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 | CONS |
|---|---|
You can expect an average interest rate that’s lower than other loan types | HELOCs come with variable interest rates that fluctuate depending on several factors, which can make your monthly payments adjust with your interest rate at any given time |
If unexpected expenses pop up, HELOCs offer a credit line that you can tap into at any time | Your home serves as collateral, putting your home at risk of foreclosure if you default |
You may receive a tax deduction from your interest payments if you meet specific IRS guidelines and use the funds to cover home-related expenses | You may be on the hook for several fees and expenses, including appraisal fees, application fees and closing costs fees |
Using your HELOC to pay other debt consolidates your other payments, lowers your overall credit utilization and improves your credit score | You can end up with an upside-down loan, which means you owe more than your property 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 | CONS |
|---|---|
Home equity loan interest rates are fixed, meaning your monthly payments will stay the same over the life of your loan | You must use your home as collateral to take out a home equity loan, which means you could lose it with too many missing or late payments |
You’ll receive a lump sum that can be used for big purchases such as a home renovation | Strict qualification requirements such as high credit score minimums and low debt-to-income ratios can make it difficult to secure a home equity loan |
Home equity loans are unrestricted, meaning you can use them for almost any expense, including home renovations or auto repairs | You may have to pay expensive closing costs, including origination and appraisal fees |
If you use the loan to buy, build or improve your home, you can potentially deduct your interest payments from your tax return | You could end up with an “underwater” loan, which occurs when you end up owing more than your home is worth |
What Is Home Equity?
Home equity represents how much you own of your home compared to what the bank or mortgage lender owns. If you’ve paid off your home in full, you have 100% equity.
You can utilize your home’s equity without paying off your home in full, whether through a home equity loan or a home equity line of credit (HELOC). You can use your home’s equity for home improvements, repairs, debt consolidation and educational costs, among other things.
Why Is Home Equity Important?
The more home equity you have, the higher your net worth rises. Building wealth is vital to having long-term financial health, and home equity is one way to build wealth.
Every time you make a mortgage payment, you increase your home equity, or how much you own of your home. The more equity you have, the more wealth you amass.
What Is a HELOC?
Home equity lines of credit, or HELOCs, are loans that allow you to borrow against your home’s equity – the current market value of your home minus your remaining mortgage balance. 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.
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