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 |
|---|---|
Competitive interest rates that are lower than some other loan types | HELOCs typically offer variable interest rates, which can make monthly payments hard to manage and budget over time |
Like a traditional credit card, HELOCs give you access to a revolving line of credit that you can use as needed to cover unexpected expenses and other needs | 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 | You can expect to pay loan fees between 2% to 5% of your total loan expenses 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 and Cons of a Home Equity Loan
| PROS | CONS |
|---|---|
When you take out a home equity loan, your interest rate won’t increase, even if federal rates go up | Home equity lenders use your property as collateral for your loan, which means they can take it if you default |
Your entire loan amount is distributed in one, lump-sum payment | 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 |
You can use home equity loan funds for almost any reason you see fit | You may have to pay expensive closing costs, including origination and appraisal fees |
Your interest payments may be tax deductible if they meet IRS guidelines | If your home’s value decreases over time, you could end up with a loan balance that’s higher than your property’s value |
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?
HELOC rates are tied more closely to banks than are first-mortgage rates, which tend to track the performance of the bond market. The Federal Reserve, which controls the interest rates that banks charge each other, has signaled to investors that it expects to raise those rates several times in 2022 and beyond.
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