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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 credits 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
| Loan term | APR |
|---|---|
60.00% LTV | 9.15% |
80.00% LTV | 9.32% |
90.00% LTV | 10.11% |
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
| Loan term | APR |
|---|---|
60.00% LTV | 9.14% |
80.00% LTV | 9.32% |
90.00% LTV | 10.14% |
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
| Loan term | APR |
|---|---|
60.00% LTV | 9.20% |
80.00% LTV | 9.39% |
90.00% LTV | 10.26% |
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 May 30, 2024
Pros and Cons of a HELOC
| Pros | Cons |
|---|---|
Lower interest rates compared to other loan types | HELOCs often come with variable interest rates that fluctuate over time, which could make it difficult to manage increasing monthly payments |
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 | Defaulting on a HELOC can place your house at risk of foreclosure since your property serves as collateral, or insurance, for the lender |
The IRS allows HELOC borrowers to deduct interest payments from their taxes based on specific guidelines such as using your funds to buy, build or improve a home | You may be on the hook for several fees and expenses, including appraisal fees, application fees and closing costs fees |
HELOCs can be an excellent option to consolidate your other debt payments into one monthly payment and boost your credit score | Borrowing against your home’s equity can be risky because you may owe more on your HELOC than your property is worth if your property value drops |
5-Year Home Equity Loan Rates (60 Months)
| Loan term | APR |
|---|---|
60.00% LTV, $50K | 8.11% |
80.00% LTV, $50K | 8.37% |
90.00% LTV, $50K | 9.10% |
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)
| Loan term | APR |
|---|---|
60.00% LTV, $150K | 8.29% |
80.00% LTV, $150K | 8.56% |
90.00% LTV, $150K | 9.25% |
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)
| Loan term | APR |
|---|---|
60.00% LTV, $200K | 8.47% |
80.00% LTV, $200K | 8.75% |
90.00% LTV, $200K | 9.41% |
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)
| Loan term | APR |
|---|---|
60.00% LTV, $250K | 8.71% |
80.00% LTV, $250K | 9.06% |
90.00% LTV, $250K | 9.63% |
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)
| Loan term | APR |
|---|---|
60.00% LTV, $500K | 9.28% |
80.00% LTV, $500K | 9.89% |
90.00% LTV, $500K | 10.05% |
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 May 30, 2024
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 | You must use your home as collateral to take out a home equity loan, which means you could lose it with too many missing or late payments |
If you have a big one-off expense or an investment opportunity, home equity loans distribute funds in lump-sum payments, unlike a credit card or a HELOC | 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 |
You can use home equity loan funds for almost any reason you see fit | Closing costs, appraisal fees, application fees and other charges can add up quickly and raise your overall loan bill |
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 | 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 a HELOC?
A home equity line of credit, often referred to as a HELOC, lets homeowners convert the equity in a residential property into cash through a revolving line of credit that’s secured by your home.
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.
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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