FLORIDA HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Florida.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current home equity loan rates in
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Compare home equity loan rates in Florida.
Key Points
• Home equity loans provide borrowers a lump sum of money upfront that is repaid with fixed monthly payments, typically for 20 years.
• Home equity loans in Florida usually require at least 20% home equity.
• Because a home equity loan uses your home as collateral, the interest rate is lower than for unsecured personal loans; however, if you fail to make payments, the bank could seize your home.
• Interest on home equity loans can be tax-deductible if used for home improvements.
• Alternative financing options include HELOCs, HECMs, and cash-out refinances.
Introduction to Home Equity Loan Rates
Home equity is the amount of ownership you have in your home compared to what you owe on your mortgage. If you’re reading this, you’re probably aware that your home equity can be a powerful tool for helping you meet your financial goals. But what’s your next step?
This guide will cover how to get equity out of your home, with a focus on home equity loans. We’ll explain the ins and outs (and ups and downs) of interest rates, and show you how to secure the best possible rates in Florida, which can save you thousands of dollars over the long term. Soon, you’ll not only understand your next step but feel confident in which one is right for you.
How Do Home Equity Loans Work?
Like any home loan, a home equity loan uses your home as collateral. Because of that, home equity loans typically have lower interest rates than personal loans. Usually that rate is fixed, giving you consistent payments over the life of the loan.
To qualify for a home equity loan in Florida, you’ll need to have at least 20% equity in your primary residence. Your lender will then calculate your combined loan-to-value ratio (CLTV), or your mortgage balance plus the amount you want to borrow, divided by the appraised value of your home. Most lenders require your CLTV to be 85% or less for a home equity loan or home equity line of credit (HELOC).
Let’s say your home is appraised at $400,000 and your mortgage owed is $250,000.
• $400,000 X 85% = $340,000
• $340,000 – $250,000 = $90,000 Max loan amount
Your maximum loan amount is $90,000, a generous sum that can be used for just about anything: home improvements, education, medical bills, or debt consolidation.
What Determines Home Equity Loan Interest Rates?
Now that you know what a home equity loan is, let’s talk rates. In Florida and throughout the country, home equity loan interest rates are based on the prime rate, the baseline interest rate that banks extend to their most creditworthy clients. Federal Reserve policy decisions on interest rates also have a ripple effect on home equity loan rates. By understanding these influences, you’re better equipped to anticipate rate shifts and make well-informed decisions about your Florida home equity loan.
How Interest Rates Impact Affordability
The interest rate you lock in can make a world of difference in how comfortably you manage your monthly payments. Consider this: Over a standard 20-year term for a home equity loan, a mere 1% variance in the interest rate could add up to an extra $11,000 in interest payments over the entire loan period.
Here are the payment figures for a $75,000 home equity loan:
| Interest Rate | Monthly Payment | Total Interest Paid |
|---|---|---|
| 8.00% | $627 | $75,559 |
| 7.50% | $604 | $70,007 |
| 7.00% | $581 | $64,554 |
Recommended: What Is a Home Equity Line of Credit?
Home Equity Loan Rate Trends
The prime interest rate acts as a crystal ball for what’s to come in home equity loan rates. By keeping an eye on the prime rate’s movements, you’re arming yourself with the knowledge to make the smartest financial moves.
Historical Prime Interest Rates
Since 2018, the U.S. prime rate has moved dramatically. It hit a low of 3.25% in 2020 and a high of 8.50% in 2023. This wide range reflects the many economic changes that have occurred over the past five years, and how those changes have affected the decisions of businesses and consumers in Florida and nationwide.
| Date | Prime Rate |
|---|---|
| 9/19/2024 | 8.00% |
| 7/27/2023 | 8.50% |
| 5/4/2023 | 8.25% |
| 3/23/2023 | 8.00% |
| 2/2/2023 | 7.75% |
| 12/15/2022 | 7.50% |
| 11/3/2022 | 7.00% |
| 9/22/2022 | 6.25% |
| 7/28/2022 | 5.50% |
| 6/16/2022 | 4.75% |
| 5/5/2022 | 4.00% |
| 3/17/2022 | 3.50% |
| 3/16/2020 | 3.25% |
| 3/4/2020 | 4.25% |
| 10/31/2019 | 4.75% |
| 9/19/2019 | 5.00% |
| 8/1/2019 | 5.25% |
| 12/20/2018 | 5.50% |
| 9/27/2018 | 5.25% |
Source: St. Louis Fed
Factors Influencing Home Equity Loan Rates in Florida
Now for the final piece of the puzzle that is home equity loan interest rates: The Florida housing market and the borrower’s financial profile also come into play. Your credit score, loan-to-value ratio, home value, property location, and lender policies all exert their push and pull on rates. Here’s what to expect when applying for a home equity loan in Florida:
Credit Score
If you’re someone who’s on top of your financial game, paying your bills on time, you’re likely to snag a more attractive interest rate. Lenders usually look for a credit score of 680 or higher for a home equity loan, but they save the best rates for borrowers with scores of 700 or above.
Loan-to-Value (LTV) Ratio
As we noted above, your loan-to-value (LTV) ratio determines the maximum loan amount you can receive. The LTV ratio is calculated by dividing the loan amount by the appraised value of the property. The LTV ratio also helps lenders determine the appropriate interest rate and terms for each borrower’s financial situation.
Home Value
Lenders often use independent appraisals to determine a home’s market value and the homeowner’s equity position. Remember, the value of your home minus what you owe on it is your equity.
Home Value Stability
When the market is up, lenders are more willing to work with you on larger loan amounts, seeing the reduced risk in your property’s increased value. But if the market takes a dip, lenders could tighten their criteria and offer smaller loans.
Property Location
Where you live makes a difference, too. Florida homeowners might see home equity loan rates that are higher than the national average due to the increased risk of hurricanes. Elsewhere, rates may reflect a heightened risk of earthquakes, wildfires, or extreme weather.
Lender Policies
Because lenders have some say in the rates they offer, it’s important to shop around and compare rates, fees, and closing costs from multiple lenders in Florida. By doing your homework and comparing your options, you might be able to secure more favorable terms and save money in the long run.
Recommended: Cash Refinance vs Home Equity Line of Credit
How to Qualify for the Lowest Rates
So, what can you do to secure the best home equity loan rates? You need to have a good credit score, manage your debt-to-income ratio, have adequate property insurance, and maintain a good amount of equity in your home. Let’s take a closer look.
Build a Strong Credit Score
A robust credit score can be your ticket to snagging more attractive interest rates on home equity loans. The higher your credit score, the lower the risk you pose to lenders, and the more appealing you become to them. This desirability can translate to significant savings over the life of your loan. And if you’re eyeing a Florida home equity loan, where the market is bustling and interest rates are on the move, this is especially pertinent. So, take the time to fortify your credit score — it’s a smart move that could pay off handsomely.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio is a significant factor when applying for a home equity loan. This ratio, which compares your monthly income to your monthly debt obligations, is a key indicator of your financial health. Lenders typically look for a DTI ratio between 36% and 50% for home equity loans. This range allows them to assess your ability to handle your current debt and manage the additional loan payments.
Obtain Adequate Property Insurance
Property insurance is often a prerequisite for securing home equity loans. This requirement holds particular significance in Florida and other regions susceptible to flooding. If you haven’t reviewed your coverage in a while, make it a priority to reevaluate and potentially upgrade your insurance before shopping around for the home equity loan.
Maintain Sufficient Home Equity
If you’re mulling over a home equity loan, make sure you have at least 20% equity in your primary residence. Not sure what your equity position is? A real estate agent or lender can help you figure it out.
Fixed vs. Variable Interest Rates
Home equity loans in Florida usually come with fixed interest rates. This means you’ll have the same predictable monthly payment for the life of the loan.
Be aware that while fixed rates offer peace of mind, they can also start off higher than variable rates. Variable rates adjust up or down over time; that can mean a lower initial payment, but potentially much higher payments in the future. Understanding the benefits and drawbacks of each type of interest rate can help you make the best financial decision for your situation.
Tools & Calculators
Take advantage of the many online tools and calculators that can help you generate accurate estimates of your home equity loan payments, and understand the potential impact of different loan terms on your financial situation. Here, in addition to the home equity loan calculator, you’ll find a HELOC repayment calculator and a HELOC interest only calculator.
Run the numbers on your home equity loan.
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Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
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HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Home equity loan closing costs can typically range from 2% to 5% of the loan amount. These may include fees for an appraisal, credit report, document preparation, origination, notary, title search, and insurance. Title insurance alone can cost you 0.5 to 1% of the loan balance, with title search fees ranging from $100 to $250. Appraisals generally fall in the $300 to $500 range. Shopping around with multiple lenders can allow you to compare fees as well as interest rates.
Tax Deductibility of Home Equity Loan Interest
The interest on a home equity loan may be tax-deductible if the funds are used for home improvements. The deduction is capped at $750,000 for joint filers and $375,000 for single filers. To claim this benefit, you’ll need to itemize your deductions. It’s always a good idea to chat with a tax advisor to ensure you’re making the most of your tax benefits.
Alternatives to Home Equity Loans
You may have heard that there are different types of home equity loans. The key terms to research are home equity lines of credit (HELOCs), home equity conversion mortgages (HECMs), and cash-out refinances. Each of these options has its own set of features and requirements, and some may be more appropriate for your situation than others. Read on for details.
Home Equity Line of Credit (HELOC)
A HELOC, or home equity line of credit, is a bit like a credit card, but with a much lower interest rate. It allows you to borrow up to a certain limit, and you only have to pay interest on the amount you borrow for the first 10 or so years. The interest rates on HELOCs tend to be variable, however, which means they can go up and down with the market. Not sure which one is for you? Our guide to HELOC vs Home Equity Loans may be able to help.
Home Equity Conversion Mortgage (HECM)
An HECM is a government-insured reverse mortgage designed to help homeowners aged 62 and older access the equity in their homes. You can receive HECM funds as a lump sum, regular payments, or a line of credit. The beauty of it is that no monthly payments are required as long as you live in your home. This makes HECMs different from home equity loans and HELOCs, which do require monthly payments. Keep in mind, though, that HECMs often come with higher closing costs and a longer application process.
Cash-Out Refinance
A cash-out refinance is a type of mortgage refinance. The refi pays off your old mortgage and gives you the homeowner a lump sum of cash based on your home equity. It’s generally easier to qualify for a cash-out refinance than other options, and you may be able to borrow up to 80% of your home’s equity.
The Takeaway
Home equity loans can be a great way to get the cash you need for a variety of uses, from home renovations to high-interest debt consolidation. To get the best rate on your home equity loan, utilize financial tools and calculators, and take the time to shop around for deals that meet your specific financial needs and objectives. That way you can feel confident that you’re making the best choice for your situation.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payment be on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan can vary depending on a number of factors, including the interest rate, loan term, and any fees. For example, a loan with an 8.00% interest rate and a 10-year term results in a monthly payment of $607. To get an accurate estimate of your monthly payment, it’s a good idea to use a loan calculator.
What is the monthly payment on a $100,000 HELOC?
When you’re thinking about a home equity line of credit, it’s important to consider the monthly payments that come due after the draw period. They’re determined by two things: the interest rate and how much of the HELOC you use. Assuming you use the full amount and make no payments during the draw period, with 8.50% and a 20-year term, the payment would be $868. To get a better idea of what your actual payments might look like, try using a HELOC calculator.
What is the payment on a $25,000 home equity loan?
When you’re mulling over a $25,000 home equity loan, the payments will depend on your interest rate and loan term. For a loan with an 8.00% interest rate and 10-year term, the monthly payment would be $303. To figure out your actual payment, run the numbers through a trustworthy loan calculator.
What would the payment be on a $30,000 home equity loan?
When it comes to a $30,000 home equity loan, the interest rate and loan term are the primary factors that determine the payment amount. For example, a $30,000 loan at 8.00% repaid over 7 years gives you a monthly payment of $468. The same loan amount and interest rate repaid over 15 years lowers the monthly payment to $287 but increases the total interest paid. To get an accurate estimate of your payments, it’s advisable to use a reliable loan calculator.
What might disqualify you from getting a home equity loan?
An unfavorable credit history, insufficient equity in your home, a high debt-to-income ratio, and inadequate insurance coverage for your property could all make you ineligible for a home equity loan. These factors suggest a higher risk of default to lenders and can significantly impact your ability to secure a home equity loan.
What are the benefits of a HELOC?
HELOCs, or home equity lines of credit, offer a variety of benefits. They are flexible, have lower interest rates than most credit cards, and you may only have to pay interest on the amount you use for the entire draw period (usually 10 years). These features make HELOCs a great option for homeowners who need more flexibility and lower costs when borrowing money.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. This content is provided for informational and educational purposes only and should not be construed as financial advice.
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More home equity resources.
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What is a Home Equity Line of Credit
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Different Types of Home Equity Loans
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HELOC vs Home Equity Loan: How They Compare