IDAHO HELOC RATES TODAY
Current HELOC rates in
Idaho.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Current HELOC rates in
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Compare HELOC rates in Idaho.
Key Points
• Idaho homeowners have several options for securing competitive home equity line of credit (HELOC) rates, including online lenders and local credit unions.
• A HELOC is like a credit card based on your home equity, allowing you to borrow up to 90% of your home’s value minus what is owed on your mortgage.
• HELOC rates in Idaho depend on the prime rate and economic factors.
• To find the best available HELOC rates in Idaho, homeowners should compare offers from multiple lenders and focus on cultivating a good credit score.
• Maintaining a credit score of 680 or higher is crucial for securing more favorable Idaho HELOC rates, with some lenders preferring credit scores exceeding 700.
Introduction to HELOC Rates
If you’re thinking about how to get equity out of your home and considering a home equity line of credit (HELOC), this guide will smooth your application process and help you get the most competitive interest rate available. You’ll learn the key factors influencing Idaho HELOC rates and how to effectively utilize this information to put your best financial foot forward and make a well-informed decision about borrowing money. Let’s start with the most basic info:
What Is a HELOC?
A HELOC enables homeowners to borrow against the equity in their home. You can borrow up to 90% of your home’s value minus what you owe on your mortgage. But because a HELOC works somewhat like a credit card, you don’t have to borrow the entire amount at once. You can borrow in increments as you need the money. Because the HELOC is secured by your home, it may have a better interest rate than a credit card or personal loan.
HELOCs have two phases: the draw period and the repayment period, and it’s important to understand the difference between them.
The Draw Period
During the HELOC’s draw period (usually 10 years), you can access funds up to your credit limit, make payments to pay down your balance, and borrow the money again. The borrower is usually required to make interest payments during the draw period, but payments toward the principal may be optional. This flexibility allows homeowners to manage their finances effectively during the HELOC draw period. It’s important to note that Idaho HELOC rates can vary, so it’s wise to compare offers from different lenders to ensure you get the right terms for your situation.
The Repayment Period
During the 10- to 20-year repayment period, borrowers repay the principal with interest. A HELOC repayment calculator can help you understand what potential monthly payments and overall interest paid will be. HELOCs carry the risk of foreclosure if borrowers default, so it’s important to understand what payments will be required and to research HELOC rates in Idaho to ensure you’re getting a competitive deal.
Where Do HELOC Interest Rates Come From?
The starting point for HELOC rates is at the Federal Reserve, which sets rates that influence lenders’ prime rates. The prime rate is the benchmark interest rate for a lender’s most creditworthy customers. But this rate isn’t offered to every borrower, and there are additional factors that influence what each applicant is offered. We’ll get to those later. But first, it’s helpful to understand just how big a deal rates are.
How Interest Rates Impact HELOC Affordability
Your interest rate can make a big difference in affordability when you borrow with a HELOC. Using a HELOC repayment calculator can help homeowners understand this, but here is a look at one example, a $50,000 HELOC repaid over 20 years at three different interest rates:
• At 6.00%: monthly payment $358, total interest paid $35,972
• At 7.00%: monthly payment $388, total interest paid $43,036
• At 8.00%: monthly payment $418, total interest paid $50,373
HELOC Interest Rate Trends
Looking at the history of fluctuations in the average prime rate provides insight into current trends in HELOC rates. As you can see in the chart below, since 2018, the prime rate has fluctuated notably, reaching a low of 3.25% in 2020 and a high of 8.50% in 2023. The graphic shows a span of more than 50 years. If you’re thinking about a home equity line of credit but wondering if a 4.00% rate is in your future, looking at this graphic will provide valuable perspective.
Historical Prime Interest Rate
| Date | U.S. 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 | 5.5% |
| 9/27/2018 | 5.25% |
Source: U.S. Federal Reserve
Historical U.S. Prime Rates
Factors Influencing HELOC Rates
Each of the factors below can influence the Idaho HELOC rate you’ll be offered.
Home Equity
Having substantial equity in your home makes you appear less risky to lenders, which can lead to lower interest rates. Homeowners typically need at least 15% to 20% equity in their property to qualify for favorable HELOC rates. To determine your equity, subtract whatever you owe on your home from its estimated value.
Credit Score
Maintaining a credit score of 680 or higher is of utmost importance in securing more favorable interest rates on HELOCs, and 700 is even better. A higher credit score serves as an indicator of reduced risk.
Stable Income
Lenders look at your income, but they are also looking for a steady income, which indicates a diminished risk of default. You may be asked to produce business records or additional pay stubs if your income is not from full-time employment.
Loan-to-Value Ratio
Many lenders require your combined loan-to-value ratio (combined loan balance / appraised home value) to be 90% or less, although some will allow you to borrow 100% of your home’s value. The ratio is a key metric in determining your credit limit. This ratio significantly impacts your home equity line of credit terms. Your combined LTV ratio is calculated by dividing the HELOC amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. If your mortgage balance is $300,000, and you want a $100,000 HELOC, and your home value is $500,000, then your LTV ratio would be 80%.
Variable vs Fixed Interest Rates
HELOCs feature variable interest rates, which can change during the loan term. While variable interest rates often start lower than fixed rates, they can adjust up or down in accordance with prevailing market conditions. Plugging different possible interest numbers into a HELOC interest calculator can provide you with valuable insights into the potential effects of these fluctuations.
Tools & Calculators
Calculators can help you gain valuable insights into your monthly payment amount and overall loan affordability, whether you’re thinking about a HELOC or a home equity loan. Here are three useful tools:
Run the numbers on your HELOC.
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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.
How to Qualify for a Competitive HELOC Rate
To obtain the most favorable HELOC rates in Idaho, you’ll want to do a little financial housekeeping before you submit your first application. Here’s your to-do list:
1. Strengthen Your Credit Score
Maintaining regular and timely payments while simultaneously reducing credit card balances can help you cultivate the kind of credit score lenders are looking for. Take a few minutes to check your credit report as well, and request a correction to any inaccuracies.
2. Assess Your Home Equity
Increased home equity can lead to better terms and higher amounts when applying for a HELOC. Make sure you have at least 20% equity in your home.
3. Calculate Your Debt-to-Income Ratio (DTI)
Your DTI ratio is how much you owe in monthly debt payments divided by your gross monthly income. Home equity lenders generally look for a DTI that’s below 50%, though many prefer a ratio below 36%, and the lower your DTI, the better.
Application Process for a HELOC in Idaho
The application process for a home equity line of credit in Idaho involves a detailed review of financial health and a formal appraisal of your home, among other steps. Understanding each step can help you navigate the process smoothly.
Step 1. Run the Numbers
Check that your credit score is 680 or above and that your DTI ratio is at least 36%. Estimate your home equity to understand how much you can borrow. Some lenders offer online prequalification tools to streamline this process.
Step 2. Compare Lenders
When seeking the best HELOC rates in Idaho, compare interest rates, qualification requirements, loan limits, fees, and the duration of draw and repayment periods from multiple lenders.
Step 3: Gather Your Documents
When preparing your HELOC application, it helps to gather and organize all the necessary documents in advance. This typically includes proof of income (such as W2 forms and at least one tax return), and property documents such as proof of insurance. If you’re self-employed, lenders may ask for a profit-and-loss statement and two years’ tax returns.
Step 4: Submit Your Application
You’ll submit your HELOC application online or in person, or sometimes even by phone, depending on the lender. Be sure to attach all necessary documents at this stage.
Step 5: Get an Appraisal
A home appraisal plays a pivotal role in determining eligibility for a HELOC. If the appraised value of your home exceeds the outstanding balance of your mortgage, you may qualify for a HELOC. The lender will guide you through the appraisal process.
Step 6: Prepare for Closing
Before accessing your home equity line of credit loans funds, complete the process by signing documents and paying any required fees. Some lenders make funds available as quickly as three business days following the signing.
Tax Benefits and Considerations
Homeowners can deduct the interest paid on a HELOC if the funds are used for significant home improvements (so keep your receipts). The maximum amount of mortgage principal eligible for interest deductions is $375,000 for single filers, and $750,000 for couples filing jointly. It is advisable to consult a tax advisor to understand your eligibility for deductions related to a HELOC.
Closing Costs and Fees
Closing costs for HELOCs are generally lower than typical home buying costs. Fees may include a fee of around $300 to $600 for the appraisal, and lesser fees for the application, loan origination, and administrative costs. Annual maintenance, transaction, inactivity, and early termination fees may also apply. Some lenders offer reduced or waived closing costs but may charge higher interest rates for your home equity line of credit.
Alternatives to HELOCs
Each avenue offers its own advantages and disadvantages, so it’s crucial to think through your financial objectives and to consider the differences between a HELOC and other types of home equity loans to ascertain the most suitable option.
Home Equity Loan
Unlike a HELOC, which offers a revolving credit line, home equity loans provide a fixed sum of money at a fixed interest rate. Homeowners can borrow up to 85% of their home’s equity with this type of loan and interest rates are usually a bit higher than those for HELOCs. Carefully consider the differences between a HELOC vs. a home equity loan:
| HELOC | Home Equity Loan | |
|---|---|---|
| Type | Revolving line of credit | Installment loan |
| Interest Rate | Usually variable-rate | Usually fixed-rate |
| Repayment | Repay only what you borrow; you may have the option to make interest-only payments during the draw period. | Starts immediately at a set monthly payment. |
| Disbursement | Charge only the amount you need. | Lump sum. |
Cash-Out Refinance
Cash-out refinancing is a little different from a typical mortgage refinance. It allows homeowners to tap into their home equity by refinancing their existing mortgage for more than they owe. They can then use the extra cash for any purpose.
Understanding the differences between a cash-out refinance vs. a home equity line of credit can help homeowners make an informed decision about their financial options. A cash-out refinance will leave you with one monthly payment (a new mortgage) vs. the two you would have if you carry a mortgage and a HELOC or home equity loan. But it also means you will have a new interest rate. So if your current home loan provides a very favorable rate, you’ll want to look closely at how much more you would pay in interest with a refi.
Personal Loan
A personal loan is typically unsecured, so it will likely have a higher interest rate than a HELOC or home equity loan. It’s repaid in regular, fixed payments over a duration of two to seven years. This loan option can be utilized for diverse purposes and does not necessitate using your home as collateral, unlike a home loan.
Credit Card
Credit cards, like personal loans, typically come with a higher interest rate than a HELOC, which can make them much more expensive if you carry a large balance from month to month. While credit cards offer flexibility for various purchases, HELOCs can be more suitable for larger expenses such as home improvements.
The Takeaway
When considering a HELOC, you’ll want to carefully weigh the advantages and disadvantages. A home equity line of credit can provide a versatile source of funding for home renovations, debt consolidation, and other financial needs. However, it’s essential to thoroughly comprehend the interest rates, fees, and repayment terms before making a decision. Using an online calculator can be very helpful in this process.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
FAQ
What is the monthly payment on a $50,000 HELOC?
To determine the monthly payment on a $50,000 HELOC, you can utilize a HELOC monthly payment calculator. For example, if you had a 20-year repayment term and a 6.00% interest rate, your monthly payment would be $358. At a 7.00% interest rate, your monthly payment would jump to $388.
Is a HELOC a good idea right now?
Deciding if a HELOC is a good idea depends on your goals. A home equity line of credit can be beneficial for home improvements, debt consolidation, and other expenses. Some borrowers find it comforting to have the line of credit open even if they don’t always use it. However, it’s important to consider the current interest rates, your ability to repay, and the potential impact on your financial stability.
What is the monthly payment on a $100,000 HELOC?
The monthly payment on a $100,000 HELOC depends on how much of the credit line you are using. But if you have drawn the maximum and are paying it off over 20 years, you would have a monthly payment ranging from around $700 to $900 if your interest rate was in the neighborhood of 6.00% to 8.50%.
What are the benefits of a HELOC?
A home equity line of credit (HELOC) offers several benefits, including flexible access to funds, lower interest rates compared to credit cards, and potential tax advantages if funds are used for remodeling. One big benefit is that you only pay interest on the amount you borrow, making a HELOC an efficient financial tool.
Do you need an appraisal for a HELOC?
It’s likely you will need an appraisal for a home equity line of credit. The appraisal helps determine the value of your home, which is crucial for calculating the amount you can borrow. Some lenders will send an appraiser in person; others will use an online model that evaluates many data points to determine your home’s estimated value.
What disqualifies you from getting a home equity loan?
Several factors can disqualify you from getting a home equity loan or line of credit. These include a low credit score, home equity below 15%, a high debt-to-income ratio, and unstable income. Addressing these factors can improve your chances of qualifying for a home equity loan.
How difficult is it to get a HELOC?
The difficulty of getting a home equity line of credit depends on your financial situation. Lenders consider factors such as your credit score, home equity, debt-to-income ratio, and income stability. Improving these aspects before you apply can make the process smoother.
Does HELOC affect credit score?
A home equity line of credit can affect your credit score in several ways. Applying for a HELOC may result in a hard inquiry, which can temporarily lower your score. Additionally, using a significant portion of your credit line can increase your credit utilization, potentially impacting your score. However, making timely payments on your HELOC can positively affect your credit score over time.
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More HELOC 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