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 | 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 | You may be required to pay several fees, including appraisal, application and closing fees |
You may be required to pay several fees, including appraisal, application and closing fees | If the property value drops, you can owe more on your HELOC than your home 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 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 | Lenders impose strict credit score and debt-to-income ratio requirements that make it difficult to qualify for a home equity loan |
Home equity loans are unrestricted, meaning you can use them for almost any expense, including home renovations or auto repairs | 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 | Your home’s overall value can drop during your loan term, which could cause you to owe more than it’s worth |
What Is Home Equity?
When you buy your home with a mortgage, your lender pays for that home in full and you make monthly payments back to your lender until it’s repaid. Every month, you earn more equity in your home as you repay your mortgage.
Home equity is the amount of your home that you own, usually expressed as a percentage. You can calculate your home equity by taking the appraised value of your home and subtracting your mortgage balance or other home loans.
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.