Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Key Points
• Home equity loan interest rates in Idaho Falls are influenced by your credit score and debt-to-income ratio.
• Fixed rates offer the peace of mind of consistent, predictable monthly payments.
• To secure the best rates, aim for a credit score of 700 or higher and a debt-to-income ratio below 50%.
• The interest on home equity loans may be tax deductible; consult a tax advisor for the latest guidelines.
• Use our calculators to estimate your monthly payments and total costs before you apply.
• Consider other options, like a home equity line of credit, to see if it might be a better fit for your financial goals.
When you’re thinkin about how to get equity out of your home, interest rates are top of mind. In this guide to home equity loan interest rates in Idaho Falls, ID, we’ll dive deep into the current rates: how they’re determined, and what you can do to qualify for the best available deal.
Whether you’re looking to fund home renovations, consolidate debt, or finance a significant purchase, understanding home equity loan rates can help homeowners save thousands of dollars in interest. We’ll also cover the risks of such loans and the alternatives to consider, ensuring you have a complete picture of the home equity loan landscape in Idaho Falls.
But first we’ll answer the question, what is a home equity loan, anyway?
A home equity loan is a lump-sum loan with a fixed interest rate. You’ll make regular monthly payments over a set amount of time, typically five to 30 years. Because the loan is secured by your home, interest rates are usually lower than unsecured personal loans and credit cards — sometimes much lower. That’s a big reason why these home loans are so popular.
To qualify for a home equity loan, you’ll need at least 20% equity in your home. This is the difference between your home’s value and what you owe on your mortgage. Many lenders will let you borrow up to 85% of your equity.
Let’s look at an example based on the average home value in Idaho Falls, which is just under $400,000. If your mortgage balance is $300,000, your equity stake is $100,000. If you qualify to borrow 85% of that, your maximum home equity loan amount would be $85,000. A home equity loan calculator can help you calculate how much you might qualify to borrow based on your equity.
Many people have difficulty distinguishing home equity loans from their cousin, the home equity line of credit (HELOC). This chart gives you the basics of HELOCs vs. home equity loans in an at-a-glance format.
| 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 plus interest; 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 |
Interest rates are influenced by a variety of economic and personal finance factors, and home equity loan rates are no different. Lenders base home equity loan rates on the prime rate, which is the rate at which banks lend money to their most creditworthy customers. Your credit score and debt-to-income ratio will also influence the rate you receive. Typically, the higher your credit score and the lower your debt-to-income ratio, the lower the rate you will be offered.
Interest rates play a pivotal role in the affordability of your home equity loan. Even the slightest variance in rates can lead to significant savings or added costs. For instance, a $100,000 loan at 8.50% over 15 years would mean a $985 monthly payment and $77,253 in total interest. Bump up that rate to 9.50%, and you’re looking at $1,044 each month. But here’s the kicker: Over time, that slightly higher monthly payment balloons into $87,960 in total interest — $10,700 more than with the lower rate. Surely, most of us could find a better use for that cash.
The charts here give you an indication of how the prime rate has fluctuated over time. The prime rate was as low as 3.25% in 2020, reflecting the Federal Reserve’s efforts to bolster the economy during the pandemic. By 2023, the prime rate had surged to 8.50%, having a big impact on borrowing costs. Such variations are a normal part of economic ups and downs. Savvy homeowners get to know the signs of when rates may rise or dip, and can time their home equity loan accordingly.
| 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 be eligible for the most favorable home equity loan rates, you’ll want to present a robust financial profile. Lenders will scrutinize your home value and equity level, credit score, and debt-to-income ratio to establish your rate. Here are a few tasks to take on before you apply.
Before you shop around for a home equity loan, make sure you have at least 20% equity in your property. Calculating your equity is simple: Just subtract your mortgage balance from your home’s current value. For instance, if your mortgage balance is $400,000 and your home is valued at $550,000, your equity is $150,000. Most lenders will allow you to borrow up to 85% of your equity, which would be $127,500 in this scenario.
If your equity doesn’t quite hit the 20% mark, think about ways to boost it, like making extra mortgage payments or making strategist improvements that increase your home’s value.
Lenders generally look for a credit score of 680 or higher for home equity loans, with many favoring 700 or more. A robust credit score is a badge of financial responsibility and can lead to more attractive home equity loan rates. To boost your score, focus on timely payments, keeping credit card balances in check, and steering clear of new debt. Regularly reviewing your credit report for inaccuracies is also key.
By maintaining a high credit score, you’re not only proving your financial mettle but also increasing your chances of securing a home equity loan with a lower interest rate, which can translate to significant savings.
Your debt-to-income (DTI) ratio compares your gross monthly income to your monthly debt obligations. To calculate your DTI, add up all your monthly debt bills — student loans, auto loan, personal loans, mortgage — and divide the total by your income before taxes. For a home equity loan, the DTI requirement is usually less than 50%, with an ideal target of 36% or lower.
To improve your DTI, consider paying down your existing debts, increasing your income, or both. Lenders will review your DTI to ensure you can handle the additional financial responsibility of a home equity loan without putting your financial stability at risk.
Property insurance is a must-have for home equity loans, especially in flood-prone areas. It’s a safety net for both your lender’s investment and your home in the face of unexpected damage. In Idaho Falls, where the whims of nature can affect home values, having the right property insurance is key.
Before you take the leap, consider using some of our handy tools and calculators. They can help you get a sense of your monthly payments and the overall costs of the loan. This way, you can be sure you’re making the right decision for your financial situation.
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.
Closing costs for different types of home equity loans tend to be 2% to 5% of the loan amount. These costs can include appraisal, credit report, document preparation, origination, notary, title search, and insurance fees. Be aware that while you can find “no-closing-cost” home equity loan offers, lenders tend to pass along those costs in other ways, like additional fees.
The interest on home equity loans can be tax deductible if the funds are used to buy, build, or improve your home. Married couples filing jointly can deduct interest on up to $750,000 in loans; single filers can deduct interest on up to $375,000. To claim this deduction, taxpayers must itemize their deductions. For personalized advice, consult a tax advisor.
There are a few other ways to tap into your home’s equity, such as a home equity line of credit (HELOC) or even a mortgage refinance. Each of these options has its own unique features and requirements. Before you decide, compare the rates and terms of each to find the best fit for your financial goals.
What is a home equity line of credit? A HELOC is a bit like a credit card. It gives you the flexibility to borrow up to a certain limit, and you only pay interest on what you actually use. But here’s the thing: The interest rate is variable, which means it’s tied to the market and could go up, potentially increasing your costs. Typically, a 680 credit score is required (though 700 is preferred), and your debt-to-income ratio should be below 50% (but ideally under 36%).
A HELOC interest-only calculator can show you how much you’ll pay during the initial “draw period,” which lasts 5-10 years and usually requires interest-only payments. Then a HELOC repayment calculator will estimate your full payment amount during the repayment period, which lasts 10-20 years. Make sure to keep an eye on the total interest you’ll pay over time, to get a better sense of which home equity financing works best for you.
A cash-out refinance is a strategic move that can replace your existing mortgage with a larger one, granting you a lump sum based on your home equity. Lenders typically allow borrowing up to 80% of your home’s value. To qualify, you’ll need a 620+ credit score and a DTI ratio under 43%. You can opt for a fixed or variable rate, with the latter potentially offering more equity access.
If you’re choosing between a cash-out refinance vs. home equity line of credit, know that a cash-out refinance streamlines your payments into one. With a HELOC or home equity loan, you’ll still have your original mortgage payment plus the new home equity financing payment.
When you’re thinking about a home equity loan, it’s a good idea to make sure you have a strong credit score, a manageable debt-to-income ratio, and property insurance. These factors can affect your loan rates and costs. Use our tools to estimate your monthly payments and overall interest costs to help you make the right decision for you. And remember, the interest on a home equity loan may be tax deductible, so it’s a good idea to consult a tax advisor.
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 things, such as making home improvements, funding a child’s education, consolidating high-interest debt, or even taking a belated honeymoon. The loan is distributed as a lump sum, has a fixed interest rate, and is repaid in fixed monthly payments. The main draw of home equity loans is that the interest rate is usually much lower than for unsecured personal loans and credit cards.
The monthly payment on a $50,000 home equity loan can vary based on the interest rate and loan term you choose. For instance, at a 9.00% interest rate over a 15-year term, your monthly payment would be around $507. If you opt for a 20-year term, your monthly payment drops to $450, but you’ll pay more in interest over the course of the longer repayment period.
A $100,000 HELOC typically comes with a draw period and a repayment period. During the draw period, you might only pay interest. At 8.00% interest, your monthly interest-only payment would be about $667. Once the draw period ends, you’ll start repaying both principal and interest, which will increase your monthly payment. Assuming the same 8.00% rate and a repayment term of 20 years, your full HELOC payment could be around $836.
The payment for a $25,000 home equity loan varies with the interest rate and loan term. For instance, at an 8.00% interest rate across a 15-year term, you’re looking at roughly $239 per month. If the rate is 9.00%, the payment increases to $254 monthly. Use a mortgage payment calculator to get a more precise estimate based on different interest rates and repayment periods.
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.
SOHL-Q225-315
