If you’re looking to tap into the equity you’ve built up in your home but are not ready to move or refinance, a home equity loan or a home equity line of credit (HELOC) could be the solution for you. Both options allow you to access the value of your home without having to sell or refinance your existing mortgage. However, choosing between a HELOC and a home equity loan can be a difficult decision, especially when considering interest rates and repayment terms.
According to real estate analytics firm Curinos, the average adjustable-rate HELOC is currently at 7.25%, with the 2026 low being 7.19% in mid-May. On the other hand, the national average rate for a fixed-rate home equity loan is 7.86%, which has increased from the previous month. These rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio of less than 70%.
When deciding between a HELOC and a home equity loan, it’s important to consider your specific financial needs. A HELOC allows you to draw cash from your approved line of credit, pay it off, and then tap into it again as needed. In contrast, a home equity loan provides you with a lump sum upfront.
Interest rates for home equity products work differently than primary mortgage rates, as they are typically based on an index rate plus a margin. HELOC rates are often tied to the prime rate, which is currently at 6.75%. On the other hand, home equity loans have fixed interest rates, providing more stability in repayment amounts.
When looking for the best home equity lender, it’s important to consider factors such as introductory rates, minimum draw amounts, and overall repayment terms. Some lenders may offer below-market introductory rates, like FourLeaf Credit Union’s HELOC APR of 5.99% for the first 12 months on lines up to $500,000.
It’s crucial to compare rates, annual fees, and repayment terms when selecting a home equity lender. HELOCs and home equity loans can be beneficial for homeowners with low primary mortgage rates and significant equity in their homes. However, it’s essential to borrow and repay the balance within a reasonable timeframe to avoid long-term financial strain.
In conclusion, home equity products can be a valuable tool for accessing the equity in your home without having to sell or refinance. By carefully comparing rates and terms from different lenders, you can find the best option to suit your financial needs.
