Home Equity Loans & HELOCs Access Your Home Equity Without Selling Your Home
Your home may be one of your largest financial assets. A home equity loan or Home Equity Line of Credit (HELOC) can allow you to access a portion of that equity while continuing to own and live in your home.
MyLoanDesk helps homeowners explore home equity financing options for renovations, major expenses, debt consolidation, investment opportunities, and other financial needs.
What Is Home Equity?
Home equity is generally the difference between your home's current value and the amount you still owe on loans secured by the property.
The amount you may actually be able to borrow depends on factors such as property value, existing mortgage balances, credit, income, loan program requirements, and combined loan-to-value limits.
Two Ways to Access Your Home Equity
Home Equity Line of Credit (HELOC)
A HELOC provides a revolving line of credit secured by your home. Instead of receiving all the money at once, you can generally draw funds as needed during the available draw period, subject to the terms of your loan.
A HELOC may be useful when you want ongoing access to your equity rather than one large lump sum. Interest rates on HELOCs are commonly variable, so payments and borrowing costs can change over time.
HELOCs May Be Useful For:
- Home improvements and renovations
- Education expenses
- Emergency reserves
- Large purchases
- Business or investment needs
- Consolidating higher-cost debt
Home Equity Loan
A home equity loan typically provides a lump sum at closing with scheduled payments over a specified term.
This may be a better fit when you know approximately how much money you need and prefer a more predictable repayment structure.
Home Equity Loans May Be Useful For:
- Major renovations
- Large one-time expenses
- Debt consolidation
- Investment opportunities
- Education expenses
- Other significant financial needs
HELOC vs. Home Equity Loan
| Feature | HELOC | Home Equity Loan |
|---|---|---|
| Access to money | Draw funds as needed | Lump sum |
| Structure | Revolving credit line | Installment loan |
| Interest rate | Often variable | May be fixed, depending on program |
| Best suited for | Ongoing or uncertain expenses | Known one-time expenses |
| Existing first mortgage | Typically remains in place | Typically remains in place |
* Neither option is automatically better. The right choice depends on how much equity you need, how you plan to use the money, and how you want to repay it.
Keep Your Existing First Mortgage
One of the biggest reasons homeowners consider a HELOC or home equity loan is that you may not need to refinance your existing first mortgage.
For homeowners who already have an attractive first-mortgage rate, replacing the entire mortgage just to access equity may not make sense. A second-lien home equity solution can potentially allow you to keep your existing first mortgage in place while accessing additional equity separately.
See How Home Equity Financing Works
Learn the difference between a HELOC and a home equity loan, how home equity is calculated, and which type of financing may fit different situations.
How Much Equity Can I Access?
The amount available depends on the specific loan program and your financial profile.
Property Value
The current market value of your home.
Current Mortgage Balance
How much you currently owe against the property.
Combined Loan-to-Value (CLTV)
Your existing mortgage plus the proposed home equity financing compared with the property's value.
Credit Profile
Credit requirements vary by lender and program.
Income & Ability to Repay
Income and documentation requirements depend on the financing program.
Calculate Your Estimated CLTV
See how your proposed home equity borrowing compares against your property's current market value.
Home Equity Financing FAQ
What is the difference between a HELOC and a home equity loan?
A HELOC is generally a revolving credit line that lets you access funds as needed, while a home equity loan generally provides the borrowed funds as a lump sum.
Do I have to refinance my current mortgage?
Not necessarily. HELOCs and home equity loans are commonly structured as separate liens, allowing an existing first mortgage to remain in place, subject to program requirements.
How much equity do I need?
Requirements vary by lender and program. The amount available will depend partly on your home's value, current mortgage balance, and the maximum combined loan-to-value allowed.
Can I use home equity to renovate my house?
Yes. Home improvements and renovations are common reasons homeowners use home equity financing.
Can I use a HELOC for debt consolidation?
Homeowners may use HELOC proceeds for debt consolidation. However, moving unsecured debt to financing secured by your home creates additional risk and should be considered carefully.
Does a HELOC have a fixed interest rate?
Many HELOCs have variable interest rates, although specific terms and features vary by lender and program.
Can I get a HELOC on an investment property?
Some lenders offer home equity financing on investment properties, but eligibility, loan-to-value limits, rates, and other requirements may differ from those for a primary residence.
Turn Your Home Equity Into Financial Flexibility
You have worked to build equity in your home. MyLoanDesk can help you explore ways to access it without automatically replacing your existing first mortgage. Whether you need a HELOC for ongoing access to funds or a home equity loan for a one-time expense, we'll help you compare available options and understand the differences.