Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• The rates for home equity loans in Boise are shaped by the prime rate and individual borrower profiles.
• To get the best deal, make sure to compare rates and terms from multiple lenders.
• The better your credit score and debt-to-income ratio, the more favorable your rates will be.
• Even a small improvement in interest rates can translate to substantial savings over the life of a loan.
• Home equity loans often come with fixed interest rates, offering you stability and predictability.
Home equity loans are a powerful financial resource for homeowners, giving you the ability to get equity out of your home without selling the property. This guide will take you through the current home equity loan rates in Boise, Idaho, and explain how these rates are affected by a variety of factors.
We’ll also thoroughly explain what a home equity loan is and compare home equity loans with other financial products, discuss the potential risks and benefits, and offer practical guidance on how to secure the most favorable rates. Gaining a clear understanding of home equity loan rates can empower you to maximize the value of your home.
A home equity loan is a second mortgage (assuming you’re still paying off your first home loan). It uses your home as collateral and provides you with a lump sum of money. You’ll begin repaying the loan as soon as you receive it, with interest, and pay it back over a predetermined period — typically five to 30 years.
Because home equity loans usually have a fixed rate, your monthly payments will be consistent and predictable. Your home secures the loan, so the interest rates are often lower than those of unsecured personal loans. To qualify, you generally need at least 20% equity in your home. A home equity loan calculator can help you determine how much you might be able to borrow.
Recommended: Different Types of Home Equity Loans
Home equity loan interest rates are determined by lenders based on a combination of economic and personal factors. Lenders set their base interest rates by adding a margin to the prime rate. But a borrower’s financial profile, including their credit score and debt-to-income (DTI) ratio, also plays a big part in determining the precise home equity loan rate they are offered. Higher credit scores and lower DTI ratios typically lead to more favorable rates.
Your interest rate is a big deal when it comes to the affordability of a home equity loan. Even a small change in percentage can add up to significant savings or costs over time. For instance, a $100,000 loan at 8.50% interest would run about $985 a month, with a total interest of $77,253 over 15 years. But increase the rate to 9.50%, and you’re looking at a monthly payment of $1,044 and a total interest of $87,960. That’s a more than $10,000 difference in interest alone. So it’s wise to seek out the best possible interest rate and think about how payments fit into your monthly budget and long-term financial goals.
When you’re surveying different lenders’ rates and terms, it can be helpful to have a sense of the history of interest rates. In recent years, we’ve seen the prime rate drop to 3.25% in 2020 and rise again to 8.50% in 2023. These fluctuations have a direct impact on home equity loan rates in Boise and across the nation. It may be tempting to wait for a low rate, but as you can see from the numbers in the chart, shifts can sometimes be slow. If you need to borrow, focus your energies on making sure your application meets lenders’ criteria for the best 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% |
To secure the most competitive home equity loan rates, there are a few key things you can do before filing your applications. Let’s take it one step at a time:
To be eligible for a home equity loan, you need to have at least 20% equity in your home. Calculating your equity is simple: Just subtract your outstanding mortgage balance from your home’s current value. Then divide the result by the home value to arrive at a percentage. For instance, if your home is valued at $550,000 and your mortgage balance is $400,000, then you have $150,000 in equity, which is 27%. Most lenders permit borrowing up to 85% of this equity.
To land the most sought-after home equity loan rates, it helps to have an excellent credit score. Lenders are often looking for a score of 680 or higher, but the real target is 700 or more. A higher score shows you’re a responsible borrower. Want to take good care of your score? Make sure you’re paying your bills on time, keeping credit card balances in check, and steering clear of new debt. It’s also a good idea to look over your credit report and dispute any errors so they can be corrected.
Your debt-to-income (DTI) ratio is a key metric when it comes to home equity loan eligibility. Lenders typically look for a DTI ratio under 50%, with an even better chance if you’re under 36%. To calculate this, they divide your total monthly debt payments by your gross monthly income. The lower this ratio, the better your chances of securing a loan with competitive rates. To improve your DTI, consider paying down existing debts, boosting your income, or both.
Property insurance is a must-have for home equity borrowers. From the lender’s perspective, having good coverage safeguards the collateral (your home). Be sure to have comprehensive coverage, including any additional protection mandated by your location. Don’t hesitate to touch base with a prospective lender to ensure your protection aligns with its needs.
Recommended: HELOC vs. Home Equity Loan
Online tools can help you figure out whether you’re ready to take on a home equity loan and assist you in comparing home equity loan rates from different lenders. Here are some especially helpful ones.
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
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.
In Boise, closing costs for home equity loans typically fall between 2% and 5% of the loan amount. These fees encompass a variety of expenses, such as appraisal, credit report, document preparation, origination, notary, title search, and title insurance. While no-closing-cost loans are an option, they often come with higher interest rates. It’s wise to compare costs across different lenders when you’re comparing interest rates.
Here’s a tip: The interest on home equity loans can be tax-deductible if you use the funds to improve your Boise home. Couples filing jointly can deduct interest on up to $750,000 of qualified home equity loans, and single filers can claim interest on up to $375,000 in loans. To benefit from this, you’ll need to itemize your deductions when filing your tax return. Discuss this with a tax advisor as tax rules can change year-to-year.
A home equity line of credit (HELOC) and a cash-out refinance are two other common ways to tap into your home’s equity. A HELOC is a revolving line of credit that lets you borrow money as you need it, up to a certain amount. A cash-out refinance is a special mortgage refinance that replaces your existing mortgage with a new one that’s larger than what you owe. You pocket the difference to use as you wish.
HELOCs often have variable interest rates, while cash-out refinances can have either fixed or variable rates. It’s a good idea to compare these options and their rates to see which one might be the best fit for your financial situation and goals. One thing to consider as you think about a cash-out refinance vs. a home equity line of credit or a home equity loan: The cash-out refi is a completely new loan. It will leave you with one payment instead of two. But if the interest rate on your current mortgage is a really favorable one, a refinance may not make sense.
Get more on what is a home equity line of credit vs. a home equity loan and a cash-out refi in the chart below.
| Home Equity Loan | HELOC | Cash-Out Refinance | |
|---|---|---|---|
| Borrowing Limit | Up to 85% of borrower’s equity | Up to 90% of borrower’s equity | 80% of borrower’s equity for most loans |
| Interest Rate | Fixed | Generally variable | May be fixed or variable |
| Type of Credit | Installment loan: Borrowers get a specific amount of money all at once that they then immediately begin repaying, with interest, in regular installments. | Revolving credit: Borrowers receive a line of credit. They have a draw period (5-10 years) during which they borrow and can only pay interest (a HELOC interest-only calculator is useful then). Then there is a repayment period (10-20 years) to repay the principal plus interest. You can use a HELOC monthly payment calculator to compute costs. | Installment loan: Borrowers receive a lump sum payment from the excess funds of their new mortgage, which has a new rate and repayment terms. |
| Repayment Term | Generally 5-30 years | A draw period of 5-10 years, followed by a repayment period of 10-20 years | Generally 15-30 years |
| Fees | Closing costs (typically 2-5% of the loan amount) | Closing costs (typically 2%-5% of the loan amount), plus other possible costs, depending on the lender (annual fees, transaction fees, inactivity fees, early termination fees) | Closing costs (typically 2-5% of the loan amount) |
When you’re ready to explore home equity loan rates in Boise, there are a few things to keep in mind. First, take good care of your credit score and try to lower your DTI ratio. These steps can help you secure a better rate. Don’t forget to get the right property insurance, too. Using tools and calculators can help you estimate your monthly payments and the total cost of the loan. Make sure you seek out rate quotes from multiple lenders, and factor in closing costs (don’t just look at interest rates). It takes a little time and energy, but it all pays off when you find the best rate and terms for your situation.
SoFi now offers home equity loans. Access up to 85%, or $350,000, of your home’s equity. Enjoy lower interest rates than most other types of loans. Cover big purchases, fund home renovations, or consolidate high-interest debt. You can complete an application in minutes.
Unlock your home’s value with a home equity loan from SoFi.
A home equity loan can be used for a variety of purposes, from financing home improvements to covering higher-interest debt. The loan is distributed as a lump sum, which you pay back with interest over a fixed period of time. Before borrowing, it’s important to consider your financial goals and the potential risks, including the chance of foreclosure if you fail to make payments.
The monthly payment on a $100,000 home equity line of credit (HELOC) will depend on how much of the credit line you have used. During the draw period, which is typically 10 years, you’re only paying interest on the amount you’ve borrowed. For example, if you take out the full $100,000 at an interest rate of 5.50%, your monthly interest payment would be around $458. Once the draw period ends, you enter the repayment period, which is usually 20 years, and you’ll be paying both the principal and interest. At that point, if the interest rate is still 5.50%, the monthly payment would be $688.
The monthly cost of a $25,000 home equity loan varies with the interest rate and term length. For example, at an 8.00% interest rate over a 15-year term, the monthly payment would be approximately $239. Extending the term to 20 years would lower the payment to about $209. This makes it more affordable, but keep in mind that it would also increase the total interest paid over the life of the loan.
There are several factors that can disqualify you from getting a home equity loan. Lenders typically require at least 20% equity in your home, a strong credit history, and a low debt-to-income ratio. A credit score below 620 or a DTI ratio above 50% might make it difficult to qualify.
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.
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.
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