Current Home Equity Loan Rates in Rhode Island Today
RHODE ISLAND HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Rhode Island.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Rhode Island.
Key Points
• The home equity loan rate you’re offered is based on factors like lender policy, borrower’s credit score, and loan-to-value ratio.
• Home equity loans allow homeowners to borrow against their home’s equity for large expenses like renovations and debt consolidation.
• Home equity loan interest rates are influenced by the prime rate and economic conditions.
• Qualifying for the best rates involves building a strong credit score, managing debt-to-income ratio, and maintaining adequate home equity.
• Home equity loans offer fixed interest rates, providing stability in monthly payments, while HELOCs offer flexibility with adjustable rates.
Introduction to Home Equity Loan Rates
Welcome to our comprehensive guide to Rhode Island home equity loans, where we’ll cover the latest interest rates and the key factors that influence them. With this information in hand, you’ll be better equipped to make smart financial decisions that align with your needs and goals.
But first: What is a hone equity loan anyway?
How Do Home Equity Loans Work?
A home equity loan uses your residence as collateral, just like your primary home loan (which makes a home equity loan a second mortgage). The main benefit is that you can get a lower interest rate than you would on a personal loan. The interest rate is usually fixed, which can make it easier to budget for your payments. You’ll also have a consistent repayment schedule.
To qualify for a home equity loan, you’ll need to have at least 20% equity in your home. Lenders determine your maximum loan amount based on the combined loan-to-value ratio (CLTV). You can estimate your CLTV easily: Add your current mortgage balance to your proposed home equity loan. Divide the total by your appraised home value. If the CLTV is below 85%, you’re in a good position to obtain your desired loan. Our home equtiy loan calculator can help you do the math.
Where Do Home Equity Loan Interest Rates Originate?
In Rhode Island as in most places in the U.S., home equity loan interest rates are a product of various economic elements, with the “prime rate” playing a significant role. The prime rate rate is what banks charge their most creditworthy clients.
Federal Reserve policy decisions have a ripple effect on home equity loan rates as well, along with national and local housing market conditions. By understanding these factors, you can be prepared for potential rate fluctuations and make well-informed decisions about when and how to get equity out of your home.
How Interest Rates Impact Home Equity Loan Affordability
The interest rate you secure helps determine your monthly payment — but it has a bigger impact on the interest you pay over the life of the loan. For a 20-year home equity loan, a 1% difference in the interest rate can translate to substantially higher costs: an additional $11,000 in total interest paid.
The chart below gives you a broader perspective on how interest rate, repayment term, and loan amount affect your monthly payment.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
Home Equity Loan Rate Trends
The prime interest rate is a key indicator of the future of home equity loan rates. By keeping an eye on this rate, you can gain valuable insights into the direction of home equity loan rates, helping you make informed decisions about your financial strategies and plan for any potential changes in your borrowing costs. This is especially important for those interested in the current home equity rates in Rhode Island.
Historical Prime Interest Rates
Since 2018, the U.S. prime rate has fluctuated significantly, with a low of 3.25% in 2020 and a high of 8.50% in 2023. This movement shows how sensitive the prime rate is to changes in the economy and how it can impact the rates of financial products like home equity loans and HELOC.
| 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
In Rhode Island, a variety of factors can influence your home equity loan rate. Your credit score, the current market value of your home, the stability of your home’s value, the loan-to-value ratio, the location of your property, and the terms of your lender all play a part in determining the rate you’ll receive.
Credit Score
Those who have a track record of responsible financial management, consistently making timely payments, are often rewarded with lower interest rates. When it comes to home equity loans, lenders typically look for a credit score of 680 or higher, with many favoring scores of 700 and above.
Home Value
Lenders in Rhode Island often use independent appraisals to help them determine the market value of a home, which in turn helps them set appropriate borrowing limits.
Loan-to-Value (LTV) Ratio
As mentioned earlier, this ratio is calculated by dividing the total amount of your home loans by the home’s appraised value. It helps determine the maximum home equity loan lenders will allow, which is usually around 85%.
Home Value Stability
The ups and downs of home values can be a game-changer when it comes to tapping into your home’s equity. Rising values often mean lenders are more willing to approve larger loans, as the reduced risk makes them more comfortable. On the flip side, falling values can make lenders more cautious, which could lead to stricter lending criteria.
Property Location
Living in an area prone to extreme weather or natural disasters can mean higher interest rates. Lenders might see these regions as riskier to invest in. And let’s face it, the last thing you want to worry about is your home equity loan when a storm is brewing.
Lender Policies
When you’re looking for Rhode Island home equity loans, it’s important to think about the impact of lender policies on the interest rates you’re offered. To make sure you’re getting the best deal, shop around and compare interest rates, fees, and closing costs from a few different lenders. By doing your homework and comparing your options, you can get better terms and save money over time.
How to Qualify for the Lowest Rates
To get the best home equity loan rates, you need to have a good credit score, manage your debt-to-income ratio, have property insurance, and have a good amount of equity in your home. Here’s your To Do list:
Build a Strong Credit Score
In Rhode Island, a stellar credit score can be your golden ticket to better interest rates on home equity loans. How do you get there? By being diligent about making timely payments, keeping your debt in check, and maintaining a low credit utilization ratio. These steps can boost your creditworthiness, opening the door to more attractive loan terms that could save you a bundle in interest over the long haul.
Manage Debt-to-Income Ratio
When you’re ready to apply for a home equity loan, keep in mind that your debt-to-income (DTI) ratio is a key metric. Most lenders look for a DTI ratio below 36% (though some will go up to 50%) for home equity loans. This ratio is a measure of your ability to handle your current debt and take on the additional monthly payments a home equity loan brings.
Obtain Adequate Property Insurance
In the Ocean State, it’s standard practice to have sufficient property insurance, especially if you’re in a flood-prone area. These policies are designed to protect your investment and your lender’s interests, ensuring that you’re both covered in the face of the unexpected.
Maintain Sufficient Home Equity
In Rhode Island, lenders want you to have at least 20% equity in your home to take out a home equity loan. This is a good thing, as it helps ensure that you don’t borrow more than you can afford to pay back. It also helps protect both you and the lender from the risks associated with borrowing and lending.
Fixed vs. Variable Interest Rates
Home equity loans typically come with fixed interest rates, which means you’ll have the same predictable monthly payment for the life of the loan. While fixed rates offer stability, they can sometimes start out higher than variable rates, which may have lower initial rates. When you’re comparing HELOCs vs homee equity loans, it’s important to understand that HELOCs typically have variable rates, while home equity loans tend to have fixed rates.
Tools & Calculators
Use our suite of financial tools and calculators to size up your home equity loan. You can compare two different loan scenarios and find out which has the better monthly payment, or how much you’ll save over time by choosing one over the other. You can also see how much you’d save by paying off your loan early, or how much you can afford to borrow. Below you’ll also find a HELOC monthly payment calculator as well as a HELOC interest only calculator.
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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.
Closing Costs and Fees
Closing costs for home equity loans typically range from 2% to 5% of the loan amount. These costs can include an appraisal fee, credit report fee, document preparation fee, origination fee, notary fee, title search fee, and title insurance.
Origination fees are usually between 0.5% and 1% of the loan amount. Title insurance typically costs between 0.5% and 1% of the loan balance. Appraisal fees can range from $300 to $500. Be sure to shop around and compare fees from multiple lenders.
Tax Deductibility of Home Equity Loan Interest
Here’s a tip: The interest you pay on a home equity loan is tax-deductible if you use the funds for home improvements. For joint filers, you can deduct the interest on up to $750,000, and for single filers, it’s $375,000. Just be sure to itemize your deductions to claim the benefit. For the best advice, we always recommend consulting a tax advisor.
Alternatives to Home Equity Loans
There are different types of home equity loans and lines of credit. Each option has its own unique characteristics and eligibility requirements, so it’s important to carefully consider which one may be right for you.
Home Equity Line of Credit (HELOC)
What is a home equity line of credit? A HELOC is a bit like a credit card, in that it allows you to borrow up to a certain limit and only pay interest on the amount you actually use. However, the variable interest rates on HELOCs mean that your costs could go up if interest rates rise.
Home Equity Conversion Mortgage (HECM)
An HECM is a government-backed reverse mortgage that offers homeowners aged 62 and older a way to receive payments based on their home’s value. The beauty of an HECM is the flexibility it offers: You can opt for a lump sum, regular payments, or a line of credit. Plus, with an HECM, you won’t have to make payments until you leave your home, unlike home equity loans and HELOCs that require regular payments.
Cash-Out Refinance
Here’s the lowdown: A cash-out refinance means taking out a new mortgage to replace the old, with a little extra cash to pocket. Lenders are usually game for up to 85% of your home’s equity. If you’re comparing a cash-out refinance vs a home equity line of credit, know that the refi leaves you with a single monthly payment while a HELOC gives you two payments (one for your original mortgage).
Recommended: What Is a Mortgage Refinance?
The Takeaway
Understanding home equity loan rates and the various factors that influence them can greatly assist homeowners in making informed financial decisions. Conducting a thorough comparison of lenders, maintaining a strong credit score, and effectively managing debt are all crucial steps in securing the most favorable rates available. Additionally, homeowners should consider the loan terms, fees, and prepayment penalties associated with each loan option.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What would the monthly payment be on a $50,000 loan?
The monthly payment on a $50,000 home equity loan varies depending on the loan term and interest rate. At 8.50% interest repaid over 10 years, your monthly payment would be about $620. Over a 20 year term, your payment would be just $434 — but you’d pay a lot more in interest over time.
What’s the monthly payment on a $100,000 HELOC?
It’s important to understand that the monthly payment on a $100,000 home equity line of credit (HELOC) can fluctuate. This is due to two things: the current interest rate and how much of the credit line you’ve used. Assuming you draw the full amount and make no payments during the draw period, at 8.50% interest and a 20-year term, the payment would be $868.
What is the payment on a $25,000 home equity loan?
When you’re looking at a $25,000 home equity loan, you’ll want to consider how the interest rate and loan term will impact your monthly payments. For a loan with an 8.00% interest rate and 10-year term, the monthly payment would be $303. To get an accurate estimate of what your payments might be, try using a home equity loan calculator.
What would the payment on a $30,000 home equity loan?
When you’re thinking about a $30,000 home equity loan, it’s important to think about how the interest rate and the loan term will affect your monthly payments. For example, a $30,000 loan at 8.00% repaid over 7 years gives you a monthly payment of $468. The same loan amount and interest rate repaid over 15 years lowers the monthly payment to $287 but increases the total interest paid.
What could disqualify you from getting a home equity loan?
There are a few factors that can make you ineligible for a home equity loan, including a poor credit history, not enough equity in your home, a high debt-to-income ratio, and inadequate insurance coverage on your property. These factors can make it more risky for a lender to work with you, so you’ll want to address these issues before applying for a home equity loan to increase your chances of getting approved.
What are the benefits of a HELOC?
A HELOC has a number of advantages over other borrowing options. These include lower interest rates, flexible borrowing and repayment options, and the ability to only pay interest on the amount of credit you use.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
SOHL-Q424-099
More home equity resources.
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What is a Home Equity Line of Credit
-
Different Types of Home Equity Loans
-
HELOC vs Home Equity Loan: How They Compare
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Current Home Equity Loan Rates in Kentucky Today
KENTUCKY HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Kentucky.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Kentucky.
Key Points
• Kentucky home equity loan rates generally follow national trends and are influenced by the prime rate.
• Other factors influencing home equity loan rates include credit score, loan-to-value ratio, home value stability, lender policies, property location, and debt-to-income ratio.
• To qualify for the lowest rates, maintain a strong credit score, manage debt-to-income ratio, have sufficient property insurance, and maintain sufficient home equity.
• Alternatives to home equity loans include HELOCs, HECMs, and cash-out refinances, each with unique features and eligibility requirements.
• Online calculators can help borrowers determine their borrowing power and monthly payments.
Introduction to Home Equity Loan Rates
If you’ve made your home loan payments consistently, you’ve probably chipped away at the principal you owe and built up valuable equity. Now it’s time to learn how to get equity out of your home with a home equity loan — and that means understanding home equity loan rates in Kentucky. In this guide, we’ll explain what goes into these rates and how you can find the most favorable rate for you. By the time you’re done reading, you’ll have a better understanding of different types of home equity loans and how to use them to finance home renovations, consolidate debt, or pay for other big expenses.
First step: get a handle on what is a home equity loan.
How Do Home Equity Loans Work?
A home equity loan is a loan that uses your home as collateral, which typically means a lower interest rate than a personal loan. (It also means getting a second mortgage, assuming you are still paying off your first mortgage.) The interest rate is usually fixed, which can make monthly payments predictable.
To qualify for a home equity loan, you’ll typically need to have at least 20% equity in your primary residence. Home equity loans can be used for a variety of expenses, such as home improvements, education, medical bills, or debt consolidation. If you’re looking for the best home equity loans in Kentucky, it’s important to compare offers from different lenders to find the best loan for your needs, and a big part of that comparison is comparing interest rates.
Where Do Home Equity Loan Interest Rates Originate?
Home equity loan interest rates are not arbitrary numbers; they are influenced by larger economic factors, including the prime rate. The prime rate is the interest rate that banks charge their most creditworthy customers. Federal Reserve policy decisions regarding interest rates can also influence home equity loan rates. But once a lender sets its prime rate, exact interest rates are adjusted based on individual borrower characteristics (we’ll get into that later). Understanding the factors that influence home equity rates can enable borrowers to anticipate rate fluctuations and make informed decisions about home equity loans.
How Interest Rates Impact Home Equity Loan Affordability
It’s important to think about how interest rates will affect your ability to afford your loan over time. Unlike a home equity line of credit (HELOC), which functions as a revolving credit account, a home equity loan provides the borrower with a lump sum of cash up front. Repayment of the principal balance and interest begins immediately, typically with a fixed interest rate.
| Loan Amount | Loan Term | Interest Rate | Monthly Payment |
|---|---|---|---|
| $100,000 | 20 years | 8.00% | $836 |
| 7.00% | $775 | ||
| 10 years | 8.00% | $1,213 | |
| 7.00% | $1,161 | ||
| $50,000 | 20 years | 8.00% | $418 |
| 7.00% | $388 | ||
| 10 years | 8.00% | $607 | |
| 7.00% | $581 | ||
| $25,000 | 20 years | 8.00% | $209 |
| 7.00% | $194 | ||
| 10 years | 8.00% | $303 | |
| 7.00% | $290 |
What’s even more striking is the change in the total interest you’ll pay over the life of the loan. For example, a 1% difference in interest rate on a $100,000 home equity loan repaid over 20 years comes to more than $14,000 in interest!
Home Equity Loan Rate Trends
As noted above, the prime rate can be a key factor in home equity rates in Kentucky. By keeping an eye on the prime rate, you may be able to get a sense of where the lending market is headed and use that information to make smart borrowing decisions.
As the chart below shows, the prime rate has seen its share of ups and downs, with a low of 3.25% in 2020 and a high of 8.50% in 2023. The graphic below shows the rate over a much longer time period: 50-plus years.
Historical Prime Interest 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
Now let’s take a closer look at the factors beyond the prime rate that influence exactly what rate you may be offered. Banks and other lenders use these details to determine your creditworthiness and assess how risky it might be to make you a loan.
Credit Score
If you’ve got a clean record of making payments on time, you’re in a sweet position. Lenders are more likely to offer you a lower interest rate if you’ve shown that you’re a responsible borrower. Kentucky lenders will likely want to see a credit score of at least 680 for a home equity loan, but the higher your score, the better your chances of obtaining a good rate.
Home Value
Lenders typically determine the value of your property by ordering an independent appraisal. This process helps ensure that you have adequate equity in your home to qualify for the loan you want, and that the loan amount you request is below the appraised value of the home.
Loan-to-Value (LTV) Ratio
Once you and a lender know your home’s appraised value, the loan-to-value (LTV) ratio can be determined. Your combined LTV ratio is calculated by dividing the loan amount you’re seeking plus any remaining balance on your first mortgage by the appraised value of the home. The maximum combined LTV lenders typically allow for home equity loans is around 85%. You can calculate your combined loan-to-value ratio (CLTV) this way:
Home Value Stability
Home values have a direct impact on the equity you can tap into. When the market is hot and prices are rising, lenders are more open to green-lighting heftier loans, as increased property values act as a safety net. But when the market slips, lenders might set more stringent requirements and offer smaller loan amounts.
Property Location
Living in areas that have a history of damage from tornados, flooding, or other climate extremes can sometimes mean higher interest rates because lenders are leery of these risks. If you live in an area like this, you might have to meet additional requirements to get a home equity loan in Kentucky, and you could have a higher interest rate.
Lender Policies
Each lender has its own policies, and these can have an impact on the interest rate you’re offered or the fees you’ll pay. To make sure you’re getting the best deal, it’s a good idea to shop around and compare interest rates and fees from several lenders.
How to Qualify for the Lowest Rates
To get the best Kentucky home equity loan rate, you need a good credit score, a low debt-to-income ratio, and enough property insurance. You also need to have adequate home equity. Follow the tips below and you will have a better chance of getting an attractive rate.
Build a Strong Credit Score
Taking good care of your credit score can unlock the door to more attractive interest rates. This means checking your credit report for errors — and if you find any, request a correction. Try not to max out all your lines of credit. And keep on top of your bills.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio, which compares your monthly income to your monthly debt obligations, is a key factor in determining your loan eligibility. Lenders typically want to see a DTI ratio under 36% for a home equity loan, though some lenders will accept up to 50%. To determine your number, add up your monthly debts, such as a car payment or student loan payment, and divide by your gross monthly income.
Obtain Adequate Property Insurance
Hopefully you are already well insured — after all, getting coverage is an important part of home ownership. But when it comes to home equity loans, having enough property insurance is a must.
Maintain Sufficient Home Equity
Lenders want to see you have a minimum of 20% equity in your primary residence. These regulations are in place to protect you and your investment, ensuring that you have a significant financial stake in your property, which ultimately lowers the risk of default for both you and the lender.
Fixed vs. Variable Interest Rates
Home equity loan interest rates are usually fixed. That means the rate you start with is the rate you’ll pay throughout the loan, which makes it easier to plan your monthly budget. It’s worth noting that these fixed rates might be a bit higher than the variable rates you would see if you sign up for a home equity line of credit (HELOC). But variable rates can change over time, so it’s worth considering that risk if you find yourself weighing a HELOC vs. a home equity loan.
Tools & Calculators
If you’re considering a home equity loan or HELOC, using tools and calculators can help you get a better idea of what you might be able to borrow. They can also help you see how different loan terms could impact your monthly payment. Here are three calculators you will find useful:
Run the numbers on your home equity loan.
-
Home Equity Loan Calculator
Enter a few details about your home loan and we’ll provide you your maximum home equity loan amount.
-
HELOC Payment Calculator
Punch in your HELOC amount and we’ll estimate your monthly payment amount for your HELOC.
-
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.
Closing Costs and Fees
Closing costs for a home equity loan can range from 2% to 5% of the loan amount. Common fees include an application fee, an origination fee, an appraisal fee, and a title search fee. Each lender has its own fee schedule, so be sure to compare both interest rates and fees.
Tax Deductibility of Home Equity Loan Interest
The interest on a home equity loan is tax-deductible if the loan is used to buy, build, or substantially improve the home. Married couples filing jointly can deduct the interest on up to $750,000 in loans, while single filers can deduct the interest on up to $375,000. You must itemize your deductions to claim the deduction, so you may want to speak with a tax preparer for advice.
Alternatives to Home Equity Loans
A home equity loan isn’t the only way to tap your home’s equity. We’ve mentioned a home equity line of credit (HELOC), but there are other options, too. Here’s the rundown:
Home Equity Line of Credit (HELOC)
Ready fpr the full explanation of what is a home equity line of credit?A HELOC is like having a credit card, but its spending limit is tied to the equity in your home. You only pay interest on the portion of the credit line that you use. During the HELOC’s “draw” period, you may make interest-only payments. When the draw period is over (typically after 10 years), you’ll have another 10 to 20 years to repay whatever you borrowed, with interest. HELOC interest rates are usually variable, as noted above, meaning they can go up or down with the market. This flexibility can be a plus, but it also means your payments could change, especially if the economy takes a turn.
Home Equity Conversion Mortgage (HECM)
A HECM is a government-insured reverse mortgage. It’s only an option for those 62 and older. If you qualify, you can opt for a lump sum, regular payments, or a line of credit. The beauty of an HECM is that you don’t need to make payments until you leave your home, unlike traditional home equity loans or HELOCs. While the closing costs and processing times may be a bit longer, the benefits are well worth it. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
A cash-out refinance is a special type of mortgage refinance. You’ll take out a new, larger mortgage to replace your existing one and pocket the difference to use as you wish. If you are weighing a cash-out refinance vs a home equity line of credit or HELOC, it’s important to consider that getting a new mortgage means getting a new interest rate. If you have a great rate on your current mortgage, you’ll want to carefully consider the added costs of a refi.
The Takeaway
Understanding Kentucky home equity loan rates and the factors that influence them is important for Kentucky homeowners who want to take advantage of their home equity. By shopping around, tending carefully to your credit score, and managing your debt-to-income ratio, you can find the best rates and terms for your needs.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What’s the monthly payment on a $50,000 home equity loan?
The monthly payment on a $50,000 home equity loan will depend on your interest rate and term. The longer the term, the lower the monthly payment will typically be — but the more interest you will pay overall. A lower interest rate, of course, means lower payments and interest. You can play with different rates in a home equity loan calculator to get a feel for how rates and terms impact the numbers.
What is the monthly payment on a $100,000 home equity loan?
Your monthly payment amount will depend on your term and interest rate. For example, a $100,000 home equity loan with a 6.00% interest rate and a 10-year term will mean a monthly payment of $1,110.
What’s the payment on a $25,000 home equity loan?
Borrow $25,000 with an interest rate of 8.00% and a term of 5 years and you’re looking at a monthly payment of $507. If you repay the loan over 10 years at a rate of 8.00%, your monthly payment would be $303. As you can see, if you change either the interest rate or the term (or both), your payment amounts will shift.
What’s the monthly cost of a $30,000 home equity loan?
A rate of 7.50% and a 20-year term would mean the monthly payment on a $30,000 home equity loan is $242. To get an accurate idea of what your monthly payments could be, use a home equity loan calculator that allows you to type in rates and terms.
What could disqualify you from getting a home equity loan?
Factors that can disqualify you from getting a home equity loan include having a credit score below 680 and having a lot of debt payments to make each month relative to your income. Of course, not having much home equity or lacking adequate insurance coverage on your home could be problematic, too.
What are the benefits of a HELOC?
A home equity line of credit (HELOC) gives you a line of credit that you can use as needed. Some borrowers prefer this over taking out a lump-sum loan — it’s helpful if you aren’t sure exactly how much money you need, such as when you’re doing a renovation. With lower interest rates than most credit cards and the ability to only pay interest on the amount of credit you use, a HELOC can provide financial flexibility.
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All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
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More home equity 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
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Liz Looks at: The 2025 Outlook
Defying Gravity
Gravity can be defined as a force that pulls two objects with mass toward each other, or more commonly, the force that makes things fall to the ground. Throughout the bull market of the past two years, there have been many forces that could have, and perhaps should have, acted as a gravitational force on markets — yet major stock indices rose to new all-time highs and defied gravity.
The debate over whether we’ll have a soft landing or hard landing has shifted — we’re now debating just how soft the landing will be, or whether there will be a landing at all. Hard landing narratives have left the chat, and optimism has permeated investor sentiment. Those trends were mostly in place before the U.S. presidential election, and have been fueled even more since then as we learn just how powerful political forces can be.
The New Year is an opportunity to start fresh and see our portfolios with new eyes. Of course, we always need to be aware of the risks, but we can’t invest by waiting for historical precedent to repeat in the same ways it has before. I, for one, have had to learn that lesson over and over throughout this cycle, as history has been a poor guide for what’s transpired. The trends remain strong, the economy has stayed on stable footing; and perhaps most importantly for markets, the buyers are still buying. For now — don’t fight it, ride it.
The Roar of 2024
The past year brought with it the beginning of the Federal Reserve’s rate cutting cycle, the continuation of an AI-fueled rally, an unemployment rate that rose above 4% for the first time since 2021, a wild election cycle, a Japanese currency scare, and a Treasury yield curve that finally re-steepened after its longest inversion ever.
Despite all the drama, the S&P 500’s biggest pullback for the year was 8.5%, considerably less than the average intra-year drawdown of 13%. A post-election relief and risk-on rally drove markets even higher, pushing the idea of a pullback even further from investors’ minds.
Nevertheless, there were a few noteworthy stocks that saw intra-year drawdowns much larger than that: Nvidia (-27%), Tesla (-43%), Super Micro Computer (-85%), and Dollar General (-55%). With the exception of Dollar General, all of those stocks are strongly positive year-to-date, showing how much price volatility there’s been this year.
The AI theme continued to power markets forward as the potential for increased productivity and innovation kept momentum intact. That said, the pace did slow as the year progressed, with investors increasingly looking for margin expansion and tangible profit to justify the large amounts of spending that has been directed toward AI. This resulted in a rotation into other areas of tech (i.e. software, but more on that later) and across different parts of the equity universe as investors search for other growth opportunities.
As for bond markets, the most notable aspect of 2024 was how much Treasury yields moved, with the 2-year yield surpassing 5% in late April, only to fall 150 basis points by the end of September. The 10-year saw similarly huge moves throughout the year, and the spread between the 2- and 10-year yield turned positive (i.e. un-inverted) for the first time since July 2022.
Contrary to conventional wisdom, stock market performance has been relatively unperturbed by the yield curve volatility, leading pundits to increasingly dismiss the shape of the curve as a useful indicator of anything ominous. I am not convinced that it should be ignored.
The persistence of buying appetite, both from investors and consumers, has kept the bull market rolling. We enter the holiday season and a new year with very little gravity pulling us down.
Rolling Into the First Half of 2025
2025 could prove to be the third year of this bull market run, but the age of the bull market tells us very little about how long it may last. Throughout history, we’ve seen bull markets that lasted less than two years, and others that lasted longer than 10. Knowing that the S&P was up 26% in 2023 and is likely to finish 2024 near or above that mark, it’s easy to wonder if all the juice has already been squeezed out.
What we found, however, is that even after consecutive strong years, the market can still do well — maybe not >25% well, but high single digits to low double digits well. It’s important to note that on average the strongest performance comes after negative years, but the blue and yellow bars below do not ring any alarm bells.
Current index levels present valuation risks and investors should be prepared for a more muted year of returns relative to 2023 and 2024, but we believe 2025 will still present opportunities and new ways to put money to work. We expect four pillars to support markets in the first half of the New Year, suggesting a friendly environment for earnings growth, and one that carries forward the current optimistic economic and business sentiment.
Pillar #1: Liquidity Spigot
The year could get off to a raucous political start as the debt ceiling limit will be reinstated on January 1. Once that happens, the Treasury will not be able to issue new debt until Congress raises the ceiling, which we do not expect to happen with any quickness.
Fear not, there is money available in the Treasury General Account (TGA) to cover spending in the meantime. In fact, estimates suggest the Treasury will have enough financial flexibility to cover expenses until the summer… even more reason why raising the debt ceiling is not an immediate threat to markets.
This means a few things: 1) Even without new debt issuance, money from the TGA will effectively boost market liquidity, 2) these available funds allow the Fed to continue on its quantitative tightening (QT) path, theoretically until mid-2025, 3) despite QT, bank reserves are likely to remain above the “scarce” range until then, which quells liquidity concerns.
Markets like liquidity, and many would argue the rally we’ve seen since late 2022 has been driven at least in part by liquidity being pumped into the system. Conceptually, there could be harsh consequences of this (i.e. reigniting inflation, excess government debt burden, increased interest expense), but so far those have not come to pass. In the first half of 2025, liquidity is still expected to be flowing enough to support markets.
Pillar #2: Strong Labor → Productivity → Cooling Wage Pressure
For much of 2024, markets feared a weakening labor market that could come with layoff announcements and an unemployment rate rising to uncomfortable levels. Since “promote maximum employment” is one of the Fed’s two mandates, a weak labor market would have strongly influenced the rate path. Long story short, that didn’t happen.
Instead, what we are in the midst of is a labor market that has slowed down and shown less churn, but remained stable and resilient. (By labor churn we mean things like the quits rate and the hires rate, both of which have declined steadily since 2022, but fell below pre-pandemic levels in 2024.)
The reason this matters is that it has helped reduce wage pressure that was fueling some inflation fears, and perhaps more importantly for 2025, because lower labor churn can power higher labor productivity. Fewer people moving around means people staying in jobs longer, which means a more efficient and productive workforce. In fact, current labor productivity is running slightly above 2%, which is higher than the non-recessionary average of about 1.4%. Higher productivity contributes to real growth in an economy.
Moreover, the chart below shows that measures of labor churn tend to lead wage costs by roughly six months. Since labor churn has fallen, we would expect wage costs (the dashed line) to continue falling as well.
As long as inflation remains under control or continues cooling, lower wage growth is not broadly detrimental to consumers. And if wage growth is falling, company labor costs are also coming down, putting less pressure on their bottom lines and allowing margins to stay stable or even expand. From an investor’s perspective, margins are critically important to earnings growth and return potential, so if this dynamic remains in place, it’s another supporting element for equity markets into 2025.
Profit margins for S&P 500 companies are currently running at trend, which is a healthy and balanced place to be, albeit lower than what we enjoyed between Q3 2021 and Q4 2022.
As an added tailwind, the new administration is expected to bring with it a looser regulatory regime, which could serve as a boost for industries such as financials, energy, and metals and mining, allowing for margins to expand.
Over time, we could also add AI and innovation to this supporting pillar as business innovation drives further productivity and profitability… but at this juncture that’s still a future force more than a current tangible reality.
Pillar #3: Inflation Under Control
We’ve come a long way from a Consumer Price Index (CPI) of 9.1% in June 2022 down to 2.7% for November 2024, which has calmed many anxieties. There are still elements of inflation that remain bothersome, namely shelter and car insurance, but many of the major components have cooled enough to satisfy markets.
The Fed’s preferred measure of inflation – the core Personal Consumption Index (PCE) – currently sits at 2.8%, down from a high of 5.6% in February 2022. Again, major progress has been made, and although not quite at the Fed’s 2% target, markets seem satisfied.
The important piece of this pillar is that inflation expectations stay under control, which could be tricky in 2025 with the prospect of increased tariffs and the level of optimism markets are exhibiting (see “What Could Go Wrong” later in this piece). This is perhaps the most questionable pillar in the pack, as inflation expectations have risen since late summer and the potential for the Fed to pause its rate cutting cycle has risen alongside.
We do expect the Fed to continue cutting rates, but at a much slower pace than originally thought. We also expect there to be adjustments made to the Fed’s projections on the neutral rate – not only the level, but the timeframe over which it may be met. If markets can remain comfortable with a higher neutral rate and a more gradual cutting cycle, inflation may not present too many problems.
In this case, the simple lack of a reignition in inflation would be a positive for markets.
Pillar #4: Sentiment has Momentum
Vibes are a powerful force for investor psychology, and although they are difficult to measure and can be fleeting, they are a force to be reckoned with when it comes to momentum. With the exception of a few blips here and there, market momentum and sentiment has been positive and pushing markets higher. We expect that trend to still have legs into 2025.
The main measures of consumer vibes are the sentiment surveys — namely, the Conference Board’s Consumer Confidence and the University of Michigan’s Consumer Sentiment surveys. In the first half of 2024, there were worries about higher than expected inflation and a slowing economy, which pushed both survey measures lower into summer. But there’s been reasonably steady improvement since then, which could continue if the labor market remains stable and the outlook for growth in 2025 stays strong. Watch for the trend to stay intact on both of these metrics.
Other major surveys that can give us a pulse on how businesses are feeling include the NFIB Small Business Optimism survey and the Purchasing Managers’ Index (PMI). These have also shown recent signs of improving, with November’s Small Business Optimism survey showing the largest single-month improvement in sentiment since July 1980.
One of the clear signs of improvement over recent months has been the U.S. economic surprise index, as data pertaining to GDP growth, consumer spending, jobs, and inflation has generally come in better than feared.
Post-election, the combination of positive economic surprises, certainty around the election outcome, and the expectation of a friendlier regulatory and capital markets environment could drive business sentiment higher from here.
For small businesses, the level of interest rates will be critical to sentiment and a gradual move down would be helpful. For larger companies, tariffs and U.S. dollar strength are critical components to future prospects. We are keeping a close eye on all of these indicators for confirmation or denial of our sentiment thesis.
What it all means for Equities
While sentiment and momentum can wield a lot of power, fundamentals are the key to market direction over longer term periods, which brings us to earnings. Earnings expectations for 2025 are strong – some might say too strong – but even if revised down slightly, companies still look to be in better shape than in 2024.
The drivers of earnings growth are important to note here. Technology is still at the top of the heap, but other sectors such as Health Care, Industrials, and Materials find themselves in new leadership positions if these forecasts come true. Also of note is that two of those three fall into the “cyclical” category and could be beneficiaries of the pro-growth sentiment that has materialized post-election.
But what about valuations? They’re high compared to history, that’s a simple fact. The S&P 500 is currently trading at 22.4x forward earnings, compared to the 10-year average of 18.4x.
Interestingly though, the average annual return on the S&P 500 is nearly 12%, and if earnings growth comes in over 14%, as expected, an average return on the S&P could actually result in a stable or lower price-to-earnings multiple before the end of the year, keeping bubble fears at bay.
In many ways, the fact that most investors do not expect another >25% year in the S&P is a good thing. If we were to produce a third year of rip-roaring returns, valuations would look even more stretched – if not exuberant – and likely drive volatility as investors try to manage exposures. An “average” year of returns may be what this market needs to stay rational.
What it all means for Yields
There’s been endless speculation on how high (or how low) Treasury yields will go. We don’t expect that to end in 2025. What we do expect though, is for yields to gradually come down as long as inflation stays contained.
A gradual drop in yields can be supportive of equities and sentiment, but contrary to expectations at the beginning of 2024, the Fed is unlikely to cut rates dramatically unless the economy weakens in a material way. This means markets and the economy may need to get (or stay) comfortable with a neutral rate that’s above pre-pandemic levels, and a 10-year Treasury yield that’s elevated as well.
Where Things Could Go Wrong
As with any new year comes new risks, or at least extensions of the prior year’s risks. To repeat a point from the beginning of this piece, we can’t invest by waiting for historical precedent to repeat. We do, however, have to keep in mind the risks we know exist as we allocate portfolios with the fresh eyes of January.
Risk #1: Sentiment Becomes Overdone, Speculation Overheats
We currently view the positive sentiment as a tailwind for markets that can continue into the first half of 2025, but there is a risk that sentiment could become over-extended and drive excess speculation in the financial system. There’s no hard-and-fast measure that can declare when we’re overheated, but something we like to track is the proportion of stock returns driven by earnings growth (i.e. fundamentals) versus multiple expansion (i.e. sentiment-driven upside).
The reason we track this is because the more of a rally that can be attributed to multiple expansion, the more fragile that rally can be. Some sentiment-driven upside is good as markets anticipate brighter days ahead, but it can turn into a chase as investors become greedy and start blindly buying risk assets.
The recent rally shows an increase in multiple expansion as a driver, but we could also argue that the business environment may change for the better in 2025 and might deserve the resulting upside.
Another way to look for excess speculation is through the lens of high quality vs. low quality asset performance. As investors increasingly pile into lower quality — therefore riskier — investments, speculation rises. One specific example of this is between mega-cap tech stocks versus those of non-profitable tech companies.
The recent outperformance of non-profitable tech stocks suggests investors have amped up their risk appetite, which is not a red flag in and of itself. Increased risk appetite could be warranted given some possible changes in the business environment in 2025 — but it’s a speculative move, nevertheless.
Lastly, much of the recent bump in sentiment has been predicated on the expectation of policies from the incoming administration that would reduce regulations, reign in government spending, and encourage stronger economic growth. Asset classes that have benefited from those expectations so far are financials, consumer discretionary, small-cap stocks, and crypto. On the flipside, there are some groups that have been hurt by new policy expectations such as health care, gold, and international stocks.
The concern is that if the expected policies do not come to fruition, or if they end up being different or less powerful than the market has priced itself for, we could see an unwind of the positive sentiment in some groups and a repricing in those that have been hit.
Expect policy volatility to continue in the first half.
Risk #2: Inflation Reignites → Fed Turns Hawkish → Yields Spike
It seems like a lot has to happen for this risk to materialize, but it could prove to be more possible than markets are appreciating. Inflation measures have come down considerably, but they’re currently stuck at levels above the Fed’s target.
If 2025 turns out to be one of stronger-than-expected consumer spending, and stronger-than-expected business investment, the resulting demand could again push prices higher. Moreover, if that’s happening with the backdrop of increasing tariffs and a reduction in the workforce due to lower immigration, costs could be driven up across multiple industries.
The possible reduction in supply and increased domestic demand could push inflation upward, and in turn pressure the Fed to stop cutting rates.
Yields are another aspect of this risk that can’t be ignored. Reheating inflation and a hawkish Fed could drive them higher, as well as the possibility of government spending remaining high while the budget deficit continues to grow. If the Treasury increases its issuance of debt, the market would need to find buyers to absorb that debt, thus pushing yields up further. The TGA can support us for a while, but not forever.
Risk #3: AI Fails to Be Monetized, Earnings Disappoint
This last risk we point out is more likely to be relevant for right now, but not forever. Eventually, we do expect AI to prove successful in various industries, but the theme is still in its infancy and it’s impossible to know how it may morph in the years to come.
Investors have already grown a bit impatient as it pertains to proof of profit for companies that have spent large amounts of CapEx on AI initiatives. In 2025, that scrutiny is likely to stick around and even increase. If companies are able to show real financial benefit, productivity, and innovation gains as a result of their AI-related spending, this risk dissipates. But if tangible results remain elusive, continued stellar earnings growth and stock price upside could also become elusive.
What Catches Our Eye in 2025
With this as a backdrop, here are a few areas we believe have tailwinds in 2025.
Software
• May be poised for a catch-up trade versus semiconductors as investors search for new pockets of growth with a lower hurdle rate.
• Could benefit from increased business capital expenditure in 2025.
• We believe this could be a next-phase beneficiary of the AI theme — a conduit for how the concepts can be brought to life.
Gold
• Institutional and international central bank appetite for gold is still strong, and it could further benefit from an increase in retail investor participation.
• Global political uncertainty is likely here to stay, gold is typically a beneficiary of policy and currency volatility around the world.
Cyclical Sectors: Financials, Industrials, Energy, Materials
• These may not produce the tech-like returns of 2023 and 2024, but a pro-growth environment with looser regulations could make 2025 a friendly cyclical environment.
Health Care
• A contrarian pick, as we believe much of the bad news and risks are already priced in. Any improvement in sentiment could drive a repricing upward.
• Expected to produce strong earnings growth in 2025, bested only by technology.
China
• Another contrarian pick given the incoming administration’s well-telegraphed plans to limit China’s trade with the U.S., but we also believe much of the bad news is already priced in.
• China’s sluggish growth may drive the country to announce more stimulus in 2025, and present an opportunity for upside.
Of course, if any of the above mentioned risks come to fruition, or other negative surprises occur, these investment implications would change. But absent a change in the investing or macro environment, we find these pockets of the market to be compelling.
Conclusion
The end of one year and beginning of the next is always a time for reflection and re-positioning. We believe 2025 has the potential to be a positive year for markets and the economy, albeit more muted than the past two years, and with its own set of risks and uncertainties.
This cycle’s economic and market resilience has been remarkable and is one for the history books. Looking back, in many ways it has been warranted. After all, the market is never wrong — it’s simply a reflection of investor sentiment and the outlook for growth prospects down the road. We choose optimism into 2025 and look forward to the new opportunities and surprises it will bring.
Want more insights from Liz? The Important Part: Investing With Liz Thomas, a podcast from SoFi, takes listeners through today’s top-of-mind themes in investing and breaks them down into digestible and actionable pieces.
SoFi can’t guarantee future financial performance, and past performance is no indication of future success. This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite. Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at www.adviserinfo.sec.gov. Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Form ADV 2A is available at www.sofi.com/legal/adv.
Photo Credit: iStock/MicroStockHub
OTM2024121301
Read moreCurrent Home Equity Loan Rates in Idaho Today
IDAHO HOME EQUITY LOAN RATES TODAY
Current home equity loan rates in
Idaho.
Disclaimer: The prime rate directly influences the rates on HELOCs and home equity loans.
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Compare home equity loan rates in Idaho.
Key Points
• Home equity loan rates in Idaho vary based on credit score, loan-to-value ratio, and lender policies.
• Home equity loans offer a lump-sum payment repaid with regular installments, typically with fixed interest rates and repayment terms ranging from five to 30 years.
• Home equity loan interest rates are influenced by the prime rate and various economic factors.
• Home value stability, lender policies, and property location also influence Idaho home equity loan rates.
• To qualify for the lowest rates, borrowers should establish a robust credit score, manage their debt-to-income ratio, obtain adequate property insurance, and maintain sufficient home equity.
Introduction to Home Equity Loan Rates
This guide will help you become knowledgeable about Idaho home equity loan rates, which can vary depending on your financial situation, the lender you’re working with, and the country’s larger financial environment. We’ll walk you through the factors that affect rates, help you understand the different types of home equity loans, and provide advice for getting the best deal on your loan. We’ll also cover what is a home equity line of credit (HELOC) and how it’s different from a home equity loan.
How Do Home Equity Loans Work?
Let’s start with the basics: What is a home equity loan, exactly? With a home equity loan, you leverage your home’s value to secure a loan with a lower interest rate than a personal loan. So if you are still paying off your mortgage, a home equity loan is a second mortgage. With a fixed interest rate and a repayment term that can be anywhere from 5 to 30 years, it’s a flexible and affordable option.
To qualify, homeowners typically need to have at least 20% equity in their property. Not sure what that means? Your equity is the difference between what you owe on your mortgage and what your home is currently worth.
Where Do Home Equity Loan Interest Rates Come From?
Home equity loan interest rates are a product of larger economic factors, including the prime rate. This is the rate at which banks lend to their most creditworthy clients. Federal Reserve interest rate policies play a role in influencing banks’ prime rates. So keeping up with the news on shifts in Fed rates may give you a sense of how home equity loan rates might fluctuate.
How Interest Rates Impact Home Equity Loan Affordability
The interest rate you secure can have a big impact on your monthly payments and the amount you pay over the life of the loan. For example, a 20-year home equity loan of $50,000 with an interest rate of 5.00% would have a monthly payment of approximately $330. But with a 1% higher rate, the monthly payment would be about $358. That’s an extra $28 per month for the same loan. Over the life of the loan, that 1% higher rate would cost you an additional $6,777.
Home Equity Loan Rate Trends
The prime interest rate is a key number to watch, as it can be a harbinger of where Idaho home equity loan rates are headed. Since 2018, the average prime rate has seen some ups and downs, hitting a low of 3.25% in 2020, as the chart below shows. The graphic shows the fluctuations of the prime rate over a much longer period of more than 50 years.
Historical Prime Interest 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% |
Source: St. Louis Fed
Source: TradingView.com
Factors Influencing Home Equity Loan Rates
In the state of Idaho, several factors come into play when determining the rates for home equity loans. Many of these were likely also important when you took out your first home loan. Lenders take a close look at these factors to understand the risk associated with your application and to set an interest rate that is fair and responsible for both you and the lender.
Credit Score
Your history of managing debt and making timely payments is a significant factor in the interest rate you’ll be offered. Generally, a credit score of 680 or higher is preferred by lenders for home equity loans, with many looking for scores of 700 or more.
Home Value
Lenders will typically use an independent appraisal to determine the market value of your home, which will then be used to determine the maximum amount you can borrow. This process will also help to establish how much equity you have in the home. The appraisal report is an important part of the lending process and is used to make sure that the loan amount is appropriate and that the lender is making a responsible loan.
Loan-to-Value (LTV) Ratio
Once you know the home’s value, you and your lender can compute the LTV ratio. It’s calculated by dividing the loan amount by the property’s appraised value. If you are still paying off a first mortgage, you’ll add what you owe on that loan to the amount you’d like to borrow and then divide by the home value for a combined LTV. Most lenders cap their LTV at 85%.
Home Value Stability
The ebb and flow of home values have a direct impact on the equity you can tap into. When the market is on the upswing, lenders are more open to green-lighting heftier loans, as the increased value of your property acts as a safety net. But when the market takes a dip, lenders might tighten their belts, which could mean more stringent requirements and smaller loan amounts.
Property Location
Living in areas that are more susceptible to damage from wildfires, flooding, or other climate extremes can sometimes mean higher interest rates. Lenders might see these areas as riskier bets. If you live in an area like this, you might have to meet additional requirements to get a home equity loan in Idaho, and you could have a higher interest rate.
Lender Policies
Each lender has its own policies, and these can have an impact on the interest rate you’re offered or the fees you’ll pay. To make sure you’re getting the best deal, it’s a good idea to shop around and compare interest rates, fees, and closing costs from a few different lenders.
How to Qualify for the Lowest Rates
There are a few steps you can take to ensure you get the best interest rates on an Idaho home equity loan. Here’s your to-do list:
Build a Strong Credit Score
It’s a well-known fact that a higher credit score often translates to better home equity loan rates. Tending to your credit score means paying your bills on time, checking your credit reports now and then to ensure there are no errors (and fixing any that you do find), and trying not to get to the max on every credit line you have. These habits will help you build credit over time in Idaho.
Manage Debt-to-Income Ratio
Your debt-to-income (DTI) ratio, which compares your monthly income to your monthly debt obligations, is a key factor in determining your loan eligibility. Lenders usually want to see a DTI ratio below 36% when considering you for a home equity loan, though some will go as high as 50%. To compute your DTI ratio, add up all your monthly debts (student loan, car loan, etc), divide by your gross monthly income, and multiply that result by 100.
Obtain Adequate Property Insurance
In the world of home equity loans in Idaho, having enough property insurance is a must, especially in areas that are prone to flooding. This insurance requirement is in place to protect both you and your lender, so you can both have peace of mind and financial protection in the event of a disaster.
Maintain Sufficient Home Equity
You’ll need to keep at least 20% equity in your home to be eligible for a home equity loan. This is a safety net for both you and the lender, ensuring you’re not overextending yourself and that the lender’s investment is protected.
Fixed vs. Variable Interest Rates
Home equity loans in Idaho usually come with fixed interest rates. This means you’ll have the same interest rate and monthly payment for the life of the loan. While this can provide stability and predictability, it can also mean that you’ll start out with a higher interest rate than you would with a variable-rate loan.
Tools & Calculators
Taking advantage of online tools and calculators can help you estimate your home equity loan payments. These are a few of our favorite resources, which can help with both a home equity loan and a home equity line of credit (HELOC).
Run the numbers on your home equity loan.
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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.
Closing Costs and Fees
Closing costs for a home equity loan typically range from 2% to 5% of the loan amount. The charges may include the cost of the appraisal, credit report, document preparation, and title insurance. Every lender has its own fee structure, so it’s important to shop around and compare multiple lenders, as fees can vary.
Tax Deductibility of Home Equity Loan Interest
The interest you pay on a home equity loan or HELOC can be tax-deductible if you use the funds to significantly improve your home. Those who file jointly can deduct interest on the first $750,000 they borrow, while for single filers the limit is $375,000. Remember, you’ll need to itemize your deductions to claim this benefit so you may need to work with a tax preparer.
Alternatives to Home Equity Loans
When you’re looking at other ways to get equity out of your home in Idaho, it’s crucial to understand the differences between a HELOC, an HECM (home equity conversion mortgage), and a cash-out refinance. Taking the time to explore these options with a prospective lender can help you make an informed decision that will align with your financial goals.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) is akin to a credit card (but with notably lower interest rates). It grants you, the homeowner, the flexibility to borrow as needed up to a predetermined credit limit, paying interest only on the amount withdrawn. The variable interest rates on HELOCs are subject to market changes, and this could mean increased costs if rates take an upward turn. Here’s a look at HELOCs vs. home equity loans:
| 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 |
Home Equity Conversion Mortgage (HECM)
For those 62 and over, the government-insured HECM program offers a lifeline. It allows you to receive payments based on your home’s value, either as a lump sum, regular disbursements, or a line of credit. You only pay the loan back when you leave your home. Unlike traditional home equity loans or HELOCs, HECMs don’t require monthly payments, but they do come with higher upfront costs and a longer application process. (While SoFi does not offer HECMs at this time, we do offer home equity loans and HELOCs.)
Cash-Out Refinance
A cash-out refinance is a special type og mortgage refinance that’s like hitting two birds with one stone. You get a new mortgage to settle the old one, and you can pocket some cash to use however you wish. As noted above, most lenders will let you borrow up to 85% of your home’s value. As you consider a cash-out refinance vs. a home equity line of credit, one thing to think about is current interest rates. If the rates now are significantly higher than your current mortgage rate, it might not make sense to refinance, and a HELOC or home equity loan could be a better option.
The Takeaway
Knowing the most competitive home equity rates in Idaho and the lenders that offer them can help you make a wise decision. By comparing rates, using financial tools and calculators, and exploring all your borrowing options, you can find the home equity product that best meets your needs and goals.
Unlock your home’s value with a home equity loan from SoFi.
FAQ
What’s the monthly payment on a $50,000 home equity loan?
If you borrow $50,000 with a home equity loan and pay it back over 10 years, the monthly payments could range from $530 to $607, depending on your interest rate (this range is from 5.00% to 8.00%). But remember: The two main factors that will affect your payments are the interest rate and the loan term, so changes in either of these will change your payment.
What is the monthly payment on a $100,000 HELOC?
If you’ve maxed out your HELOC and are paying it back over 20 years at a rate of 7.00%, you can expect to pay $775 per month. Of course this is just an example. You can use a HELOC repayment calculator to compute the number for your exact interest rate.
What is the payment on a $25,000 home equity loan?
Borrow $25,000 with an interest rate of 8.00% and a term of 5 years, and you’re looking at a monthly payment of $507. Change either the interest rate or the term (or both) and your payment amounts will change as well.
How about a $30,000 home equity loan? What would that cost?
The monthly payment on a $30,000 home equity loan will depend on the interest rate and the loan term, but a 10-year term and 8.00% interest rate would mean a monthly payment of $364.
What might disqualify you from getting a home equity loan?
There are a number of factors that can prevent you from getting a home equity loan. These can include having a low credit score, having a high debt-to-income ratio, lacking 20% equity in your home, or not having enough insurance on your property.
What are the benefits of a HELOC?
HELOCs have a variety of benefits, including flexible borrowing, lower interest rates than many credit cards, and the ability to pay interest on only the amount of the credit line that you’ve used. These benefits make HELOCs a great financial tool for homeowners who need a flexible and cost-effective credit solution that fits their unique financial needs and long-term goals.
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.
²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
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More home equity 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
Turn your home equity into cash. Call us for a complimentary consultation or get prequalified online.
Why Stock Indexes Matter to Your Investments
When investors talk about how the stock market is doing, they’re often referring to one of the benchmark stock indexes. You have probably heard of some of the most well-known ones, such as the Dow Jones Industrial Average, which has been around since 1896, or the S&P 500, which is the broadest measure of the U.S. stock market. You may have even heard that both have risen to record highs this year or that chip maker nvidia bumped Intel from the Dow, ending the tech giant’s 25-year run in the index by better leveraging the artificial intelligence boom.
But what exactly are stock indexes and how do investors use them? We’re getting into it.
Stock Indexes Versus the Economy
Stock indexes track the combined performance of a specific group of stocks. They’re designed to be representative of a certain section of the market and can give investors a sense of how stocks are broadly responding to economic data, changes in regulations and trade policies, or the political climate.
But no, the stock market and the economy aren’t the same, in case you were wondering. They are interconnected, given that the economy is a measure of things that are made, bought, and sold in a given region, and the stock market reflects a critical aspect of the companies that do the making, buying and selling. But they can diverge in noticeable ways. For example, even when the economy is doing well, investor worries about a slowdown in the future can pull stock prices lower.
Two Key Indexes to Remember
One of the most cited indexes is the Dow, which measures the performance of 30 large, publicly traded U.S. companies. It’s measured in points, so you’ll often hear how many points the Dow went up or down in a given day or week. By tracking how these businesses are faring, market watchers may gauge (and infer) how the stock market is doing as a whole. The Dow is a price-weighted average, meaning stocks with a higher share price can influence the index more. The highest-weighted Dow stocks were Wall Street bank Goldman Sachs, insurer UnitedHealth Group, and retailer Home Depot as of December 6, 2024.
The other very prominent stock index is the S&P 500, which tracks a much bigger chunk of the market by following 500 leading, publicly trading U.S. companies. The S&P 500 is weighted by market value rather than share price. Even though all sectors are represented, big tech reigns the index, with Apple, Meta, Google-parent Alphabet, Microsoft, and NVIDIA among the top 10 biggest constituents.
While the Dow is often the most cited index, the S&P 500 can provide a broader, more diverse view of overall market health.
And there are a multitude of other stock indexes tracking different parts of global financial markets. In the U.S., the Nasdaq Composite Index, which focuses on tech stocks, and the Russell 2000 Index, which tracks smaller companies, are also commonly cited.
How Can Stock Indexes Inform Your Investments?
Indexes can help investors understand the overall market sentiment, but they can also offer a point of comparison. For instance, if an investor wants to understand how a specific stock or investment is faring versus the overall market, they might compare it to the S&P 500’s long-term return of roughly 10% (or 6-7% when adjusted for inflation), according to historical data.
You can also base your investments on indexes through investment funds, such as exchange-traded funds (ETFs). These funds allow you to invest in all the stocks in an index rather than purchasing individual securities. If you’re saving for the long-term, such as for your retirement, using average historical market returns can also help you project how much your investments could potentially grow over time.
image credit: Bernie Pesko
photocredit: iStock/Prostock-Studio
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
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