Best HELOC Rates Of September 2024 (2024)

FAQs

Best HELOC Rates Of September 2024? ›

There's a good possibility that HELOC rates will drop again in 2024. The Federal Reserve has hinted at reducing interest rates, which could influence the rates for Home Equity Lines of Credit (HELOC) as well. As inflation cools, borrowing costs may decrease.

There's a good possibility that HELOC rates will drop again in 2024. The Federal Reserve has hinted at reducing interest rates, which could influence the rates for Home Equity Lines of Credit (HELOC) as well. As inflation cools, borrowing costs may decrease.

The general consensus is that home equity rates on both home equity loans and HELOCs are going to drop in fall 2024, as are mortgage rates across the board. Ultimately, though, it comes down to the Fed's plans for rate cuts.

15-year fixed home equity loan: 8.55%

The average HELOC rate nationwide is 9.25% as of September 17, 2024.

Whether you should get a HELOC now, with rising interest rates, depends on your circ*mstances. Interest rates are rising on all products, so if your only option is a credit card or personal loan (which usually have much higher rates), then a HELOC may be your best bet.

Once we get into 2025, though, even more rate cuts could be on the horizon. "The most recent forecasts project four 25 basis-point cuts in 2025," Tooley says. "If this holds true, that would mean the federal funds rate, and the rate on your HELOC, would go down 1.25% between now and December 2025."

Reduce your debt-to-income ratio

With a lower debt-to-income ratio, lenders will see that more of your money can go towards paying off your HELOC, which usually equates to lower HELOC rates. Typically, lenders will require that you have a debt-to-income ratio that doesn't exceed 43 percent for a HELOC.

Compare different HELOC lenders and don't be afraid to negotiate to get the best interest rates and terms. Additionally, consider options like rate locks or adding a co-borrower to your line of credit to reduce the overall interest you pay over the lifetime of your HELOC.

Alternatives to a HELOC

If you know exactly how much you need upfront, and plan to spend it promptly, a home equity loan could be a better option than a HELOC. Cash-out refinance: A cash-out refinance replaces your existing mortgage with a new loan that has a bigger balance.

Is a HELOC a bad idea right now? ›

With interest rates expected to decline, adjustable-rate HELOCs may be a good idea for today's borrowers. Some lenders, like PNC Bank, also offer HELOCs with fixed interest rates for borrowers who prefer more predictable monthly payments.

Before you choose a fixed-rate HELOC, make sure this move aligns with your financial goals. For example, it may work well if you plan to stay in your home long-term and know that the monthly payments will fit into your budget.

Lawrence Yun, chief economist at the National Association of Realtors, even told CNBC last year that he doesn't think mortgage rates will reach the 3% range again in his lifetime.

Experts largely agree that home equity loan rates — and all kinds of mortgage rates, for that matter — will drop in 2024.

Assuming a borrower who has spent up to their HELOC credit limit, the monthly payment on a $50,000 HELOC at today's rates would be about $403 for an interest-only payment, or $472 for a principle-and-interest payment.

That noted, here's how much a $100,000 HELOC would cost per month if taken now, pegged to two different repayment periods: 10-year HELOC at 9.18%: $1,276.52 monthly for a total of $53,182.28 in interest paid. 15-year HELOC at 9.18%: $1,025.00 monthly for a total of $84,500.41 in interest paid.

Mortgage rates are expected to continue trending down through 2024 and into 2025, and we could see rates drop further into the 5% range.

Different lenders have different credit score requirements for HELOCs. According to Experian, borrowers likely need a FICO Score of at least 680 to qualify for a HELOC, but some lenders may prefer a credit score of 720 or more.

The loanDepot HELOC has a variable interest rate based on an index (WSJ Prime Rate) plus a margin set by the lender. Your APR will not exceed 18.00% at any time during the term of your account (could vary based on limits imposed by state law).

Most HELOCs have variable interest rates, meaning your interest rate will adjust many times over the course of your term. Fortunately, while market HELOC rates change daily, your specific interest rate will only change monthly. Exactly how much it will change depends on the caps outlined in your HELOC's terms.