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 typically offer variable interest rates, which can make monthly payments hard to manage and budget over time |
HELOCs let you access your funds as needed compared to a traditional loan that’s paid as a lump sum | Your home serves as collateral, putting your home at risk of foreclosure if you default |
You may be able to deduct interest payments from your taxes, depending on how you use your HELOC | HELOCs charge several loan fees that usually equal 2% to 6% of your overall loan amount fees |
You may be required to pay several fees, including appraisal, application and closing fees | 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 | 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 |
You’ll receive a lump sum that can be used for big purchases such as a home renovation | 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 several purposes, unlike other loan types such as business or auto loans | Fees and charges can raise your overall payment amount and prolong your repayment efforts |
If your home equity loan meets IRS guidelines such as buying, building or improving a home, you can deduct your interest payments from your taxes | You can have negative equity in your home if your property loses value and you end up with loan debt that exceeds its value |
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.
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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