Borrow against the equity you've built, without giving up your mortgage.
A home equity line of credit (HELOC) lets you borrow against your home's value as you need it. If you locked in a mortgage rate you'd rather keep, it can be a way to access cash without refinancing the whole loan.
How a HELOC works
A HELOC is a revolving line of credit secured by your home, usually in second position behind your existing mortgage. You're approved for a maximum line, then borrow only what you need. You pay interest on what you've drawn, not the full line.
Most HELOCs have two phases. During the draw period (often around 10 years), you can borrow, repay, and borrow again, and some programs allow interest-only payments. During the repayment period, borrowing stops and you pay down principal and interest, so payments are usually higher. Exact periods vary by lender.
Most HELOCs have a variable rate tied to an index such as the prime rate, so your payment can rise or fall over time. Some lenders offer an option to lock part of your balance at a fixed rate.
What people use them for
- Renovations, repairs, and upgrades
- Paying off higher-interest debt
- Large planned expenses, like tuition or medical bills
- A standby cushion you only draw on if you need it
Side by side
HELOC, home equity loan, or cash-out refinance?
All three turn home equity into cash. The right one depends on how you'll use the money and how your current mortgage rate compares to today's market.
| HELOC | Home equity loan | Cash-out refinance | |
|---|---|---|---|
| Your current mortgage | Stays in place | Stays in place | Replaced by a new, larger loan |
| How you get the money | Draw as needed, up to your line | One lump sum | One lump sum at closing |
| Rate | Usually variable | Usually fixed | Fixed or adjustable |
| Interest charged on | Only what you've drawn | The full amount | The full new balance |
| Often a fit when | Costs come over time, or you want a cushion | You need a set amount once and want a fixed payment | Today's rates beat your current rate |
What lenders look at
- Equity. Many lenders cap your total borrowing (mortgage plus HELOC) at roughly 80–90% of your home's value.
- Credit. Your score and history affect whether you qualify and your pricing.
- Income and debt-to-income. The lender confirms you can afford the payment on top of your current obligations.
- Occupancy and property type. Primary residences usually have the most options; second homes and rentals vary.
Good to know before you apply
- Your home secures the line. Missing payments puts your home at risk.
- On a primary residence, you generally have a three-business-day right to cancel after closing.
- Lenders can freeze or reduce a line in certain situations, such as a significant drop in your home's value.
- Ask about annual fees, minimum draws, early closure fees, and what the payment looks like once the draw period ends.
- Whether HELOC interest is tax-deductible depends on how you use the money. Check with a tax professional.
Let's look at your numbers
Find out what your equity can do for you.
I'll help you compare a HELOC against your other options and give you a straight answer on which makes more sense, even if that answer is to wait.