Compare HELOC rates in Louisiana.

Introduction to HELOC Rates

To secure the best interest rate for a home equity line of credit (HELOC) in Louisiana, homeowners should shop around and consider factors like their credit score and amount of home equity before submitting an application. But first, it helps to understand exactly what is a home equity line of credit and how it differs from other lending options.

This article provides insights into various types of home equity loans, explains the key factors that influence what rates you’ll be offered, and provides smart strategies for securing competitive rates. After all, you’ve been paying off your home loan and building equity in your home. You want to make the most of it. So let’s get back to the basics.

What Is a HELOC?

A HELOC is a revolving credit line with a ceiling that is determined by your home equity. You don’t have to borrow up to the limit of the credit line all at once; you can access funds as you need them, and (one nice feature of a HELOC) you’ll only pay interest on the amount of the credit line that you actually use. You may be able to borrow up to 90% of your home’s value, minus your mortgage.

HELOC interest rates are typically variable, so the monthly cost of a HELOC can go up or down based on how much of the credit line you use and your variable rate. But initial rates on a HELOC are often lower than those for credit cards or personal loans, since your home is collateral.

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

The Draw Period

During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit. Payments toward the principal may be optional, but interest payments are typically required. Using a HELOC interest-only calculator can help you plan your payments. It’s important to research the best Louisiana HELOC rates to ensure you’re getting the most favorable terms.

The Repayment Period

During the repayment period (typically 10 to 20 years), borrowing ends and the principal is paid back with interest. HELOCs offer lower interest rates because your home serves as collateral. Borrowers should be prepared for variable interest rates. Using a HELOC repayment calculator can help you manage payments and understand the total cost.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are linked to the prime rate, which is influenced by various economic factors. Lenders set their prime rate as a benchmark interest rate for customers with sparkling credit. They look to the Federal Reserve’s policy decisions for guidance, and then they tinker with the rate they offer each individual customer based on the borrower’s qualifications. Understanding this can help you watch for potential fluctuations in rates and make well-informed decisions regarding your financial choices.

How Interest Rates Impact HELOC Affordability

Interest rates are so important because they are the primary driver of a HELOC’s cost. Over a 20-year loan term, a mere 1% difference in the interest rate can result in a substantial financial impact. If you borrow a large amount, such as $60,000 or $100,000 dollars, you could see tens of thousands of dollars in additional interest paid with higher rates. Utilizing a HELOC interest calculator can provide valuable insights into how different interest rates affect the overall affordability of your loan.

HELOC Interest Rate Trends

Having a sense of the history of the average prime rate can give you perspective on the interest rates available in the current market. As you can see in the chart below, since 2018, the average prime rate has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. The graphic below shows a much longer period of time, more than a half-century. Looking at this will help you understand how frequently rates under 4.00% or greater than 10.00% have come around in the past.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

There are other factors beyond the prime rate that will have an impact on the rate you are offered by any one lender. Understanding these can help you prepare yourself (and, more importantly, your finances) for the HELOC application process.

Home Equity

Having a nice amount of equity in your residence improves your standing in the eyes of lenders, potentially resulting in more favorable interest rates. You’ll typically need to meet an equity threshold of 15% to 20% to qualify for a HELOC. But the bigger the portion of your home that you own outright, the better.

Credit Score

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

Stable Income

Lenders will want to see your pay stub or other proof of earnings, but they’ll also be looking at how consistent your earnings are. A stable income indicates a lower risk of default, possibly leading to better HELOC rates.

Loan-to-Value Ratio

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

Variable vs Fixed Interest Rates

As noted above, a distinguishing feature of a HELOC is its variable interest rate. These rates usually commence at a lower level in comparison to fixed rates but can be modified up (or down) in accordance with market conditions. Before you apply for a HELOC, it’s not a bad idea to plug some different interest numbers into an online calculator to see how monthly payments might vary at different interest rates.

Tools & Calculators

Here are some of our favorite calculators. Spending some time imagining different scenarios and running the numbers can help you understand how the amount you borrow, the interest rate, and the repayment term can determine monthly payments and total interest paid.

How to Qualify for a Competitive HELOC Rate

There are a few things you can do before applying to help you qualify for a competitive HELOC rate in Louisiana. Consider this your task list.

Care for Your Credit Score

Pay your bills on time and avoid maxing out all your credit cards — it’s a good practice even if you aren’t applying for a HELOC. Another to-do: Check your credit report for mistakes, as they do happen. Fixing them can help your score bounce back.

Assess Your Home Equity

You need at least 15% equity in your home for a HELOC. Particularly if you live in a hot real estate market, it will be helpful to get a sense of your home’s current value by looking up your address on a real estate web site. Subtract whatever you owe on your mortgage from the estimated value, then divide the result by the estimated value. The result is your home equity percentage.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is what you owe in monthly debt payments divided by your gross monthly income. Home equity lenders look for a DTI that’s below 36%, though some will allow up to 50%. Usually, the lower the better.

Application Process for a HELOC in Louisiana

The application process for a HELOC in Louisiana involves several important steps and can take 30 – 60 days. Take the steps one at a time and double-check everything for errors before you submit it, and you’ll be on your way to a headache-free experience.

Step 1. Run the Numbers

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

Step 2. Compare Lenders

Visit lender sites or check in with your bank to learn loan qualification requirements, minimums and maximums, the length of the draw and repayment periods, and any fees. Some lenders offer better rates or discounts for automatic payments.

Step 3: Gather Your Documents

You’ll need a government-issued I.D. and recent pay stubs, W-2 forms, and a recent tax return. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns. Lenders also typically require proof of homeowners insurance. Having your documents close at hand can speed the application process and help you secure the best HELOC rates in Louisiana.

Step 4: Submit Your Application

Submitting your HELOC application online or in person is the next step. Ensuring your application is complete and accurate will better your chances of a smooth process and could help you secure Louisiana’s more competitive HELOC rates.

Step 5: Get an Appraisal

After you submit your application, the lender may request a home appraisal. This might be an in-person appraisal, or a lender may use an automated valuation model (AVM) appraisal, where a home’s estimated value is computed based on available data. The appraisal helps determine the amount of equity you have in your home, which affects your HELOC rate and the size of your line of credit.

Step 6: Prepare for Closing

Once you find a HELOC with terms you like at a comfortable interest rate, you’re ready to sign the HELOC agreement and pay necessary fees. Make sure you read everything and understand all the terms of the agreement before signing. Lenders can make funds available as quickly as three days following the closing of the HELOC.

Tax Benefits and Considerations

Homeowners can deduct HELOCs interest if they use the borrowed funds to buy, build, or significantly improve a primary residence. Deductions are limited to interest on the first $375,000 of the mortgage principal for individual taxpayers ($750,000 for married couples filing jointly). Consulting a tax advisor is crucial to navigate the specific tax implications and confirm eligibility for deductions related to HELOC rates in Louisiana.

Closing Costs and Fees

HELOC closing costs in Louisiana are generally lower than homebuying or refinancing costs. The appraisal fee, typically the highest expense, ranges from $300 to $600. Other costs may include application, loan origination, and administrative fees. Some lenders charge an annual maintenance fee. Make sure you factor these costs into your comparison of offers from different lenders.

Alternatives to HELOCs

As you think about how to get equity out of your home, it’s a good idea to consider all options, and to also look at borrowing strategies that don’t involve using your home as collateral. Here are your choices:

Home Equity Loan

The names sound similar, so you’re probably wondering what is a home equity loan and how does it differ from a home equity line of credit? The big difference in HELOCs vs. home equity loans is that home equity loans provide you with a large lump sum and are paid back at a fixed interest rate. You begin paying back the loan, plus interest, immediately after you receive the funds. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. Using a home equity loan calculator can help you determine how much you might be able to borrow and what the payments might be.

Cash-Out Refinance

This special type of mortgage refinance also supplies borrowers with a lump sum. How it works: You refinance your mortgage for more than you owe. You use the funds to pay off your original mortgage and then can use the leftover cash for whatever you wish.

As you consider a cash-out refinance vs. a home equity line of credit, one thing to think about is how current mortgage rates compare to the rate you have on your original home loan. If they are higher, it may not make sense to do a refi. But you’ll want to do the math and compare all costs, including closing costs, to what you might pay with a HELOC or home equity loan.

Personal Loan

A personal loan is typically unsecured and repaid in regular payments over 2 – 7 years. Because it is unsecured, you can expect higher interest rates with a personal loan than with a HELOC or home equity loan.

Credit Cards

Credit cards also tend to have higher interest rates than HELOCs, making them an expensive way to carry a large balance.

The Takeaway

When considering HELOC rates in Louisiana, it’s essential to shop around and compare offers from different lenders. Factors like your credit score and your level of home equity will significantly influence the rate offers you’ll receive. Improving your credit score is one way to help secure the best HELOC rate available.

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

FAQ

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

The monthly payment for a $50,000 HELOC can change based on the repayment term and your interest rate. Assuming a term of 10 years, this is the payment amount at different interest rates: $555 (6.00%); $568 (6.50%); $581 (7.00%); $594 (7.50%); $607 (8.00%).

Is a HELOC a smart move for you?

Whether a home equity line of credit (HELOC) is a smart decision depends on your personal financial circumstances. You can use a HELOC repayment calculator and test low and high interest rates to see what monthly payments might be. A HELOC has a variable interest rate. So if you feel you can handle the payments at the higher end, then a HELOC may be the right move — especially if you like the fact that you can borrow in increments versus in a lump sum.

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

Remember that just because you have a home equity line of credit of $100,000 doesn’t mean you have to borrow the full $100,000 all at once. If you did use the entire $100,000 and needed to pay it back at 7.50% interest over 20 years, your monthly payment would be $806. Changing the interest rate or term would also change your monthly payment number.

What are the benefits of a HELOC?

The benefits of a HELOC include flexible access to funds, lower interest rates compared to credit cards, and potential tax advantages, depending on how the funds you borrow are used. HELOCs allow you to borrow against your home equity as needed, making them suitable for various expenses. Additionally, competitive HELOC rates in Louisiana can make these loans an attractive financing option.

Do you need an appraisal for a HELOC?

An appraisal is generally required for a home equity line of credit or a home equity loan. It is essential for determining the value of your home, which is pivotal in calculating your home equity and the loan amount you qualify for. Lenders rely on this information to evaluate your eligibility for HELOCs and to establish your HELOC rate.

What disqualifies you from getting a home equity loan?

Several factors can disqualify you from getting a home equity loan, including poor credit history, insufficient home equity, and a large amount of monthly debt (car payment, student loan payment, etc.) relative to your gross monthly income.

How difficult is it to get a HELOC?

Whether you hit roadblocks in obtaining a home equity line of credit is contingent upon your financial circumstances. Lenders look at various factors, including credit scores, available home equity, and stability of income. By preparing documents carefully and acquiring a good understanding of the application process, individuals can significantly enhance their chances of qualifying for a HELOC.

Does having a HELOC affect your credit score?

HELOCs can impact your credit score in several ways. Applying for a HELOC may result in a hard inquiry, which can temporarily lower your score. Additionally, using a significant portion of your available credit can increase your credit utilization ratio, potentially affecting your score. However, making timely payments on your home equity line of credit can help build a positive credit history over time.

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

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

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

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.

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 .

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

SOHL-Q424-028

Compare HELOC rates in Vermont.

Introduction to HELOC Rates

A HELOC is a flexible financial tool that allows homeowners to tap into the equity they’ve built up in their home as they have made payments on their home loan. But before you sign on to a home equity line of credit, it’s important to understand how a HELOC works, and how its interest rate will be determined. This will allow you to put your finances in order before you apply and obtain the best available HELOC rate in Vermont.

What Is a HELOC?

A HELOC is a revolving line of credit similar to a credit card, but secured by your home’s equity. (Your equity is the difference between your home’s current value and what you owe on your mortgage.) You don’t have to borrow the entire amount of the credit line all at once; you can borrow as you need to, and (one advantage of a HELOC) you’ll only pay interest on the amount of the credit line that you actually use. You may be able to borrow up to 90% of your home’s value, minus your mortgage.

HELOC interest rates are usually variable, and so the monthly cost of a HELOC can go up or down based on the amount of the credit line that you are using and your variable rate. HELOCs are one of the types of home equity loans available, but they aren’t the only option, and below we’ll cover alternatives to a HELOC.

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

The Draw Period

During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit, make payments to pay down your balance, and borrow the money again. The borrower is usually required to make interest payments during the draw period, but payments toward the principal may be optional. Use a HELOC monthly payment calculator to plan your payments effectively.

The Repayment Period

During repayment (10-20 years), borrowers pay back the principal with interest. Borrowers should expect rate fluctuations during this time.

Where Do HELOC Interest Rates Come From?

HELOC rates are based on a lender’s prime rate, which in turn is influenced by Federal Reserve decisions about rates. The prime rate is the rate a lender offers the customers it deems to be at lowest risk of default. Understanding this and keeping an eye on news of rate changes can help borrowers decide when to get a HELOC and whether borrowing with a fixed-rate loan, such as a home equity loan, might be a better move.

How Interest Rates Impact HELOC Affordability

Your interest rate can make a big difference in affordability over the course of a HELOC with a 10-year draw and a 20-year repayment term. A HELOC repayment calculator can help you see how different rates affect payment amounts. The chart below shows different HELOC amounts and how monthly payments and total interest paid change based on the interest rate and repayment term.

HELOC Interest Rate Trends

It helps to have a sense of the history of the average prime rate when you go into the process of deciding whether or not to get a HELOC (or a loan of any kind). Since 2018, as shown in the chart below, the average prime rate has experienced significant fluctuations, ranging from a low of 3.25% in 2020 to a high of 8.50% in 2023. These variations have had a direct and substantial impact on Vermont HELOC rates.

The graphic below shows the average prime rate over a much longer time period. As you can see, rates that are below 4.00% or above 10.00% have not historically come around that often.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

HELOC rates are influenced by several key factors, and understanding these can help you better prepare for the application process.

Home Equity

Having substantial equity in your home makes you appear less risky to lenders, which can lead to lower interest rates. Homeowners typically need at least 15% equity in their property to qualify for a HELOC.

Credit Score

Maintaining a credit score of 680 or higher is of paramount importance when you’re applying for a HELOC. Some lenders prefer a credit score of 700 or above. A higher credit score is a reliable indicator of lower risk, improving your likelihood of qualifying for the best available terms on your home equity line of credit.

Stable Income

Lenders assess your income to determine your ability to repay the HELOC. A stable income indicates a lower risk of default, potentially leading to better HELOC rates. Providing proof of income, such as pay stubs and tax returns, will be an essential part of the application process.

Loan-to-Value Ratio

Many lenders require your combined loan-to-value ratio to be 90% or less. Your combined LTV ratio is calculated by dividing the HELOC amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. If your mortgage balance is $280,000, and you want a $120,000 HELOC, and your home value is $600,000, then your LTV ratio would be 66%.

Variable vs Fixed Interest Rates

As noted above, HELOCs feature variable interest rates, which are subject to change over the course of the loan, within certain limitations that will be put in place in your HELOC agreement. While initially lower than typical fixed rates, these variable rates can rise (or fall) in response to market conditions. Understanding this distinction is crucial for making an informed decision about whether or not to obtain a HELOC, or whether to choose a HELOC vs. a home equity loan.

Tools & Calculators

User-friendly online tools can assist you in estimating your payments, seeing the effect of different interest rates, and exploring possible loan amounts. Here are three of our favorites:

How to Qualify for a Competitive HELOC Rate

To secure the most favorable HELOC rates available in Vermont, aim to maintain an exceptional credit score, furnish evidence of an adequate income stream, and ensure that your loan-to-value ratio remains low. Get the specifics on how you can better your case for a good HELOC rate in Vermont.

Take Care of Your Credit Score

Making on-time payments can help your credit score, and a good score is imperative for obtaining more favorable HELOC rates. It’s also a smart idea to keep overall balances low (in other words, don’t max out every credit card). And periodically review your credit report to find and fix any inaccuracies.

Assess Your Home Equity

You’ll need 15% to 20% equity in your home to obtain a HELOC. To assess your equity level, look up your home on a real estate web site to find an estimated value. Subtract your mortgage balance from that number and then divide by the estimated home value to get your percentage of equity.

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is how much you owe in monthly debt payments (car loan, student loan, etc.) divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 36%, though some allow a DTI below 50%. Generally, the lower the better where your HELOC interest rate in Vermont is concerned.

Application Process for a HELOC in Vermont

The application process for HELOCs in Vermont will entail a thorough examination of your financial well-being. Take it a step at a time and check everything you submit for accuracy.

Step 1. Run the Numbers

Check that your credit score is 680 or above and that your DTI ratio is below 36%. Estimate your home equity to understand how much you can borrow. Some lenders offer online prequalification tools to streamline this process.

Step 2. Compare Lenders

When looking for the best HELOC rates in Vermont, compare different lenders’ qualification requirements, interest rates, loan limits, fees, and duration of the draw and repayment periods.

Step 3: Gather Your Documents

When preparing your HELOC application, it helps to gather and organize all the necessary documents in advance. This typically includes proof of income (such as W2 forms and your tax return), and property documents such as proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years of tax returns.

Step 4: Submit Your Application

Depending on the lender, you’ll submit your HELOC application online, in person, or sometimes even by phone. Carefully attach all the necessary documents at this stage.

Step 5: Get an Appraisal

A home appraisal has an important role in determining eligibility for a HELOC. If the appraised value of your home exceeds the outstanding balance of your mortgage, you may qualify for a HELOC. The lender will tell you if an in-person appraisal by a professional appraiser is needed.

Step 6: Prepare for Closing

Before you can use your home equity line of credit, you’ll need to read and sign documents spelling out your terms and pay fees. Some lenders make funds available as quickly as three business days after this step.

Tax Benefits and Considerations

Homeowners can deduct HELOC interest if the funds are used for buying, building, or significantly improving their primary residence. Deductions are limited to interest on the first $375,000 of the principal for individual taxpayers ($750,000 for married couples filing jointly). Consulting a tax advisor will be helpful, and you’ll need to itemize in order to take this deduction.

Closing Costs and Fees

HELOC closing costs are usually lower than the costs associated with buying or refinancing a home. Appraisal fees, which are the largest portion of costs, range from $300 to $600. Other charges might include application, origination, and administrative fees. Some lenders have annual maintenance and transaction fees. Understanding these costs is vital for managing your home loan.

Alternatives to HELOCs

When thinking about how to get equity out of your home or how to borrow a large sum for a renovation or other expense, it’s important to consider all your financing options. Here are some alternatives to HELOCs you might be considering.

Home Equity Loan

Unlike a HELOC, a home equity loan provides a lump sum amount and is paid back at a fixed interest rate. Borrowers can usually access up to 85% of the equity built in their home through a home equity loan. This option is suitable for those needing a specific amount for a one-time expense. Here’s a quick look at how the two compare:

Cash-Out Refinance

Homeowners can use this special type of mortgage refinance to obtain a large lump sum. If you choose this option, you would refinance for more than you currently owe. You use the funds to pay off your initial home loan and take the difference in cash to use as you wish.

As you consider a cash-out refinance vs. a home equity line of credit, here are some things to think about: A refi would leave you with one larger monthly payment as opposed to two smaller ones. If you got a good interest rate when you purchased your home, and rates are higher now, you may spend more with a cash-out refi than you would otherwise. It’s always best to run the numbers with an online calculator to see how interest rates compare.

Personal Loan

A personal loan is typically an unsecured lump-sum loan that you pay back in regular, fixed payments over a set term of 2–7 years. Personal loans can be used for various purposes, just like HELOCs. But because they do not require collateral, they may have a higher interest rate.

Credit Cards

Credit cards also typically come with a higher interest rate than a HELOC or a home equity loan, which can make this an expensive way to carry a large balance from month to month.

The Takeaway

HELOCs offer a flexible way to access the equity in your home, with competitive interest rates. Because you only borrow what you need at any given time, your monthly interest payments could be lower with a HELOC than with other types of financing. It’s important to consider your financial needs and your comfort level with a HELOC’s variable rate before you apply, but HELOCs can be a smart financial tool for homeowners looking to fund large expenses while maintaining financial stability.

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

FAQ

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

If you owed $50,000 on a HELOC and had a 20-year repayment term at a 7.00% interest rate, your monthly payment would be $388. But if you were able to obtain a 6.00% interest rate, your monthly payment would be $358. At an 8.00% interest rate and with a 10-year term, your monthly payment would run you about $607. Needless to say, the interest rate and term are important factors.

Is a HELOC a good idea right now?

Whether a HELOC is a wise move right now depends in large part on your personal financial situation. Do you need to borrow a large sum? Then a home equity loan may be an efficient way to do that. Are you not quite sure how much you need to borrow? A HELOC may be preferable to a lump-sum loan. Are you already a little nervous about your other monthly debt payments? Then this may not be the right time for a variable-rate loan.

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

The monthly payment on a $100,000 HELOC depends on how much of the credit line you have used, and on your rate and term. If you used the entire $100,000 and needed to pay it back at 7.50% interest over 20 years, your monthly payment would be $806. If you obtain a 7.00% interest rate, your payment would be reduced to $775.

What are the benefits of a HELOC?

HELOCs offer several benefits, including flexible access to funds, competitive interest rates, and potential tax advantages. They can be used for home improvements, debt consolidation, education expenses, and more. However, it’s important to weigh the benefits against the risks, such as variable interest rates and the potential for foreclosure if payments are not made.

Do you need an appraisal for a HELOC?

A home appraisal is generally a prerequisite for a HELOC. The appraisal serves as an essential tool in determining the value of your property and helps the lender calculate what your maximum HELOC amount will be.

What disqualifies you from getting a home equity loan?

Several factors, such as an unfavorable credit history, insufficient home equity (less than 15%), and a high debt-to-income ratio, can render you ineligible for a home equity loan.

How difficult is it to get a HELOC?

The process of obtaining a HELOC is influenced by your financial profile. Lenders meticulously evaluate various factors, including your credit score, the amount of home equity you have, and the stability of your income. By carefully preparing your financial documents and diligently comparing multiple lenders, you can enhance your chances of securing loan approval.

Does HELOC affect credit score?

HELOCs can affect your credit score in several ways. Applying for a HELOC results in a hard inquiry, which can temporarily lower your score. Additionally, using a significant portion of your available credit can increase your credit utilization ratio, potentially impacting your score. However, making timely payments can positively affect your credit history.

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.

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.

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 .

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

SOHL-Q424-055

Compare HELOC rates in New Jersey.

Introduction to HELOC Rates

If you’re wondering how to get equity out of your home and thinking about a home equity line of credit (HELOC), this guide will help you decide if a HELOC is right for you and smooth your application process if you do decide to apply. Best of all, it will help you get the most competitive HELOC interest rate available. You’ll learn the key things that influence HELOC rates in New Jersey and how to ensure you’re ready to complete a HELOC application.

Let’s start at the beginning with what is a home equity line of credit.

What Is a HELOC?

A HELOC is a revolving credit line based on your home equity. If you qualify, you may be able to borrow up to 90% of your home’s value minus your mortgage. New Jersey HELOC rates can vary, so it’s important to compare offers from different lenders to find the best option for your financial situation.

HELOCs offer lower interest rates than many other borrowing methods because your home serves as collateral. It’s also important to know that HELOC rates are variable, so the rate can change during the loan term. HELOCs have two distinct time periods and it’s important to understand the difference.

The Draw Period

During the home equity line of credit’s draw period, which usually spans a decade, you are free to access funds up to the limit of your credit, make payments, and borrow again. Typically, interest payments are required, while principal payments can be optional. For effective management of your finances during this phase, consider utilizing a HELOC interest-only calculator.

The Repayment Period

During the repayment period (typically 10 to 20 years), borrowing ends, and the principal is paid back with interest. This is when a HELOC repayment calculator will come in handy.

Where Do HELOC Interest Rates Come From?

HELOC interest rates are tied to the prime rate. The prime rate is a lender’s benchmark interest rate for creditworthy customers. Lenders set their prime rate in part in response to changes in Federal Reserve policy. Understanding this can help borrowers keep an eye on rate fluctuations and make informed decisions about when to apply for a HELOC.

How Interest Rates Impact HELOC Affordability

The interest rate you manage to secure on a HELOC has a significant impact on both your monthly payment amount and the cost of interest over the life of the credit line. Take a look at this chart to see how different interest rates and terms affect payments.

HELOC Interest Rate Trends

One way to better understand HELOC interest rates in New Jersey is to have a sense of where the average prime rate has been in recent years. Since 2018, the prime rate has fluctuated. It hit a low of 3.25% in 2020 and a high of 8.50% in 2023. Looking at the graphic below, you can see how unusual it is to see a rate below 4.00%.

Historical Prime Interest Rate

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

The prime rate is important, but it isn’t the only thing that will guide what HELOC rate you will be offered in the Garden State. There are several other important factors that play a significant role in determining HELOC rates, including credit score and combined loan-to-value (LTV) ratio. We’ll examine them one by one.

Home Equity

The more equity you have in your home, the less risky you appear to a lender — and the more favorable you can anticipate your rate will be. Lenders generally require a minimum of 15% to 20% equity to qualify for a HELOC.

Credit Score

Maintaining a credit score of 680 or higher will help you qualify for a HELOC, and as with equity, the higher your number, the better your rate will likely be.

Stable Income

Lenders examine your overall income to assess your capacity to repay the HELOC, but they will also be looking at how steady your income is. If you are a freelancer or small business owner, you may be asked to provide more documentation of your income over a longer period of time when you submit your application.

Loan-to-Value Ratio

Lenders often require a combined loan-to-value ratio of 90% or less for a HELOC. You can figure out your LTV by adding the amount you owe on your current home loan to the amount you would like to have for a credit line. Then divide by the estimated value of your home. If the answer is more than 90%, you may need to dial back the amount of HELOC you seek.

Variable vs Fixed Interest Rates

HELOCs have variable interest rates, as we’ve noted. While variable interest rates often start lower than fixed rates, they can adjust up or down in accordance with prevailing market conditions. Experimenting with different possible interest numbers using a HELOC interest-only calculator can provide you with valuable insights into the potential effects of these fluctuations.

Tools & Calculators

Online calculators are useful both before you apply for a HELOC or home equity loan or afterward, when rates change. Here are three of our favorites:

How to Qualify for a Competitive HELOC Rate

To obtain the most favorable New Jersey HELOC rates, it is essential to prioritize enhancing your credit score, among other things. Consider these your to-dos before applying for any form of financing based on your home equity.

Cultivate a Good Credit Score

Maintaining timely payments and reducing credit card balances are two ways to help ensure a healthy credit score. Regularly reviewing your credit report and addressing any errors is another good step to take. Mistakes do happen.

Assess Your Home Equity

As we’ve noted, you’ll want to have at least 15% to 20% equity in your home before applying for a HELOC. Your equity is your home’s value minus whatever you owe on your mortgage. Divide that result by the home value to get a percentage of equity. (You can check a real estate web site for a rough idea of your home’s value.)

Calculate Your Debt-to-Income Ratio (DTI)

Your DTI ratio is how much you owe in monthly debt payments divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 50%, though some like to see a ratio even lower: 36% or below. A lower DTI can help you qualify for more favorable terms on your HELOC.

Application Process for a HELOC in New Jersey

The application process for a HELOC in New Jersey involves several steps. Taking them one at a time, completing the entire application, and double-checking everything for accuracy before submitting is the recipe for a smooth application process.

Step 1. Run the Numbers

Check that your credit score is 680 or above and that your DTI ratio is under 36%. Estimate your home equity to understand how much you can borrow. Some lenders offer online prequalification tools to streamline this process.

Step 2. Compare Lenders

Look at published offers from different lenders. Consider interest rates, but also examine qualification requirements, limits, fees, and the length of draw and repayment periods.

Step 3: Gather Your Documents

When preparing your HELOC application, it helps to gather and organize all the necessary documents in advance. This typically includes proof of income (such as W-2 forms and at least one tax return), and property documents such as proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns.

Step 4: Submit Your Application

Check over everything for accuracy and don’t leave questions unanswered. This will help ensure a smooth path through the lender’s evaluation process.

Step 5: Get an Appraisal

A home appraisal plays a pivotal role in determining eligibility for a HELOC. If the appraised value of your home exceeds the outstanding balance of your mortgage, you may qualify for a HELOC. The lender will guide you through the appraisal process.

Step 6: Prepare for Closing

Before you can access your HELOC funds, you’ll need to sign an agreement and remit any fees that may be required. Some lenders make funds available within three days of the signing of your paperwork.

Tax Benefits and Considerations

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

Closing Costs and Fees

HELOC closing costs are generally lower than typical home-buying or refinancing costs. An appraisal fee ($300-$600) is often the highest expense. Other costs may include application, origination, and administrative fees. Some lenders charge annual maintenance fees, transaction fees, inactivity fees, or early termination fees.

Alternatives to HELOCs

A HELOC is not your only borrowing option. There are different types of home equity loans — or rather, different ways to borrow against your home equity — as well as ways to borrow that don’t involve using your home as collateral. Below we’ll explore home equity loans, cash-out refinances, personal loans, and credit cards. Weigh the options to find the best fit for your needs.

Home Equity Loan

If you’ve been wondering what is a home equity loan, and how it is different from a HELOC, here are the basics: A home equity loan, like a HELOC, is secured by your home. Unlike a HELOC, it typically has a fixed rate for the entire term. And the money you borrow with a home equity loan comes as a lump sum vs. through a line of credit.

Borrowers can usually access up to 85% of the equity built in their home through a home equity loan (vs. 90% with a HELOC). A home equity loan is a smart option for those who need a specific amount of money for a large, one-time expense. Here’s a quick summary of HELOCs vs. home equity loans:

Cash-Out Refinance

Homeowners can get cash by doing a mortgage refinance for more than they owe. As you consider a cash-out refinance vs. a home equity line of credit, one important thing to think about is whether the interest rate on a new loan would be higher than your current rate. If so, you’ll want to look carefully at the total cost of this method as compared to the cost of a HELOC or home equity loan. Some borrowers like the fact that a refinance leaves them with one monthly payment as opposed to two.

Personal Loan

A personal loan is a flexible loan that you pay back in regular, fixed payments over a set term of 2 to 7 years. Like a HELOC, a personal loan can be used for various purposes, including home improvements, debt consolidation, and other expenses. Because personal loans are usually unsecured, interest rates may be higher than the rate you would obtain with a HELOC.

Credit Cards

Credit cards also typically come with higher interest rates than HELOCs, which can make them much more expensive if you carry a large balance from month to month. While credit cards offer flexibility for smaller purchases, a HELOC or home equity loan may be better suited for larger expenses such as home improvements or debt consolidation.

The Takeaway

Understanding the intricacies of the best HELOC rates in New Jersey is of paramount importance for making prudent financial decisions. By meticulously comparing HELOC rates in New Jersey, prospective borrowers can effectively secure highly competitive terms and optimize their financial gains. It is imperative to meticulously evaluate factors such as creditworthiness, property values, and prevailing market trends to identify and obtain the most advantageous HELOC rate.

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

FAQ

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

With an 8.00% interest rate and a 10-year term, your monthly payment will be about $607. But exactly how much you’ll pay will depend on your interest rate and loan term. The same 8.00% interest rate over a 20-year term would cost you $418 per month, although you would pay more interest overall if you had the 20-year term.

Is a HELOC a good idea right now?

If you need to borrow a large sum but not all at once, or if you aren’t sure how much you need to borrow, a home equity line of credit could provide you with a flexible option. You’ll only pay interest on the amount you actually borrow, but the credit line will be open should you need to borrow more. If you can secure a competitive interest rate thanks to good credit and a healthy level of home equity and are comfortable securing a loan with your home, a HELOC could be a good fit.

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

The monthly payment for a $100,000 HELOC can fluctuate based on the interest rate and repayment terms. Assuming a 20-year term, here’s the payment amount at several interest rates: $716 (6.00%); $746 (6.50%); $775 (7.00%); $806 (7.50%); $836 (8.00%).

What are the benefits of a HELOC?

The main benefit of a HELOC is its flexibility: You borrow what you need from the credit line when you need it, and you only pay interest on the amount you borrow. Borrowers also like HELOC’s competitive interest rates and potential tax advantages.

What disqualifies you from getting a home equity loan?

Several factors can disqualify you from getting a home equity loan, including a lackluster credit history, high debt-to-income ratio, and insufficient home equity.

How difficult is it to get a HELOC?

The difficulty of getting a HELOC depends on your financial situation and the lender’s requirements. Factors such as credit score, home equity, and income play a significant role. Preparing the necessary documentation and understanding the application process can make it easier to secure a home equity line of credit. Comparing lenders and their qualification criteria can also help.

Does HELOC affect credit score?

Initially, a HELOC may temporarily lower your score, because getting approved for one requires a hard credit inquiry. But after that, as long as you make your payments promptly, a HELOC could have a positive impact on your score.

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.

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.

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 .

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

SOHL-Q424-040

Compare HELOC rates in New Mexico.

Introduction to HELOC Rates

If you’re wondering about interest rates for a home equity line of credit (HELOC) in New Mexico, this guide can help you understand the current landscape and how to secure the best available deal.

We’ll discuss what is a home equity line of credit, where posted interest rates come from, and the factors influencing those rates. We’ll also cover the application process and alternatives for leveraging home equity to give you an understanding of how to navigate the market.

What Is a HELOC?

A HELOC is a revolving line of credit, similar to a credit card, that lets you leverage and borrow up to 90% of the equity you’ve built up in your primary residence. A HELOC has two phases: the draw period and the repayment period.

The Draw Period

During a HELOC’s draw period, typically lasting 10 years, you can access funds up to your credit limit. Interest payments will likely be required during this period, but principal payments may be optional. You can choose to make payments to reduce your balance, and then you may borrow again.

The Repayment Period

The repayment period of a HELOC is usually 10 to 20 years, and follows the draw period. During this phase after borrowing has ended, you must pay back the principal with interest. You will only pay interest on the amount you’ve borrowed, not the entire credit limit. Variable interest rates can fluctuate, however, making repayment unpredictable. A HELOC monthly payment calculator can help you to figure out what you might pay each month.

Recommended: Different Types of Home Equity Loans

Where Do HELOC Interest Rates Come From?

Interest rates for HELOCs are tied to the prime rate. This is the benchmark interest rate banks charge their most creditworthy customers. Policy decisions by the Federal Reserve also influence HELOC rates. Understanding these factors can help a borrower anticipate rate fluctuations and make informed decisions about the best time to apply for a HELOC.

How Interest Rates Impact HELOC Affordability

Interest rates have a significant impact on the cost of enjoying credit via a HELOC. The difference in total interest you’ll pay on a $100,000 HELOC at 6.00% and 7.00% amounts to about $14,000 over a 20-year term. A HELOC interest-only calculator can help you determine how much total interest you might end up paying. This chart also includes some examples:

HELOC Interest Rate Trends

Past fluctuations in the prime rate can provide insight into the potential trajectory of New Mexico HELOC rates. Staying informed about current HELOC rates will give you power to make well-timed decisions if you plan to borrow against your home equity.

Historical Prime Interest Rate

Since 2018, the prime rate has fluctuated considerably. It has ranged from a low of 3.25% in 2020 to a high of 8.50% in 2023. Historical trends can offer valuable insights into the potential future of HELOC rates in New Mexico.

Historical U.S. Prime Rates

Factors Influencing HELOC Rates

The prime rate is important, but it isn’t the only thing that influences HELOC interest rates in New Mexico. Factors that are specific to the individual borrower often come into play as well. Understanding these considerations may help you to attain the most favorable rates for your home equity line of credit.

Home Equity

Having an impressive level of equity in your residential property makes you a safer prospect for lenders. As a borrower, you’ll typically need a minimum of 15% equity to qualify for a HELOC. The amount of equity you hold can potentially help you secure a better interest rate.

Credit Score

To make sure you get a favorable interest rate for your HELOC, you’ll want to maintain a credit score of 680 or higher. Many lenders prefer a credit score of 700 and above.

Stable Income

Lenders take a close look at your income in order to evaluate your ability to repay the HELOC. The stability of your incoming cashflow is important.

Loan-to-Value Ratio

Lenders are likely to require your combined loan-to-value ratio (CLTV) to be 90% or less. You can use this equation to compute your CLTV: Add your existing mortgage balance to the amount you hope to access with a HELOC, then divide by the appraised value of your home. Here is an example:

A homeowner has a property valued at $500,000. They owe $300,000 on the mortgage and apply for a $120,000 HELOC.

   $300,000 + $120,000 = $420,000

   $420,000 / $500,000 = .84

   The homeowner’s CLTV is 84%.

Variable vs Fixed Interest Rates

As we’ve noted, HELOCs often have variable interest rates. That means they are subject to change over the life of the loan. Initially, variable interest rates tend to be lower than fixed rates, but they generally increase or decrease over the loan’s duration, depending on prevailing market conditions. Rate fluctuations are almost certain to impact your HELOC payments.

Tools & Calculators

Online calculators will be useful as you prepare to borrow against the equity in your home. These tools will help you get an idea of how much you may be able to borrow, and what your monthly payments could ultimately be. Try plugging in different interest rates to see how a variable-rate loan could affect your monthly bills down the road. These three widgets, including a HELOC repayment calculator, may all be helpful:

How to Qualify for a Competitive HELOC Rate

To secure a good HELOC interest rate in New Mexico, you will want to make sure that, among other things, your credit score looks stellar. Do these things before applying:

Take Care for Your Credit Score

Keep up with payments. Work on chipping away at credit card balances you’re carrying. You will not just tidy up your finances — you will be nurturing your credit score. Regularly review your credit reports, look for inaccuracies, and correct them. The higher your credit score, the more attractive a candidate you’ll be for a home equity line of credit.

Assess Your Home Equity

If you are planning to apply for a HELOC, go for the best terms possible. You can do this by making sure you have at least 15% equity, or more, in your home. You can build your equity by making timely mortgage payments and investing in home improvements. Equity grows as your property’s value increases.

Calculate Your Debt-to-Income Ratio (DTI)

You can find out your DTI ratio by using a simple formula: Take the sum of your total monthly debt payments (car loan, student loan, etc.) and divide that number by your gross monthly income. A DTI below 50% is acceptable to some lenders. Others require a DTI of 36% or less. As a rule, lower is better. This number is always a factor in determining your HELOC eligibility and the terms you might be offered.

Application Process for a HELOC in New Mexico

The application process for a home equity line of credit in New Mexico will involve a detailed review of your financial situation and a formal appraisal of your home, among other steps. Understanding each part of the process can help you navigate it smoothly.

Step 1. Run the Numbers

Confirm that your credit score is 680 or above, and that your DTI ratio is below 36%. Estimating your home equity will give you an idea of how much you can borrow. Some lenders offer online prequalification tools, which can help you hone in on short-term goals.

Step 2. Compare Lenders

When seeking the best HELOC rates in New Mexico, it’s helpful to compare interest rates, qualification requirements, credit line minimums and limits, fees, and the duration of draw and repayment periods from multiple lenders.

Step 3: Gather Your Documents

When you’re ready to prepare your HELOC application, start by gathering and organizing all the necessary documents. This typically includes proof of income (such as W2 forms and at least one tax return), and property documents including proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns — it’s smart to have these items prepared in advance.

Step 4: Submit Your Application

You can likely submit your HELOC application online or in person, depending on the lender. Sometimes you can even apply by phone. Be sure to attach all of the necessary documents.

Step 5: Get an Appraisal

A home appraisal plays an essential role in determining your eligibility for a HELOC. If your home’s appraised value exceeds the outstanding balance of your mortgage, you may qualify. The lender will offer resources to guide you through the appraisal process.

Step 6: Prepare for Closing

Before you’ll be able to access funds via your home equity line of credit, you’ll need to complete the process by signing documents and paying any fees the lender requires. Some lenders may make funds available as quickly as three business days following the signing.

Tax Benefits and Considerations

Homeowners can deduct the interest paid on a HELOC if the funds are used for significant home improvements (hold onto your receipts!). The maximum amount of mortgage principal eligible for interest deductions is $375,000 for a single filer, and $750,000 for couples filing jointly. It’s a good idea to consult a tax advisor, who can help you understand your eligibility for HELOC-related deductions.

Closing Costs and Fees

Closing costs for a HELOC tend to be lower than those you’d typically pay when buying a home. The fees may include $300–600 for the home appraisal, and lesser amounts for the application, origination, and administrative charges. Annual maintenance, transaction, inactivity, and early termination fees may also apply. Some lenders offer reduced or waived closing costs but then charge a higher interest rate for your home equity line of credit.

Alternatives to HELOCs

Every option for how to get equity out of your home offers advantages and disadvantages, so it’s wise to think through your financial objectives and to consider the differences between a HELOC and home equity loans to choose the right option for you.

Home Equity Loan

What is a home equity loan? Unlike a HELOC, it offers a lump sum of money at a fixed interest rate. Homeowners can borrow up to 85% of their home’s equity with this type of loan. Interest rates are usually a bit higher than those for HELOCs.

Carefully consider the differences between a HELOC vs. a home equity loan:

Cash-Out Refinance

One option that is a little different from a typical mortgage refinance is cash-out refinancing. This offering allows homeowners to tap into their home equity by refinancing their existing mortgage for more than they currently owe. They can then use the extra cash for any purpose.

Understanding the differences between a cash-out refinance vs. a home equity line of credit can help homeowners make smart decisions about their financial options. A cash-out refinance will leave you with one monthly payment (a new mortgage) versus the two you’d have when choosing to carry a mortgage and a HELOC or home equity loan. But it means, too, that you’ll have a new interest rate. If your current home loan provides a favorable rate, look closely at how much more you would pay in interest if you were to go with a refi.

Personal Loan

Personal loans are typically unsecured, and are likely to have a higher interest rate than a HELOC or home equity loan. You repay this type of loan in regular payments over a period of 2–7 years. This loan option can be utilized for almost any purpose and, unlike a home loan, doesn’t require you to use your home as collateral.

Credit Card

Like personal loans, credit cards typically come with higher interest rates than HELOCs. That aspect can make them much more expensive, especially if you carry a large balance from month to month. Credit cards do offer flexibility for smaller purchases, but HELOCs can be more suitable for larger expenses, including home improvements.

The Takeaway

A home equity line of credit can be a valuable financial tool for a homeowner seeking to capitalize on the equity they have accumulated in their home. HELOCs typically provide competitive interest rates and flexible repayment options. Just remember, a HELOC’s variable interest rate means that monthly payments can increase unexpectedly, since the rate fluctuates with the market. But if you aren’t sure how much you need for a major project, a HELOC is a flexible option to consider.

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

FAQ

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

You can use a HELOC monthly payment calculator to determine the monthly payment on a $50,000 HELOC. Just plug in the interest rate and loan term, along with the amount you plan to draw. For example, if you borrow the max on a $50,000 credit line at an interest rate of 7.50%, and your term is 20 years, your monthly payment would be $403.

Is a HELOC a good idea right now?

To determine if a home equity line of credit is a sound financial move, consider your specific circumstances. A HELOC is a flexible way to borrow, since you only take what you need at any given moment, up to your approved credit line. You won’t pay any interest on the portion of the credit line you aren’t using. But HELOCs do typically have variable interest rates.

If you prefer a steady monthly payment amount, a home equity loan might be more appealing. You can play with a home equity loan calculator to see how the two might compare.

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

The monthly payment on a $100,000 HELOC will depend on the interest rate and repayment term as discussed, along with how much of the credit line you are using. If you’ve drawn just $30,000 of your $100,000 limit, the payment might be a few hundred dollars. If you’ve cashed out the entire $100,000 credit line and are paying 8.00% interest over 20 years, the monthly payment would be $836.

What are the benefits of a HELOC?

A home equity line of credit is a flexible way to borrow. You withdraw only the amount of the credit line needed at any given time, and only pay interest on the amount you’ve borrowed. Because it is secured by your property, a HELOC typically has a lower interest rate than a personal loan or a credit card. You can use the funds you borrow for almost anything. For many homeowners, an open credit line is a financial security blanket in case unexpected costs, like big-ticket home repairs, come up.

Do you need an appraisal for a HELOC?

Yes. An appraisal is customarily a requirement for a home equity line of credit. Since it is a determination of value for your home, it will be a factor for the lender in deciding your eligibility to borrow, along with your maximum credit line.

What disqualifies you from getting a home equity loan?

A poor credit history, insufficient home equity, or a high debt-to-income ratio — any of these issues can knock you out of the running for a home equity loan.

How difficult is it to get a HELOC?

Assuming you have your financial ducks in a row and can easily gather the necessary documents (tax returns, pay stubs, etc), and that you meet all the lender’s qualifications, it shouldn’t be hard to get a HELOC. The entire process takes 1–2 months and will move even faster if you’re organized. Be efficient when deciding which lender you’d like to utilize, and be sure to swiftly arrange access for the appraiser if a home visit is required.

Does HELOC affect credit score?

It can, yes. Applying for a HELOC entails a hard inquiry, which can have a temporary impact on your credit score.Your score is also influenced by how you manage your debts, so making consistent, punctual payments is essential. Stay on schedule and you shouldn’t have anything to worry about.

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.

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.

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 .

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

SOHL-Q424-041