IOWA HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Iowa.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current home equity loan rates in
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Iowa.
Key Points
• Home equity loans allow homeowners to borrow against the equity in their homes, typically for large expenses like home renovations or debt consolidation.
• Home equity loan rates are influenced by external factors like the prime rate and local housing market.
• To qualify for the lowest rates, build a strong credit score, manage your debt-to-income ratio, obtain adequate property insurance, and maintain sufficient home equity.
• Fixed-rate home equity loans provide stability with consistent monthly payments, while variable-rate loans may start lower but can fluctuate.
• Alternatives to home equity loans include HELOCs, HECMs, and cash-out refinances, each with its own features and eligibility requirements.
Introduction to Home Equity Loan Rates
If you’d like to get equity out of your home in Iowa, this guide is for you. We’ll explain what is a home equity loan, plus current home equity loan rates, trends in rates, and the factors that can impact the rate you are offered by a lender.
We’ll also offer advice on how to qualify for the best rates and explore some different types of home equity loans so you’re prepared to choose the option that suits your goals.
How Do Home Equity Loans Work?
When you secure a home equity loan, your home becomes the collateral. This often means you can borrow money at a lower interest rate than if you were to get a personal loan. But it also means you have a second mortgage (assuming you’re still paying your first one). Home equity loan interest rates are usually fixed, so if you like a predictable monthly payment, this could be a good fit for you. To qualify for a home equity loan, you typically need at least 20% equity in your home.
In Iowa, and elsewhere, you can use a home equity loan for pretty much anything, from remodeling your space to covering college expenses or medical bills, or consolidating debt. If you’re wondering what is a home equity line of credit (HELOC), and how it’s different from a home equity loan, we’ll get to that soon.
Where Do Home Equity Loan Interest Rates in Iowa Come From?
Home equity loan interest rates are influenced by a number of economic factors, including the prime rate, which is the interest rate banks charge their most creditworthy customers. Federal Reserve policy decisions also have an impact on home equity loan rates because they influence the prime rate. Understanding these factors can help you when you’re seeing news updates on rate changes in the home equity loan marketplace.
How Interest Rates Impact Home Equity Loan Affordability
Just like when you got your first home loan, interest rates are a big deal when it comes to home equity loans. Over the decade (or decades) it will take you to repay a home equity loan, a 1% difference in interest rates could mean paying more each month and paying a significantly greater amount of interest over the life of the loan.
Take a look at this chart showing how different rates, terms, and amounts play out for monthly payments on a home equity loan:
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
Home Equity Loan Rate Trends
The ebb and flow of the prime interest rate can be a window into home equity loan rates in Iowa. By keeping an eye on prime rate changes, you’re better equipped to identify the right time to secure a home equity loan. Since 2018, the prime rate has fluctuated significantly, from a low of 3.25% in 2020 to a high of 8.50% in 2023, as you’ll see in the chart below.
Historical Prime Interest Rates
| 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
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
There are other factors besides the prime rate that influence exactly what rate any individual borrower in Iowa may be offered. Banks and other lenders use these details to determine your creditworthiness and the level of risk associated with making a loan.
Credit Score
If you have a history of making your payments on time, you’re in a great spot. Lenders are more likely to offer you a lower interest rate if you’ve shown that you’re a responsible borrower. Most lenders in Iowa will want to see a credit score of at least 680 for a home equity loan, but the higher your score, the better your chances of getting a good rate.
Home Value
Lenders typically determine the value of your property by ordering an independent appraisal to establish the exact amount you can borrow. This process helps ensure that you have enough equity in your home to qualify for the loan you want, and that the loan amount you request is below the appraised value of the home.
Loan-to-Value (LTV) Ratio
Once you and a lender know your home’s appraised value, the loan-to-value (LTV) ratio can be determined. Your combined LTV ratio is calculated by dividing the loan amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. The maximum combined LTV lenders typically allow for home equity loans is around 85%.
Home Value Stability
Changes in home values in your area of Iowa can significantly impact a lender’s decision about how much to lend and at what rate. When the housing market is up, lenders are often more willing to say okay to larger loans. But when values dip, the lending landscape can become more conservative.
Property Location
If your property is located in a high-risk area, such as an area prone to tornados or flooding, you may be charged a higher interest rate. This is because these areas are more likely to experience property damage and financial losses, which can lead to a higher risk of default.
Lender Policies
When it comes to choosing the best home equity loan, the policies of various lenders can have an impact on the interest rate you receive. To make sure you’re getting the best deal, take the time to shop around and compare home equity rates in Iowa, as well as fees and closing costs, from multiple lenders. This can help you save a significant amount of money over the life of your loan.
How to Qualify for the Lowest Rates
To qualify for the best home equity loan rates, you’ll want to take steps to improve your financial profile. Take the steps below.
Build a Strong Credit Score
It’s no secret that a robust credit score can open doors to more favorable interest rates on home equity loans. So it’s crucial to keep that number looking good. Try not to max out every line of credit that you have. Check your credit report to make sure there are no inaccuracies (and correct any you find). And pay your bills on time, naturally.
Manage Debt-to-Income Ratio
The debt-to-income (DTI) ratio is a crucial financial yardstick used by lenders to size up your capacity to repay a loan. It’s a simple comparison: your monthly debt duties, housing costs included, divided by your gross monthly income. For a home equity loan, the DTI requirement is usually below 36%, meaning your monthly debt payments should not surpass 36% of your monthly income.
Obtain Adequate Property Insurance
Having the right property insurance is a must, especially in areas that are prone to flooding or other natural disasters.
Maintain Sufficient Home Equity
As noted above, you’ll typically need to have at least 20% equity in your home to qualify for a home equity loan in Iowa. When you compute your home equity, make sure you use the current value of your home, not what you paid for it initially.
Fixed vs. Variable Interest Rates
Home equity loans in Iowa often come with fixed interest rates, which means you’ll have the same monthly payment for the life of the loan. While this offers stability, you could start out with a higher rate than you would with a variable rate.
Tools & Calculators
Using financial tools and calculators can help you compare rates for an Iowa home equity loan or home equity line of credit. Here are a few of our favorite calculators:
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
HELOC Interest Only Calculator
Use SoFI’s HELOC interest calculator to estimate how much monthly interest you’ll pay .
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Closing Costs and Fees
Closing costs for home equity loans typically range from 2% to 5% of the loan amount. These include fees for the appraisal, credit report, document preparation, and title insurance, but each lender has a different fee schedule so it’s wise to compare offers from multiple lenders before making a decision.
Tax Deductibility of Home Equity Loan Interest
Good news: The interest you pay on a home equity loan can be a tax write-off if the funds you borrow are used for home improvements (so file away those receipts). Couples filing joint tax returns can deduct interest paid on up to $750,000 of qualified home equity loans, while single filers are permitted to deduct interest paid on loans of up to $375,000. To claim this benefit, you’ll need to itemize your deductions. For the fine points on maximizing tax benefits, a sit-down with a tax advisor is advisable.
Alternatives to Home Equity Loans
You’ve probably 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? A guide to HELOCs 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. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
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 that you can use for any purpose. As you compare a cash-out refinance vs. a home equity line of credit, think about whether it makes sense to refinance — if you have a great rate on your current home loan, the numbers may show that a HELOC or home equity loan is a better bet.
The Takeaway
Understanding home equity loan rates in Iowa and the factors that influence them is key to making smart financial decisions. By shopping around, using online tools and calculators, and considering all options, you can increase your chances of getting the best loan terms for your financial needs.
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?
When considering a $50,000 Iowa home equity loan, carefully evaluate the interest rate and loan term, as these factors directly influence the resulting monthly payment amount. A $50,000 loan with an 8.00% interest rate and a 10-year term would mean a monthly payment of $607. A 6.00% rate and a 20-year term would mean a monthly payment of $358.
What is the monthly payment for a $100,000 HELOC?
The monthly payment on a $100,000 home equity line of credit (HELOC) is determined by the interest rate and the amount of the credit line that is drawn. If you used the entire $100,000 and repaid it over a 20-year term at 7.00% interest, you would pay $775 per month.
What is the payment on a $25,000 home equity loan?
Borrow $25,000 with a 7.00% rate and a 5-year loan term and you’ll pay $495 per month. But when you’re considering a $25,000 home equity loan, it’s important to understand how the interest rate and loan term will affect your repayment. Using a loan payment calculator can help you get your actual payment amount.
What’s the monthly payment on a $30,000 home equity loan?
When you’re thinking about a $30,000 home equity loan, the interest rate and loan term are crucial to knowing your monthly payments. A $30,000 home equity loan with a 20-year term at a rate of 7.50% would cost you $242 per month, but changing the interest rate or term will also change the payment number.
What could disqualify you from getting a home equity loan?
There are a few things that could prevent you from getting a home equity loan. These include having bad credit, lacking enough equity in your home, having a high debt-to-income ratio, and not having enough insurance on your property. Each of these factors can make it more difficult to get a home equity loan, so it’s important to address them before you apply.
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 only have to pay interest on the amount of the credit line that you use. These features make HELOCs an appealing option for homeowners who need more flexibility and lower costs when borrowing money.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. This content is provided for informational and educational purposes only and should not be construed as financial advice.
SOHL-Q424-075
More home equity resources.
-
What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
You are now leaving the SoFi website and entering a third-party website. SoFi has no control over the content, products or services offered nor the security or privacy of information transmitted to others via their website. We recommend that you review the privacy policy of the site you are entering. SoFi does not guarantee or endorse the products, information or recommendations provided in any third party website.
Okay Close