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
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Competitive interest rates that are lower than some other loan types
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Variable interest rates fluctuate based on the federal benchmark rate, potentially increasing monthly payments
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HELOCs let you access your funds as needed compared to a traditional loan that’s paid as a lump sum
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Lenders use your property for collateral when you take out a HELOC, which jeopardizes your house if you default
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If your HELOC meets IRS guidelines, your interest may be tax-deductible, but you must use the funds to purchase, build or improve a home
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You can expect to pay loan fees between 2% to 5% of your total loan expenses fees
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You may be required to pay several fees, including appraisal, application and closing fees
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If the property value drops, you can owe more on your HELOC than your home is worth
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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 |
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Home equity loans offer fixed interest rates and monthly payments that stay the same over your loan term
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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
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Home equity loans offer lump-sum funds that are ideal for tackling large expenses like home repairs, down payments and more
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Strict qualification requirements such as high credit score minimums and low debt-to-income ratios can make it difficult to secure a home equity loan
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Home equity loans are unrestricted, meaning you can use them for almost any expense, including home renovations or auto repairs
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You may have to pay expensive closing costs, including origination and appraisal fees
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The IRS allows home equity borrowers to deduct interest payments from their taxes if they meet specific guidelines
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If your home’s value decreases over time, you could end up with a loan balance that’s higher than your property’s value
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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.
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.
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.