EQUITYUPDATES / THE RESOURCE DESK
Compare ways to access equity
Understand the structure, costs, and tradeoffs of three common home-secured borrowing options.
Your Options
Ways to Access Your Equity
There are three primary ways homeowners tap into their home equity. Each has different structures, rates, and ideal use cases.
Variable Rate
HELOC
A Home Equity Line of Credit is a revolving credit line secured by your home — works much like a credit card with a draw period and repayment period.
- Borrow only what you need, when you need it
- Draw period typically 5–10 years
- Interest-only payments available during draw phase
- Variable rate tied to Prime Rate
- Credit line can be reused as you repay
- Ideal for ongoing projects or expenses
Fixed Rate
Home Equity Loan
Sometimes called a "second mortgage," a home equity loan provides a lump sum at a fixed interest rate, with predictable monthly payments over a set term.
- Receive full amount upfront in a lump sum
- Fixed interest rate — payment never changes
- Terms typically 5–30 years
- Easier to budget and plan around
- Good for one-time large expenses
- Often lower rates than personal loans or credit cards
Replaces Mortgage
Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a new, larger loan. You receive the difference in cash — converting equity to liquid funds while resetting your loan terms.
- Access large amounts of equity at once
- Can lock in a new rate on your entire mortgage
- Single monthly payment (no second mortgage)
- Potential to lower rate if market rates improved
- Good if your current rate is higher than market
- Closing costs typically 2–5% of loan amount