Put your home equity to work.
There are three main ways to turn your home equity into cash. The right one starts with how you want to get the money.
What do you want to use your equity for?
Pick the path that fits what you need.
Three ways to use your home equity
The biggest difference is how you get the money and what happens to your current mortgage.
| Home Equity Product | How you get money | Your mortgage | Payments |
|---|---|---|---|
| Home equity loan | One lump sum | Stays in place | Set monthly payments |
| HELOC | Use as needed | Stays in place | Can change |
| Cash-out refinance | One lump sum | Replaced | New mortgage payment |
A quick way to narrow down your decision
How home equity options work
What homeowners commonly use them for
| Option | How it works | Best for | |
|---|---|---|---|
| Home equity loan | A lump sum at a fixed rate, repaid on a set schedule. | A known, one-time cost | See home equity loans |
| HELOC | A revolving line you draw on as needed, usually at a variable rate. | Ongoing or uncertain costs | See HELOC |
| Cash-out refinance | Replaces your whole mortgage at today's rate, for a larger sum. | Only if today's rate still beats yours | See cash out refinance |
Common questions
What's the risk of borrowing against my home?+
Your home secures the loan, so missed payments put it at risk. If your equity drops, from a market downturn or falling home value, you could end up owing more than your home is worth.
How much equity can I borrow against?+
Most lenders cap combined borrowing at 80 to 85 percent of your home's value, including your existing mortgage. The exact limit depends on your lender, credit, and loan type.
Rates are elevated. Here's why a HELOC often wins right now.
A HELOC leaves your existing mortgage rate untouched, so you're not trading a low rate for today's higher one. You also skip the closing costs that come with refinancing your entire loan balance. You only borrow, and pay to access, what you actually need.
HELOC or home equity loan, which is better?+
A HELOC fits ongoing or uncertain costs since you draw as needed. A home equity loan fits a known, one-time cost since you get a lump sum at a fixed rate.
Does a cash-out refinance affect my mortgage rate?+
Yes. A cash-out refinance replaces your entire mortgage, so your new rate applies to the full balance, not just the cash you take out.
Answer two questions and see your best next move.