Home equity loan rates vs. HELOC rates
HELOC rates are usually slightly lower than home equity loan interest rates.
Consumers sometimes confuse home equity loans with home equity lines of credit (HELOCs), but they work very differently. A HELOC is a line of credit that can be used like a credit card, and they almost always come with variable rates.
| A home equity loan is best if: | A HELOC is best if: |
- You want a fixed interest rate
- You want predictable monthly payments that stay the same
- You want money in one lump sum
- You need all the money immediately
- You understand that you'll have to pay interest on the full amount, whether you use all of the funds or not
| - You're OK with a variable rate
- You don't mind having payments that change over time
- You want a competitive interest rate for borrowing cash
- You want ongoing access to funds, rather than a one-time lump sum
- You want to pay interest only on the amount you use
- You want the flexibility to access funds, pay them off and reuse that portion of your credit
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See current HELOC rates and top lenders today.
Home equity loan rates vs. cash-out refinance rates
Cash-out refinance rates are usually lower than home equity loan interest rates.
A cash-out refinance gives you access to cash by replacing your existing mortgage with a larger one. Because it’s a first mortgage, you can access that cash at lower interest rates than you could with second mortgages, like HELOCs and home equity loans. A cash-out refi also has more lenient requirements overall than a home equity loan, making it easier to qualify for. For example, you could get an FHA cash-out refinance with a credit score as low as 500.
| A home equity loan is best if: | A cash-out refinance is best if: |
- You want to leave your first mortgage balance alone
- You want to save money on closing costs
| - You can get a better interest rate on a new mortgage
- Your credit scores are too low for a home equity loan
|
Learn about cash-out refinance options.
Home equity loan rates vs. personal loan rates
Personal loan rates are usually higher than home equity loan interest rates.
If you prefer to leave your home equity alone, you may qualify for an unsecured personal loan. The rates are often higher than home equity products, but you won’t have to worry about the lender foreclosing on your home if you default on your payments.
| A home equity loan is best if: | A personal loan is best if: |
- You want a lower rate
- You want a longer repayment term
- You want a lower payment
- You need a higher loan amount
| - You don’t want to use your home as collateral
- You don’t have enough equity to take out a home equity loan
- You need the money faster
- You need a lower loan amount
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See top lender personal loan rates today.
Can I get a home equity loan with bad credit?
See how much you could borrow with a