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 typically offer variable interest rates, which can make monthly payments hard to manage and budget over time |
If unexpected expenses pop up, HELOCs offer a credit line that you can tap into at any time | 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 |
The IRS allows HELOC borrowers to deduct interest payments from their taxes based on specific guidelines such as using your funds to buy, build or improve a home | You can expect to pay loan fees between 2% to 5% of your total loan expenses fees |
You may be required to pay several fees, including appraisal, application and closing fees | If your home’s value drops while you have an open HELOC, you may owe more 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 |
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 |
There are no limits on what you can use your home equity loan fund for | You may have to pay expensive closing costs, including origination and appraisal fees |
Interest paid on your home equity loan might be tax-deductible if you itemize your deductions | If your home’s value decreases during your loan term, you may end up owing more than your loan is worth |
What Is Home Equity?
When you buy your home with a mortgage, your lender pays for that home in full and you make monthly payments back to your lender until it’s repaid. Every month, you earn more equity in your home as you repay your mortgage.
Home equity is the amount of your home that you own, usually expressed as a percentage. You can calculate your home equity by taking the appraised value of your home and subtracting your mortgage balance or other home loans.
Why Is Home Equity Important?
Two major ways you build home equity is when the value of your home goes up (appreciation) and the balance of your mortgage goes down. As you make ongoing, regular monthly payments to your mortgage, your home equity will increase and so will your wealth.
Borrowing against your home equity lets you use money for major financial needs, including:
- Home improvements, upgrades or repairs
- Consolidating debt
- Making large payments on high-interest debt
- Educational costs
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.
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