Refinancing your home can be a smart financial move, especially with interest rates on the rise. According to Zillow, the average 30-year fixed refinancing rate as of Jan. 8 was 6.54%, while a 15-year term had a rate of 5.65%. Despite projections for a slight decline in rates, Fannie Mae forecasts that the average 30-year fixed mortgage rate will be 6.2% in the first quarter of 2026, dropping to 5.9% by year-end.
However, these rates are still higher than those seen in 2020 and 2021. The average 30-year fixed mortgage rate surpassed 6% in 2022 and has remained above that mark since, according to the Federal Reserve Bank of St. Louis. With home prices also on the rise, the average value of a home has increased from $246,326 in early 2020 to $359,241 as of November 2025.
For many Americans, these high interest rates pose a challenge for those looking to refinance and access their home’s equity. With more than half of U.S. mortgage holders having rates of 4% or lower, and 80% under 6%, refinancing may not be an attractive option, especially considering the additional closing costs involved.
Fortunately, there are alternative ways to tap into your home’s equity without committing to a new, higher-interest mortgage. A home equity loan (HEL) allows you to borrow against your home’s equity at a lower interest rate than other types of loans. These loans typically have a fixed interest rate and allow you to borrow up to 80% of your home’s equity.
Another option is a home equity line of credit (HELOC), which works like a credit card and also uses your home as collateral. HELOCs have variable interest rates and come with a draw period where you can access funds, followed by a repayment period where you must start paying down the principal.
For homeowners aged 62 and older, a reverse mortgage can provide access to funds based on equity, but it’s important to consider the implications. Reverse mortgages accrue interest over time, potentially reducing your equity and limiting your ability to downsize or leave assets to heirs.
Lastly, borrowing from friends and family can provide a lower-interest alternative to traditional lenders, but it’s important to consider the potential impact on relationships if repayment becomes difficult.
In conclusion, with interest rates on the rise, exploring alternative ways to tap into your home’s equity can provide financial flexibility without committing to a new mortgage. Whether through a HEL, HELOC, reverse mortgage, or borrowing from loved ones, it’s essential to weigh the pros and cons of each option before making a decision.
