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 |
|---|---|
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 |
You only owe interest on your balance and not the full credit line amount | When you take out a HELOC, the lender will use your property as collateral, which means you can lose your home if you fall behind on payments |
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 required to pay several fees, including appraisal, application and closing fees |
HELOCs can be an excellent option to consolidate your other debt payments into one monthly payment and boost your credit score | Borrowing against your home’s equity can be risky because you may owe more on your HELOC than your property is worth if your property value drops |
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 | You put your property at risk of foreclosure since your home secures your loan against defaulted payments |
If you have a big one-off expense or an investment opportunity, home equity loans distribute funds in lump-sum payments, unlike a credit card or a HELOC | Home equity loans have strict requirements that can make them difficult to qualify for |
Home equity loans are unrestricted, meaning you can use them for almost any expense, including home renovations or auto repairs | Home equity loans come with several costs and fees that can add up and offset the benefits of a lower interest rate |
If your home equity loan meets IRS guidelines such as buying, building or improving a home, you can deduct your interest payments from your taxes | 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.
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.
How Does a Home Equity Loan Work?
A home equity loan is a lump-sum loan that allows you to borrow money by leveraging your home’s equity.
The maximum amount you’re allowed to borrow is based on how much equity you have in your home, up to the amount offered by that lender. These types of loans tend to have competitive interest rates since they’re secured loans. Your home is used as collateral to secure the loan, meaning if you miss or fall behind on payments, you could face foreclosure.
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