This calculator was created before the new tax bill passed, so please leave the state & federal tax rates at 0% to get accurate calculations. We considered removing the income tax deduction features from the calculator, but kept the feature as the tax laws may change again in 2025. Accurate calculations require leaving these fields set to zero if the debt is taken on for reasons other than building or improving the dwelling, since you can no longer deduct equity debt obtained for other purposes. If the interest deduction is important to your finances then a cash out refi on your original mortgage may still qualify (or at least the portion of the debt which is considered origination debt or debt which is used to build or substantially improve the dwelling).
For your convenience we publish current HELOC & home equity loan rates, auto loan rates & mortgage refinance rates which you can use to estimate your payments and find a local lender.
Our rate table lists current home equity offers in your area, which you can use to find a local lender or compare against other loan options. From the [loan type] select box you can choose between HELOCs and home equity loans of a 5, 10, 15, 20 or 30 year duration.
The following table shows current 30-year mortgage rates. You can use the menus to select other loan durations, alter the loan amount, change your down payment, or change your location. More features are available in the advanced drop down
In 2017 TransUnion published a study on the return of HELOCs which stated they anticipate there will be approximately 10 million HELOCs originated between 2018 and 2022. Here is a chart showing historical data & their future estimates
| Year | HELOC Originations |
|---|---|
| 2012 | 700,000 |
| 2013 | 800,000 |
| 2014 | 1,000,000 |
| 2015 | 1,100,000 |
| 2016 | 1,200,000 |
| 2017 | 1,400,000 |
| 2018 | 1,600,000 |
| avg/yr 19-22 | 2,100,000 |
| 2019-2022 total | 8,400,000 |
The Federal Reserve has lifted the Fed Funds Rate over the past couple years. Homeowners who have built up solid home equity have become more inclined to fund other large purchases with a HELOC or home equity loan rather than using a cash out refinance.
Refinancing the entire mortgage would mean the interest rate on the entire debt amount would lift to current market rates. Whereas if a homeowner obtains a second mortgage they still keep their existing rate on the first mortgage.
Mortgages are typically priced at a small rate premium to the rate on the 10-year U.S. Treasury, which bottomed at 1.375% on July 5, 2016. Refinancing loan volume fell 34.7% from 3,370,884 in 2016 to 2,200,834 in 2017.
According to the Home Mortgage Disclosures Act (HMDA) data in 2017 there were:
This would indicate the number of HELOCs is quite significant in terms of total transaction volume, even if they represent a far small portion of the total mortgage debt due to their smaller average loan size.
When interest rates fall significantly many people who would have perhaps considered taking out a second mortgage are more likely to instead refinance their home to lock in the lower rate on their first mortgage.
When interest rates are high or are rising significantly then the share of mortgage originations which are refinances shrinks and a greater share of homeowners who are looking to extract equity opt for a second mortgage.
As the COVID-19 crisis swept across the world the Federal Reserve pinned the Federal Funds Rate back to zero and suggested they were unlikely to lift interest rates through 2023. As the Federal Reserve offered forward guidance and expanded their balance sheet with over $3 trillion in quantitative easing in 4 months mortgage rates fell to all-time record lows, boosting refinance activity.
In October Fannie Mae suggested we would likely see $4.1 trillion in first mortgage loan volume in 2020, with roughly $2.7 trillion of that being home refinancing.
As a rule of thumb it is generally not considered a good idea to use debt to purchase depreciating assets. Tapping home equity to obtain money to buy a car is not that common.
Data showed that recently only 7% of equity loans were used for automobile purchases.
| Type of Use | Loan | Line |
|---|---|---|
| Debt Consolidation | 44% | 40% |
| Home Improvement | 25% | 23% |
| Automobiles | 7% | 7% |
| Education | 4% | 6% |
| Major Purchases | 2% | 6% |
| Investment | 2% | 3% |
| Household Expenses | 2% | 2% |
| Business Expenses | 1% | 2% |
| Medical Bills | 1% | 1% |
| Vacation | 1% | 1% |
| Other | 11% | 9% |
If you estimate 2 million equity transactions each year, this would mean 140,000 home equity loans were used to buy vehicles.
In 2017 used car sales across the United States reached an all-time high of 39.2 million. An additional 17.1 million new vehicles were sold, bringing the total volume to 56.3 million.
This means 0.24867% of automotive buyers finance the purchase using home equity. That amounts to 1 in 402 vehicle buyers.
Most people who buy vehicles either use dealer financing or pay cash for the purchase.
Many automotive manufacturers offer subsidized promotional rates to help move vehicles off the lot & many automotive dealerships make more money on financing than they do selling the actual vehicle.
Using home equity to secure a used vehicle is also a risky proposition, as if you default on either a first or second mortgage the home can go into foreclosure. And if you buy a lemon you could be required to rent, lease or buy another vehicle, adding further costs.
Home equity loans generally often have lower interest rates than auto loans since homes tend to appreciate while vehicles typically depreciate. In some cases auto manufactures offer special rates on new vehicle models to move slow selling new cars, though people with lower credit scores may not qualify for those incentives. People with bad credit who are buying used vehicles may often get charged 10% APR or more for auto loans.
In the past interest on home equity debt was tax deductible, but it no longer is unless it is obtained to build or substantially improve the homeowner's dwelling. The Tax Cuts and Jobs Act of 2017 changed what home debt interest payments could be deductible against income. As of 2018 homeowners can deduct interest paid on first mortgages, up to a limit of the interest payments on the first $750,000 of debt.
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