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 | 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 | HELOCs can come with significant fees that range from at least 2% to 6% of your total loan costs 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 |
|---|---|
Home equity loan interest rates are fixed, meaning your monthly payments will stay the same over the life of your loan | 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 | Home equity loan lenders tend to charge expensive fees that include origination fees, appraisal fees and closing costs |
The IRS allows home equity borrowers to deduct interest payments from their taxes if they meet specific 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.
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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