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 |
|---|---|
Lower interest rates compared to other loan types | Variable interest rates fluctuate based on the federal benchmark rate, potentially increasing monthly payments |
You have consistent access to credit that they can use for emergency expenses or other quick costs | Defaulting on a HELOC can place your house at risk of foreclosure since your property serves as collateral, or insurance, for the lender |
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 |
|---|---|
You’ll pay a fixed interest rate that remains consistent during your loan term | Home equity lenders use your home as collateral for the loan, which could result in foreclosure should you default on your monthly payments |
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 |
There are no limits on what you can use your home equity loan fund for | Fees and charges can raise your overall payment amount and prolong your repayment efforts |
The IRS allows home equity borrowers to deduct interest payments from their taxes if they meet specific guidelines | You could end up with an “underwater” loan, which occurs when you end up owing more than your home is worth |
Why Is Home Equity Important?
Home equity is important because it signifies how much wealth you have based on how much of your home you own. The more equity you have, the more wealth you’ve accumulated.
If you ever need to utilize your home equity, you can tap into it with a home equity loan or home equity line of credit. You might also want to explore a cash-out refinance as an option to use your home’s equity.
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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