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.
Related: Best Home Equity Loan Lenders
$100K HELOC Loan Rates
—Ideal for Medium-Sized Projects
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
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
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.
*Data accurate as of December 6, 2024
Pros and Cons of a HELOC
5-Year Home Equity Loan Rates (60 Months)
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)
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)
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)
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)
The 30-year term maximizes affordability with the lowest monthly payments. These options are best for substantial borrowing needs and long-term investments.
*Data accurate as of December 6, 2024
Pros and Cons of a Home Equity Loan
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?
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.
More From Advisor
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