Home equity loans and home equity lines of credit (HELOCs) allow homeowners to tap into the value of their homes.
A home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home’s value and pay that amount back in monthly installments. A home equity line of credit is a variable-rate second mortgage that draws on your home’s value as a revolving line of credit.
Both options use your property as collateral for your payments, which means your lender can seize your property if you can’t repay what you borrow.
$100K HELOC Loan Rates
Ideal for Medium-Sized Projects
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A $100K HELOC is suitable for more extensive renovation projects or other significant financial needs. Compare the rates and terms to find the best fit for your situation.
$250K HELOC Loan Rates
Access More Funds for Major Investments
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For larger projects or investments, a $250K HELOC provides the necessary funds with various LTV options. Explore these rates to determine the right balance between borrowing capacity and risk.
$500K HELOC Loan Rates
Maximize Your Borrowing Power
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If you have substantial equity in your home and need significant financing, a $500K HELOC offers a great deal of borrowing power. Evaluate these options to find the optimal rate and term for your goals.
Pros and Cons of a HELOC
| PROS | CONS |
|---|---|
Interest rates are generally lower than some other loan types such as personal loans | Variable interest rates fluctuate based on the federal benchmark rate, potentially increasing monthly payments |
If unexpected expenses pop up, HELOCs offer a credit line that you can tap into at any time | Lenders use your property for collateral when you take out a HELOC, which jeopardizes your house if you default |
Interest payments may be tax deductible if you meet IRS guidelines and prove that you will use the funds to buy, improve or build a home | HELOCs can come with significant fees that range from at least 2% to 6% of your total loan costs fees |
HELOCs can be an excellent option to consolidate your other debt payments into one monthly payment and boost your credit score | If the property value drops, you can owe more on your HELOC than your home is worth |
5-Year Home Equity Loan Rates (60 Months)
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A 5-year term offers a shorter repayment period with typically higher monthly payments. These products are suitable for borrowers looking for a quicker payoff.
10-Year Home Equity Loan Rates (120 Months)
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With a 10-year term, borrowers can enjoy a balanced monthly payment while still building equity quickly. 10-year home equity loans are ideal for medium-sized projects or financial needs.
15-Year Home Equity Loan Rates (180 Months)
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A 15-year term provides lower monthly payments compared to shorter terms, offering more affordability while still progressing toward your financial goals.
20-Year Home Equity Loan Rates (240 Months)
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Offering longer repayment and lower monthly payments, 20-year home equity loans are suitable for larger investments and long-term financial planning.
30-Year Home Equity Loan Rates (360 Months)
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The 30-year term maximizes affordability with the lowest monthly payments. These options are best for substantial borrowing needs and long-term investments.
Pros and Cons of a Home Equity Loan
| PROS | CONS |
|---|---|
Home equity loans offer fixed interest rates and monthly payments that stay the same over your loan term | Home equity lenders use your property as collateral for your loan, which means they can take it if you default |
Home equity loans offer lump-sum funds that are ideal for tackling large expenses like home repairs, down payments and more | Many lenders have strict qualification requirements such as high credit score minimums and a low debt-to-income ratio |
There are no limits on what you can use your home equity loan fund for | Home equity loan lenders tend to charge expensive fees that include origination fees, appraisal fees and closing costs |
Interest paid on your home equity loan might be tax-deductible if you itemize your deductions | You could end up with an “underwater” loan, which occurs when you end up owing more than your home is worth |
What Is a HELOC?
A home equity line of credit, often referred to as a HELOC, lets homeowners convert the equity in a residential property into cash through a revolving line of credit that’s secured by your home.
When you get a HELOC, you can take the money available in installments as you need it and pay interest only on what you use.
How Does a Home Equity Loan Work?
You earn home equity every month when you make your mortgage payments. The more payments you make, the more your equity increases.
A home equity loan is a lump-sum loan based on how much of your home you own outright. So if your loan-to-value ratio (LTV) is 50%, you can borrow, say, 80% of that LTV. Most lenders won’t let you access 100% of your home’s equity, but even getting a portion of it through a home equity loan could be a game-changer for your big financial needs.
How Do I Calculate Home Equity?
You’ll calculate your home equity by taking your home’s current value – based on its most recent appraisal – and subtracting it from your current mortgage balance.
For example, say your home is valued at $500,000 and your mortgage’s outstanding balance is $250,000. This would mean you have $250,000 in home equity, and your loan-to-value ratio (LTV) would be 50%. If you’re looking for a home equity loan or line of credit, lenders usually only approve up to a certain LTV ratio. For example, some lenders require 80% LTV or less.
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