month, which includes both principal and interest, over the life of the loan.
• Available Equity Amount: This is the portion of the home’s value that the homeowner owns outright and is calculated by subtracting the mortgage balance from the home’s current market value.
How to Use the Texas Home Equity Loan Calculator
A home equity loan calculator provides homeowners with valuable foresight into their borrowing options. By inputting a few key financial details, homeowners can generate estimates that help shape their borrowing strategy. Here’s a step-by-step guide on how to use the calculator:
Step 1: Enter Your Home Value
To begin, input the current estimated market value of the home. It is important to use a realistic, up-to-date valuation rather than the original purchase price to ensure the calculator’s estimates are accurate.
Step 2: Input Your Desired Loan Amount
Next, enter the specific lump-sum amount that is intended for borrowing. This figure should reflect the actual funds needed for the intended project or financial goal.
Step 3: Type in Your Current Mortgage Balance
Input the remaining balance on the existing primary mortgage. If there are other loans secured by the property, their balances should be included in this total.
Step 4: Select a Home Equity Loan Repayment Term
Select a repayment period for the loan. The available terms generally range from five to 30 years and will directly affect the monthly payment.
Step 5: Estimate Your Interest Rate
Enter an estimated interest rate to see how different rates can affect the monthly payment and overall cost of the loan.
Step 6: Review Your Results
After all the information has been entered, the calculator will provide estimates for the maximum loan amount that might be available and the projected monthly payment. You can review these numbers to make sure you can both borrow what you need and afford the monthly payments.
What Is a Home Equity Loan?
A home equity loan functions as a second mortgage, allowing homeowners to convert a portion of their home equity into a usable lump sum of cash. Its core characteristics are:
• Second mortgage: It is a loan taken out in addition to your primary mortgage. This means you will have two separate monthly payments on your property.
• Lump-sum payout: The full amount of the loan is disbursed to you all at once at closing. This makes it ideal for large, one-time expenses where the total cost is known upfront.
• Fixed interest rate: The interest rate is typically fixed for the life of the loan. This provides stability and predictability, as your monthly payment amount will not change.
• Secured by your home: Your home serves as collateral for the loan. While this can result in a better rate, it also means the lender can initiate foreclosure proceedings if you fail to make your payments as agreed.
• Repayment structure: The loan is repaid in regular monthly installments that include both principal and interest. The repayment term is set at the beginning of the loan and generally ranges from five to 30 years.
Recommended: What Is a Home Equity Loan and How Does It Work?
Home Equity Trends in Texas
As home values have risen over the last five years, so have homeowner equity levels. In fact, equity levels have doubled since 2020, a collective increase of $5.7 trillion (see chart below). About half of homeowners with a mortgage are considered “equity rich,” which means their mortgage balance is less than 50% of the home’s value.
Texas homeowners, like those throughout most of the U.S., have benefited from an upswing in home values between 2020 and 2025. The average owner’s home equity in Texas has increased by 61% during that time period, and the average Texas homeowner is currently sitting on more than $63,000 in equity as of 2025.
Here’s how home equity has climbed in the U.S. as a whole in recent years.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
The data generated by a home equity loan calculator offers actionable insights for effective financial planning and decision-making. By translating the estimates into a practical strategy, homeowners can approach the borrowing process with greater confidence and clarity. Here’s how to use the data to your advantage:
• Budgeting: The estimated monthly payment is a key piece of information for household financial management. Knowing this potential new expense allows a borrower to assess affordability and determine how the new debt can be integrated into an existing budget without causing financial strain.
• Comparing lenders: Having a baseline estimate for monthly payments and borrowing capacity empowers a homeowner to compare offers from multiple lenders more effectively. This knowledge helps in identifying the most competitive terms and can lead to substantial savings over the life of the loan.
• Project planning: Understanding the maximum loan amount helps plan the scope of large projects, such as home renovations. It allows you to set a realistic budget for the project and helps avoid over-borrowing, ensuring the project’s scale aligns with available financing.
Recommended: How to Get Equity Out of Your Home
Home Equity Loan Scenarios
To better understand the practical impact of different loan terms and interest rates, it is helpful to examine a few borrowing scenarios. Here are three ways you can use a home equity loan in Texas:
Scenario 1: Home Improvements
A homeowner decides to undertake a major kitchen remodel to update their living space and increase their property’s resale value. Using a home equity loan for this purpose is a strategic use of funds because it reinvests the money directly back into the asset that secured the loan. This can potentially increase the home’s market value.
Scenario 2: Debt Consolidation
A Texas homeowner overwhelmed by high-interest credit card debt uses a home equity loan to pay off multiple balances at once. With a lower interest rate and a single fixed monthly payment, this approach reduces interest costs and simplifies repayment with a clear payoff timeline.
Scenario 3: Funding Major Life Events
For major one-time expenses like a wedding, a home equity loan offers a lump sum with a fixed interest rate and predictable payments. This structure helps families budget confidently without the uncertainty of variable-rate borrowing.
Tips on Home Equity Loans
When it comes to home equity loans, responsible borrowing is important. Below are practical tips for making sound financial choices.
• Wise use of funds: It’s recommended that borrowers use loan proceeds for purposes that can add value or improve their financial standing. Home remodels can increase a property’s market value, while consolidating higher-interest debt can reduce overall interest costs.
• Understand the risks: A borrower must always remember that the home directly secures the loan. Failure to make scheduled payments gives the lender the right to foreclose on and seize the property.
• Maintain financial health: To qualify for the most favorable terms, it is important to maintain a strong credit score and a low debt-to-income (DTI) ratio. Lenders view these metrics as indicators of financial responsibility.
• Shop around: Homeowners should not accept the first offer they receive. It is beneficial to get estimates from multiple lenders to compare rates, fees, and loan terms.
• Borrow only what you need: Lenders may approve a loan for the maximum amount a homeowner qualifies for, but it may not be prudent to borrow that much. Homeowners should borrow only the sum they actually need to avoid taking on unnecessary debt.
Alternatives to Home Equity Loans
While there aren’t different types of home equity loans, a traditional home equity loan is not the only option. Understanding the alternatives is important for choosing the right financial product to meet specific needs and goals. Here are four other options to consider:
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) is a revolving line of credit secured by the equity in your home. It has a “draw period,” during which the borrower can access funds as needed, followed by a repayment period. HELOCs usually have a variable interest rate, meaning payments can fluctuate.
A HELOC interest-only calculator can calculate what your payments might be during the initial period. To determine your principal plus interest amount during the subsequent repayment period, you can use a HELOC repayment calculator.
When to choose a HELOC over a home equity loan: You have ongoing project costs without a fixed total, need funds at different times, or want the flexibility to borrow and repay funds multiple times.
Recommended: What Is a Home Equity Line of Credit?
Home Improvement Loan
A home improvement loan is a type of unsecured personal loan, meaning it is not backed by the equity in the home. Because it is unsecured, the application and funding process may be faster than for a home equity loan. However, interest rates will likely be higher.
When to choose a home improvement loan over a home equity loan: You need a smaller amount of money, have limited home equity, or are unwilling to use your home as collateral for the loan.
Personal Line of Credit
Similar to a HELOC, a personal line of credit is another unsecured, revolving credit option. The key difference is that it is not secured by the home, which eliminates the risk of foreclosure, though interest rates may be higher than those for a secured line of credit.
When to choose a personal line of credit over a home equity loan: You need flexible access to a smaller amount of cash and do not want to use your home as collateral.
Cash-Out Refinance
A cash-out mortgage refinance involves replacing an existing mortgage with a new, larger one, which allows the homeowner to receive the difference between the new and old loan amounts in cash. This action results in a single, consolidated mortgage payment.
When comparing a cash-out refinance vs. home equity line of credit, a cash-out refinance results in a single mortgage payment, whereas a home equity line of credit (or home equity loan) is a payment separate from your primary mortgage.
When to choose a cash-out refinance over a home equity loan: You can secure a lower interest rate on your primary mortgage than your current rate, and you prefer the simplicity of a single, consolidated monthly mortgage payment.
Recommended: HELOC vs. Home Equity Loan
The Takeaway
Ultimately, a Texas home equity loan calculator is a valuable starting point for taking out a home equity loan, as it estimates borrowing potential and monthly payments. Success in securing favorable loan terms often depends on having a strong credit profile and a low debt-to-income ratio. Before committing, homeowners are strongly advised to compare offers from different lenders and carefully consider the risks involved, particularly the use of their home as collateral.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How is a home equity loan different from a home equity line of credit (HELOC)?
A home equity loan provides a one-time lump sum of cash with a fixed interest rate, resulting in predictable monthly payments. In contrast, a HELOC is a revolving line of credit with a typically variable interest rate. It allows a borrower to draw funds as needed during a specified period, offering more flexibility for ongoing or uncertain expenses.
Is the interest rate on a home equity loan fixed or variable?
Home equity loans typically come with a fixed interest rate. This means that the rate, and consequently the monthly payment amount, remains the same for the entire repayment term. This predictability is a key feature that helps homeowners budget effectively.
What are the typical loan terms for a home equity loan?
Repayment terms for a home equity loan generally range from five to 30 years. The length of the term affects the monthly payment; a longer term can result in a lower monthly payment. However, a longer term may also lead to paying more in total interest over the life of the loan.
Does a home equity loan replace my first mortgage?
No, a home equity loan is a second mortgage and does not replace the primary one. After obtaining a home equity loan, the homeowner will have two separate monthly payments: one for the original mortgage and a second for the new home equity loan.
Learn more about mortgages:
SoFi Loan Products 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.
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 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.
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.
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.
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Free Tennessee Home Equity Loan Calculator
Tennessee Home Equity Loan Calculator
By SoFi Editors | Updated December 23, 2025
A home equity loan is a powerful financial tool allowing you to convert a portion of your home’s equity into a lump sum of cash to fund significant expenses. This home equity loan guide is designed to provide a comprehensive understanding of how the Tennessee home equity loan calculator works as a planning tool. We will explore how a home equity loan works, factors that influence eligibility and rates, and how you can strategically use the tool to navigate the world of home equity loans with confidence.
- Key Points
- • A home equity loan provides funds as a single, lump-sum payment based on the equity you have in your home.
- • A borrower’s credit score and debt-to-income ratio are important factors for lenders to determine eligibility and loan terms.
- • Use the Tennessee home equity loan calculator to experiment with a variety of inputs without making a formal commitment.
- • Home equity loans typically have fixed interest rates, which means your monthly payments will remain the same throughout the loan’s term.
- • Repayment terms for home equity loans generally range from five to 30 years.
- • Alternatives to a home equity loan include a home equity line of credit, a home improvement loan, personal line of credit, and cash-out refinance.
Calculator Definitions
• Home Value: The home value is the current estimated market value of your property, not the original purchase price.
• Desired Loan Amount: The desired loan amount is the principal amount that will be repaid over the loan term. You can input this amount (or use the slider), and you will see this figure appear in the calculator as a result.
• Current Mortgage Balance: This is the total outstanding amount you owe on your primary home loan. For an accurate calculation, you must also include the balances of any other existing loans secured by the property, such as a home equity loan or HELOC.
• Home Equity Loan Repayment Term: This is the length of time over which you will repay the loan, typically between five and 30 years. The term you select will directly affect the size of your monthly payment.
• Interest Rate: Interest, expressed as a percentage, is the cost of borrowing money. For a home equity loan, the interest rate is typically fixed for the duration of the loan.
• Maximum Loan Amount: This represents an estimate of the highest amount a lender might offer based on your available equity and financial profile. It may be tempting; however, you do not have to borrow the maximum loan amount offered.
• Estimated Monthly Payment: This is the calculated amount, including both principal and interest, that you would pay each month. This payment remains constant until the loan is fully repaid.
• Available Equity Amount/Percentage: The available equity amount represents the amount you can potentially borrow against. Basically, it is the portion of your home’s value that you own outright, and it’s calculated by finding the difference between your home’s market value and your current mortgage balance.
How to Use the Tennessee Home Equity Loan Calculator
A Tennessee home equity loan calculator is an indispensable financial planning tool that can demystify the borrowing process. Here are the steps to use the calculator effectively:
Step 1: Enter Your Home Value
Begin by inputting the current market value of your home. This is the estimated price your home would sell for today, not what you originally paid for it.
Step 2: Input Your Desired Loan Amount
Enter the total lump sum you intend to borrow. Since home equity loans are well-suited for fixed-cost projects, you should have a clear idea of the amount you need.
Step 3: Choose Your Current Mortgage Balance
Provide the total outstanding balance of your primary mortgage and any other loans secured by your home. This is critical for calculating your available equity.
Step 4: Select a Home Equity Loan Repayment Term
Select a repayment period, which typically ranges from five to 30 years. Remember that a longer term will result in lower monthly payments but will cause you to pay more in total interest over the life of the loan.
Step 5: Estimate Your Interest Rate
Input an estimated interest rate. The actual rate a lender offers will be heavily influenced by your credit history, income, and overall financial standing, but using a current market average can provide a realistic estimate.
Step 6: Review Your Results
The calculator will generate an estimated monthly payment and the maximum loan amount you might qualify for. These figures are helpful for budgeting and planning, but remember they are estimates until you receive a formal offer from a lender.
What Is a Home Equity Loan?
A home equity loan is a financial tool that functions as a second mortgage, allowing homeowners to borrow against the equity they have built in their property. Having an understanding of what a home equity loan is, including the benefits and the risks, will help you determine whether this option is the right fit for your goals and finances.
Basically, a home equity loan converts your ownership stake into a usable, lump sum of cash that can be used for nearly any purpose. Many homeowners opt to fund major projects like home renovations or repairs. The funds can also go toward high-interest debt consolidation. The loan is secured by your home, which serves as collateral for the lender. This is also a risk; if you fail to make timely payments, you could face foreclosure proceedings.
Some of the key characteristics of the home equity loan are:
• Lump-sum disbursement: Upon closing, you receive the entire loan amount in a single, upfront payment.
• Fixed interest rate: The vast majority of home equity loans come with a fixed interest rate. This ensures your monthly principal and interest payments will not change for the entire duration of the loan, providing stability and predictability for your budget.
• Defined repayment term: The loan must be repaid over a specific period, typically between five and 30 years, through predictable and consistent monthly installments.
• Lower interest cost: Because your home secures the loan, lenders often offer significantly lower interest rates, making it a more affordable way to borrow large sums of money.
Recommended: What Is a Home Equity Line of Credit?
Home Equity Trends in Tennessee
As home values have risen nationwide over the last five years, so have homeowners’ equity levels. Since 2020, equity levels have doubled, with a collective increase of $5.7 trillion (see chart). In fact, about half of homeowners with a primary mortgage have a mortgage balance less than half of the home’s value—making them “equity rich.”
Homeowners in Tennessee are benefitting from this surge in home equity with an average equity level increase of 105% over the same period. The average home equity per homeowner is just above $112,000.
As you explore how to get equity out of your home, it’s helpful to monitor this market trend.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
The data from the Tennessee home equity loan calculator allows homeowners to assess affordability, set realistic goals, and plan effectively before committing to a loan. First, refer to the estimated monthly payment, which helps determine if you can comfortably manage the new debt alongside existing financial obligations. Next, understanding your maximum loan amount provides a realistic ceiling for large-scale projects, helping you align your project scope with what you can affordably borrow.
Finally, experimenting with different repayment terms reveals the trade-off between short-term cash flow and long-term cost. A shorter term means higher monthly payments but less interest paid overall, while a longer term offers lower payments at a greater total cost. Using the Tennessee home equity loan calculator to its fullest can help you locate a balance between securing the funds you need and maintaining a repayment schedule that’s within your budget.
Home Equity Loan Scenarios
To get the most out of our Tennessee home equity loan calculator, you can apply it to real-world examples. Here are two scenarios:
Scenario 1: Home Remodeling Project
A homeowner has been dreaming of undertaking a kitchen renovation with a fixed cost of $50,000. They apply for a home equity loan and, once approved, receive the full amount in a lump sum. This allows them to pay their contractor and purchase materials without delay. By choosing a 10-year repayment term for example, they secure a predictable and consistent monthly payment that fits into their budget. Because the renovation is a single, fixed-cost project, the lump-sum works well, eliminating the temptation to overspend that can come with a revolving line of credit.
Scenario 2: Debt Consolidation
Another homeowner is juggling high-interest debt spread across multiple credit cards, totaling $25,000. They take out a home equity loan and use the funds to pay off all their credit card balances immediately, stopping the cycle of compounding interest. Now, instead of managing multiple payments with variable rates, they have a single, fixed monthly payment. Additionally, they have swapped out high-interest, unsecured credit card debt for lower-interest, secured home equity debt.
Tips on Home Equity Loans
Securing a home equity loan is a significant financial decision that requires careful preparation. By taking steps to strengthen your financial profile, you can increase your chances of approval, qualify for more competitive interest rates, and manage the loan responsibly. Here are some tips:
• Maintain a strong credit profile: A strong credit profile will attract competitive loan offers including lower interest rates. Pay bills on time, keep your credit card balances low, and monitor your credit report.
• Understand your debt-to-income ratio: Your DTI compares total monthly debt payments to gross monthly income. Lenders typically want to see a lower ratio (below 50% is a common guideline, with a ratio below 36% being ideal).
• Borrow only what you need: It may be tempting to borrow the maximum amount offered, but you don’t have to. Avoid taking on unnecessary debt.
• Compare offers from multiple lenders: Try not to accept the first offer you receive. Shop around with different banks and credit unions to compare interest rates, fees, and loan terms first. This could lead to substantial savings over the life of the loan.
• Be aware of the risks: Remember that a home equity loan uses your home as collateral. Therefore, if you fail to make your payments for any reason, the lender has the right to foreclose on your property.
Alternatives to Home Equity Loans
While a home equity loan is a useful financial tool, it is not the right fit for every situation. There are other options available for accessing funds, each with its own unique structure, benefits, and drawbacks. Here are some alternatives:
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) functions like a credit card that is secured by your home. Instead of a lump sum, it provides a revolving line of credit that you can draw from as needed during a set “draw period.” HELOCs typically have variable interest rates, and payments during the draw period are often interest-only, which can make them a flexible option for ongoing projects with uncertain costs.
Some helpful tools to have at your disposal are the HELOC interest-only calculator, which determines what your payments might be during the draw period. Also, a HELOC repayment calculator can help you figure out your principal plus interest amount during the repayment period.
Recommended: HELOC vs. Home Equity Loan
Home Improvement Loan
A home improvement loan is a type of unsecured personal loan specifically intended for renovations. Because it is not secured by your home, there is no risk of foreclosure if you are unable to make payments. However, this lack of collateral generally means that interest rates are higher compared to a home equity loan.
Personal Line of Credit
A personal line of credit (which is different from a personal loan) is a revolving credit line that can be used to pay for a variety of personal expenses. It is considered unsecured because it is not secured by your home equity. This lack of collateral results in less risk for you as the borrower, but it may lead to higher interest rates and lower credit limits compared to a HELOC.
Cash-Out Refinance
A cash-out refinance involves replacing your current primary mortgage with a new, larger one. With this type of mortgage refinance, the difference between the old mortgage balance and the new loan amount is paid to you as a lump sum of cash. This consolidates your debt into a single mortgage payment, but it also resets the term of your primary mortgage.
One important difference between a cash-out refinance vs. a home equity line of credit is that a cash-out refinance leaves you with just one monthly payment.
The Takeaway
A home equity loan can be the right option when you want to access a large, one-time sum of cash to fund significant expenses, such as home improvements or debt consolidation. Its primary advantages are a fixed interest rate and a predictable monthly payment schedule, which offer stability and make budgeting straightforward.
The Tennessee home equity loan calculator can help you get a handle on your monthly payments and maximum borrowing power before meeting with a lender.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How much can I borrow with a home equity loan?
Lenders typically allow you to borrow up to 85% of your home’s equity.
What can I use home equity loan money for?
You can use the funds from a home equity loan for nearly any purpose. Some common types of purposes homeowners put the funds toward are home improvements like remodelings or repairs, or even debt consolidation.
Are there closing costs or fees with home equity loans?
There are closing costs (ranging from 2% to 5% of the loan amount) associated with home equity loans. These costs may include fees for a home appraisal, title search, and loan origination.
Does a home equity loan replace my first mortgage?
No. A home equity loan is a second mortgage. It is a separate loan with a separate payment. You will make payments on both loans concurrently.
Learn more about mortgages:
SoFi Loan Products 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.
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 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.
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.
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.
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Free South Dakota Home Equity Loan Calculator
South Dakota Home Equity Loan Calculator
By SoFi Editors | Updated December 18, 2025
For South Dakota homeowners, understanding how much home equity you have built up through your mortgage payments is the first step toward determining whether you might borrow money with a home equity loan. And a home equity loan calculator is a big help. Using it can quickly allow you to see not only your equity level but also the estimated monthly payments for a potential home equity loan. This guide will help you use a home equity loan calculator to best advantage, and equip you to borrow smartly if you decide that’s the right move.
- Key Points
- • A home equity loan is a second mortgage that uses a home’s equity as collateral for a lump sum of cash.
- • Repayment occurs through monthly installments at a fixed rate over a period of five to 30 years.
- • The fixed interest rate provides a predictable payment amount and schedule for the duration of the loan.
- • A home equity loan calculator can allow homeowners in South Dakota to experiment with different loan scenarios before committing to a lender.
- • Funds from a home equity loan can be used for any purpose, such as home improvement, debt consolidation, or funding a major purchase.
Calculator Definitions
• Home Value: Your home value is the property’s current market value — not what you originally paid for the property. Find the estimate on a real estate site.
• Desired Loan Amount: This is the specific sum you wish to borrow.
• Current Mortgage Balance: For the purposes of the calculator, your current mortgage balance is the amount still owed on your home loan but also the amount you owe on any other loans secured by your home.
• Home Equity Loan Repayment Term: If you move forward with a home equity loan, you’ll choose a repayment term ranging from five to 30 years. The longer the term, the lower the monthly payments but the more interest you will pay in total for the loan.
• Interest Rate: The cost of borrowing the money from the lender is calculated as a percentage of the loan amount. The percentage is your interest rate.
• Maximum Loan Amount: The home equity calculator will show the maximum that you might be able to borrow from a lender based on your equity. Ultimately the lender will determine this figure.
• Estimated Monthly Payment: This is the projected amount that will be due each month based on your interest rate, loan term, and amount borrowed. This payment covers both the principal balance and interest charges.
• Available Equity Amount/Percentage: Your available equity is the portion of the home’s value that you possess outright. The home equity calculator shows this as both a dollar value and a percentage of the home’s overall value.
How to Use the South Dakota Home Equity Loan Calculator
Using a South Dakota home equity loan calculator is easy. Follow these steps to input your information accurately and see results in seconds.
Step 1: Enter Your Home Value
Input the current estimated market value of your home. If a real estate site shows a range, use the midpoint or make an educated guess.
Step 2: Input Your Desired Loan Amount
Enter the sum you wish to borrow. This figure should align with the cost of the project or expense you intend to finance.
Step 3: Choose Your Current Mortgage Balance
Provide the total outstanding balance on your current mortgage plus any other loans secured by the property.
Step 4: Select a Home Equity Loan Repayment Term
Select a repayment period from five to 30 years.
Step 5: Estimate Your Interest Rate
Enter an estimated interest rate or a rate you have been quoted by a lender. Experimenting with different rates can illustrate how the cost of borrowing affects the monthly payment.
Step 6: Review Your Results
The home equity loan payment calculator will provide estimates for the maximum loan amount and the monthly payment on your chosen loan amount, which are foundational figures for financial planning. If you think a home equity loan might be a good fit, your next move is to make sure you fully understand what a home equity loan is before moving forward.
What Is a Home Equity Loan?
A home equity loan is a financial instrument that allows homeowners to convert a portion of their property’s value into cash they can use to cover significant expenses. Technically, a home equity loan is a second mortgage — assuming you’re still paying off your first mortgage. The loan is secured by the property itself. Because your home is collateral for the loan, a home equity loan will typically have a more favorable interest rate than unsecured debt such as a personal loan or credit card. But this also means that if you fail to make payments on a home equity loan, your home is at risk of foreclosure.
A home equity loan provides funds in a single lump sum, which is then repaid in monthly installments over a set term, commonly ranging from five to 30 years. The interest rate is almost always fixed, ensuring that the monthly payment remains consistent throughout the life of the loan. The lump-sum distribution of this loan makes it a good option for financing large, one-time expenses where the total cost is known upfront.
If you aren’t certain how much you’ll need to borrow, you can consider another borrowing option. There aren’t really different types of home equity loans, but there are other ways to borrow against your equity. We’ll cover those below.
Recommended: What Is a Home Equity Line of Credit?
Home Equity Trends in South Dakota
If you’re thinking about how to get equity out of your home in South Dakota, you’re hardly alone. Residents of the state have seen their average home equity almost double, increasing by 95% between 2020 and 2025. The average South Dakota homeowner has more than $120,000 in equity. This is part of a larger trend, as you can see in the graphic.
Across the U.S., equity has increased in many markets as home values have risen. Many of the equity-rich are Baby Boomers, a third of whom told Redfin they would “never” sell their home, according to a recent survey. These owners are among those who may be looking for home equity loans to update their homes or prepare for aging in place.
Current home equity loan rates by state.
Compare current home interest rates by state and find a home equity loan rate that suits your financial goals.
Select a state to view current rates:
How to Use the Home Equity Loan Calculator Data to Your Advantage
Once you have the output from a home equity loan calculator, there are several ways you can use the information.
Set Realistic Expectations
The home equity loan payment calculator will show you your maximum loan amount based on your equity. This can help you set realistic expectations when thinking about a big renovation, for example, and when requesting quotes from lenders. It’s a good idea to get multiple rate quotes to find the one that saves you the most money, whether on interest, fees, or both.
Double-Check Your Budget
The estimated monthly payment figure shown by the home equity payment calculator allows you to assess whether you can meet a new debt obligation within your monthly budget *before* committing to a loan. Does the calculator’s estimated monthly payment fit within your existing financial obligations? If so, proceed.
Try Out Different Scenarios
Maybe the monthly payment amount feels a bit scary. You can use the calculator here as well. By adjusting variables like the loan amount or loan term, you can try to find a balance between the amount you want to borrow and the amount you can afford to pay.
Home Equity Loan Scenarios
Here are two examples of how a home equity loan decision might play out for someone using the home equity calculator.
Scenario 1: Home Renovation
A homeowner wants to undertake a complete kitchen remodel with a fixed cost of $50,000. Using a home equity loan calculator, they explore different repayment terms. They find that a 10-year term at 8.00% interest results in a monthly payment of about $607, while a 20-year term lowers the payment to approximately $418. The homeowner decides that the renovation is financially manageable with the longer loan term, even if it does mean higher interest costs.
Scenario 2: Debt Consolidation
Another homeowner is managing multiple high-interest credit card debts totaling $25,000. The combined monthly payments are high and are mostly servicing interest. By entering their information into a calculator, they discover that a home equity loan could consolidate these debts into a single loan. With a 10-year term (and an 8.00% rate), their new monthly payment could be around $303. This single, lower-interest payment simplifies their finances and allows them to pay down the principal balance more effectively than they could with their credit cards.
Tips on Home Equity Loans
Securing a home equity loan is a big financial decision and these practical strategies can help homeowners borrow wisely.
• Shop around: It is advisable to compare offers from multiple lenders. Even small differences in interest rates and fees can lead to substantial cost variations over the life of the loan.
• Take good care of your credit: You’ll need a credit score of 680 to get the loan, but if you can pay your bills on time and not max out all your lines of credit, you could eventually get above 700. For many lenders, that’s a sweet spot for lower interest rates.
• Pin down your project needs: Home equity loans are well-suited for projects with a known, fixed cost, such as replacing a roof, covering the costs of a wedding, or paying down debt. Try to understand the full cost of your project and take out a loan for that amount. Better yet if your project adds value to your home.
• Understand the risk: We’ve said it before but it bears repeating. Your home is used as collateral to secure the loan. This means that a failure to repay the loan according to the agreed-upon terms can lead to foreclosure.
Recommended: HELOC vs. Home Equity Loan
Alternatives to Home Equity Loans
A traditional home equity loan is not the only option for accessing a home’s value. You can even access cash with a mortgage refinance. Learn about that and other options here:
Home Equity Line of Credit (HELOC)
A HELOC is a revolving line of credit secured by the home. Unlike a home equity loan that provides a one-time lump sum, HELOCs allow a borrower to draw funds as needed up to a preapproved limit during a specified “draw period.” It typically has a variable interest rate, and payments are made only on the amount borrowed. Even better, lenders typically only require you pay interest during the draw period. A HELOC interest-only calculator can show you what those payments might look like.
After the draw period ends, the loan enters a “repayment period” where the outstanding principal and interest must be paid back and a HELOC repayment calculator comes in handy. HELOCs are especially useful for borrowers who don’t need all the funds at one time, or who aren’t sure exactly how much they need to borrow.
Home Improvement Loan
A home improvement loan is a type of unsecured personal loan, meaning it does not use the home as collateral. This is the primary distinction from a home equity loan. Because the loan is unsecured, it may have a higher interest rate, a lower borrowing ceiling, or a shorter repayment term.
Personal Line of Credit
A personal line of credit is an unsecured, revolving line of credit. As with a home improvement loan, it is not secured by the home. This feature differentiates it from both a home equity loan and a HELOC, as it poses no direct risk to the borrower’s property in case of default. But again, the interest rate on a personal credit line might be higher than that on a home equity loan.
Cash-Out Refinance
A cash-out refinance is a process that replaces an existing mortgage with a new, larger loan. The homeowner receives the difference between the new and old loan amounts in cash. There are important differences in a cash-out refinance vs. a home equity line of credit or home equity loan. Unlike a home equity loan or HELOC, which are both second mortgages, a cash-out refinance results in a single, new primary mortgage that consolidates the old mortgage and the new cash amount. A refinance makes the most sense if you can obtain a lower interest rate on the refi than you have on your current mortgage.
The Takeaway
Using a South Dakota home equity payment calculator is a smart first step for homeowners interested in borrowing against the equity built up in their home. It can estimate your borrowing power and help you understand potential repayment obligations. The core nature of a home equity loan—a fixed-rate, lump-sum loan secured by one’s property—makes it a predictable financial commitment, which is attractive to many borrowers. Before pursuing a home equity loan, explore interest rates with multiple lenders.
SoFi now offers home equity loans. Access up to 85%, or $750,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
How is a home equity loan different from a home equity line of credit (HELOC)?
A home equity loan provides a one-time lump sum of cash. Repayment starts immediately, and the borrower pays a consistent monthly payment thanks to a fixed interest rate. In contrast, a HELOC is a revolving line of credit with a typically variable interest rate. You can borrow and repay funds as needed during a set draw period, usually 10 years. You can even borrow and only pay interest during that time. After the draw phase ends, you’ll be required to make monthly payments for the duration of the term. These payments can be somewhat unpredictable because the interest rates on HELOCs change with market conditions.
How much can I borrow with a home equity loan?
The borrowing amount depends on your available equity and your creditworthiness. Generally speaking, lenders typically limit borrowing to 85% of equity.
What can I use home equity loan money for?
Funds from a home equity loan can be used for nearly any purpose. Common applications include home renovations, consolidating higher-interest debts such as credit-card debt, or covering other large, one-time purchases.
Is the interest rate on a home equity loan fixed or variable?
Home equity loans typically come with a fixed interest rate. This means the rate remains the same for the entire loan term, which results in predictable and consistent monthly payments.
Learn more about mortgages:
SoFi Loan Products 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.
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 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.
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.
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.
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