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 | 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 | Lenders use your property for collateral when you take out a HELOC, which jeopardizes your house if you default |
You may be able to deduct interest payments from your taxes, depending on how you use your HELOC | HELOCs can come with significant fees that range from at least 2% to 6% of your total loan costs fees |
Borrowers looking to consolidate their debt payments can use a HELOC to pay off debts and improve their 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 and Cons of a Home Equity Loan
| PROS | CONS |
|---|---|
Home equity loan interest rates are fixed, meaning your monthly payments will stay the same over the life of your loan | Your home will be used as collateral for your loan, which places your property at risk of foreclosure if you can’t make your payments |
Home equity loans offer lump-sum funds that are ideal for tackling large expenses like home repairs, down payments and more | Home equity borrowers must typically have a higher-than-average credit score and an excellent debt-to-income ratio to qualify for most loan rates |
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 | Your home’s overall value can drop during your loan term, which could cause you to owe more than it’s worth |
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?
Your equity in your home comes from how much you’ve paid on your mortgage. The longer you’ve been paying off your mortgage, the more equity you have. You can tap into that equity through a home equity loan.
A home equity loan is paid out in a lump sum that you can use for home improvements, home repairs, debt consolidation or another major expense. The amount you’re approved for is based on how much equity you have in your home, your credit score and history, and how much you need.
Different home equity lenders offer different repayment terms, but longer repayment terms usually mean lower monthly payments. This might be helpful for you if you’re paying both your original mortgage and a home equity loan at the same time.
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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