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What is a Home Equity Loan?
Home equity is the difference between the fair market value of a property and the balance of the mortgage owed against it. Home equity loans allow homeowners to access their equity in a lump sum of cash, which may be used for a variety of purposes, and is repaid in monthly installments. Home equity loans usually have fixed interest rates and are fully amortized while a home equity line of credit (HELOC) provides a line of credit that allows you to draw funds up to your maximum credit line.
Start Accessing Your Home Equity
If you have equity in your home, a home equity loan lets you exchange a part of this equity for cash. You can use this cash loan to make home improvements or upgrades, pay for college tuition or medical bills, or go on vacation. It’s really up to you. And, the interest you pay on the loan is tax deductible. Not sure if you have enough equity built up in your home? Use our home equity loan calculator to estimate your home equity.
A home equity loan has the same expenses as your mortgage - an application fee, title search, appraisal, attorneys’ fees and points (a percentage of the amount you borrow). Home equity lines of credit (HELOCs), on the other hand, may not have fees at all. A HELOC acts as a credit card in that it’s a revolving line of credit. You make payments and pay interest only on the amount that you spend. With a home equity loan, you receive one lump sum and make fixed monthly payments on that amount for the entire length of the term. Read more about the differences between home equity loans and HELOCs at LendingTree to make sure you get the best equity loan for you.
If you have significant equity built up in your home, you may want to consider a reverse mortgage loan. Reverse mortgages are designed for homeowners age 62 and older looking for an additional source of income.
One of the best reasons to get a home equity loan right now is that interest rates for equity loans are lower than they've been since 2008. Many homeowners are taking advantage of these interest rates now while they're so low. We can help you find the lender you need to get the best rate possible.
Top 5 Reasons To Take Equity Out Of Your Home
- Take advantage of low interest rates.
- Make home improvements that add value to your home
- Get cash for a large purchase
- Pay for college
- Consolidate debt
If you are still on the fence about getting a home equity loan download LendingTree's home equity loan guide below:
Your Free Guide To Home Equity
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