Updated: November 7, 2024
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Home equity is the difference between your home's market value and mortgage balance. According to Experian, home equity balances surged by 17.6%, showing that more homeowners are using this resource.
The average APRs for 15-year and 10-year home equity loans are 7.9% and 7.7%, respectively. Knowing current home equity loan rates lets you make informed decisions that could lower your borrowing costs or fund significant projects like home renovations.
Nationally, current home equity loan rates are 7.9% for 15-year terms and 7.7% for 10-year terms.
Rates for 15-year home equity loans with an 80% loan-to-value (LTV) ratio vary between states. For example, the average APR in Arkansas is 5.8%, while it's 8.6% in Nevada.
Lenders in the same state may offer varying home equity loan rates. For example, in Texas, Wichita Falls Teachers Federal Credit Union offers 4.8%, while Pinnacle Bank offers 9.8%.
MoneyGeek examined 1,556 different banks and credit unions using S&P Global's SNL Depository Rates dataset to stay current on the latest home equity loan rates.
Nationally, the current home equity loan rate for a 15-year term averages 7.8% APR with an 80% loan-to-value ratio. Rates can vary based on your repayment terms, affecting total interest costs. The bar chart below shows how APRs differ between loan terms.
Finding the best home equity loan rate can help reduce your monthly payments and total interest paid. For example, a 15-year home equity loan with a 7.8% APR has a $472 monthly payment and $34,973 in total interest.
With a 6.8% APR, your monthly payment drops to $444. Your total interest falls to $29,892, saving you $5,081. This frees up money for other financial goals and eases your financial burden.
Understanding the factors influencing your loan rates can help you secure the best home equity loan rates. Here’s what you need to know:
Repayment terms
Shorter repayment terms typically come with lower interest rates, while longer terms often mean higher rates. Choosing a repayment plan that fits your financial situation is key to managing your loan costs.
Loan-to-value (LTV) ratio
Your LTV ratio compares your loan amount to your home's value. A lower LTV ratio generally leads to lower rates because it reduces the lender's risk. A higher LTV ratio might result in a higher rate.
Location
Your home's location can affect your loan rates. Rates may be higher in areas with higher housing costs or economic instability, while more stable regions often offer lower rates.
Lender
Lenders offer different rates based on their risk assessments and business models. Searching for the best rates is key to finding the best loan terms.
Your financial profile
Your credit score, income and debt levels significantly determine your loan rate. A solid financial profile can help you qualify for the best home equity loan rates, while a weaker profile may result in higher numbers.
Your loan-to-value (LTV) ratio, which compares your loan amount to your property's current value, can impact the home equity loan rate you qualify for. For example, the average APR for a 15-year home equity loan with an 80% LTV is 7.8%, while a 90% LTV is 8.2%. The chart below shows how APRs vary between LTV ratios.
Calculating your loan-to-value (LTV) ratio is simple and can impact your loan rate. If your home is worth $300,000 and you owe $200,000, divide the mortgage balance by your home’s value: $200,000 ÷ $300,000 = 0.67, or 67%.
Lenders view higher LTV ratios as riskier because they indicate that you’re borrowing a larger portion of your home’s value. This increased risk often leads to higher interest rates. The more equity you have in your home (a lower LTV), the more favorable your loan terms can be.
Home equity loan rates vary widely between states due to local housing markets and economic conditions. For example, for a 15-year term with an 80% LTV ratio, Alaska's average APR is 5.8%, while Nevada's is 8.6%.
State regulations and lender competition also affect the best home equity loan rates. The table below shows the average APRs for some of the most populous states, giving you a clearer view of how rates differ across the country.
| FL | 7.64 | 7.48 | 8.00 |
Average APRs for home equity loans vary between states and cities in the same state. In Texas, Wichita Falls has an APR of 5%, while Pampa's APR is 9.8% for a 15-year term with an 80% LTV ratio.
Comparing multiple lenders is a smart way to secure the best home equity loan rates. Lenders may offer different rates due to variations in their cost structures and risk assessments, even for borrowers with similar financial profiles and loan types.
Competition and regional market conditions can also lead to significant differences in rates. The table below highlights lenders offering the lowest home equity loan rates in some states.
State | Lender With Lowest Average APR | Average APR |
|---|---|---|
California | Star One Credit Union | 6.20% |
Texas | Wichita Falls Teachers Federal Credit Union | 4.75% |
Florida | Miami Postal Service Credit Union | 4.88% |
New York | ACMG Federal Credit Union | 5.50% |
Pennsylvania | S&T Bank | 5.07% |
To find the best home equity loan rates, take a systematic approach when comparing options. Here’s how you can effectively evaluate different lenders and their offers:
Look up the latest home equity loan rates from multiple lenders. This will give you a baseline against which to compare offers and spot any outliers.
Examine each lender's specific terms, including repayment periods and any penalties. Different terms can significantly affect your overall loan cost.
Don't just focus on the interest rate — look at the full cost of the loan, including any origination fees, closing costs and prepayment penalties.
Research the lenders' reputation, service quality and customer reviews. A lower rate might not be worth it if the lender is difficult to work with.
Apply for prequalification based on your credit profile to see what rates you might personally qualify for. This step can give you a more accurate comparison.
Avoid focusing solely on the lowest interest rate when comparing home equity loan rates. Hidden fees, such as origination or closing costs, can offset any savings.
Also, beware of teaser rates that increase after a few months. Always compare the full terms of each offer, including any potential penalties for early repayment. This ensures you get the best overall deal, not just the best advertised rate.
Taking proactive steps can make a big difference in securing the best home equity loan rates. Here are some effective strategies to consider:
Improve your credit score
A higher credit score often results in lower interest rates. Paying down credit card debt and correcting any errors on your credit report can boost your score and help you qualify for better rates.
Increase your home’s equity
The more equity you have, the lower your loan-to-value (LTV) ratio. Lenders see lower LTV ratios as less risky, which can lead to more favorable rates.
Shop around
Lenders offer different rates based on their criteria. Comparing offers from multiple lenders helps you find the most competitive rate.
Consider a shorter loan term
Lenders typically offer lower rates for shorter loan terms. Choosing a shorter repayment period can save you money if you can manage higher monthly payments.
Lock in your rate
Once you find a good rate, consider locking it in. Rates can fluctuate, and locking in ensures you won’t miss out if rates rise before your loan closes.
Home equity loan rates can vary widely, making it important for homeowners to understand their options. We answered common questions about securing the best home equity loan rates.
As of October 2024, the average APRs are 8.46% for a 10-year loan and 8.38% for a 15-year loan. Rates may vary based on your credit score and loan-to-value ratio.
Home equity loan rates are generally fixed, while home equity lines of credit (HELOC) are typically variable. HELOC rates may start lower but can increase over time.
Home equity loan rates can change frequently, often in response to market conditions and economic factors. Check rates regularly if you're considering a loan.
You can lock in a home equity loan rate, meaning your interest rate will stay the same for the loan term. This offers stability in your monthly payments.
If rates drop after you secure a loan, you won't benefit from the lower rates unless you refinance. Refinancing may involve additional costs and fees.
About Zachary Romeo, CBCA
Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.
Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.
