HELOC
HELOC vs Home Equity Loan: Best Way to Access Your Equity in 2025
6 min read · 2025-02-24
With home values near record highs, millions of homeowners have significant equity. Here's how to access it wisely.
U.S. homeowners collectively hold over $32 trillion in home equity. If you've owned your home for a few years, you may have significant equity to tap for home improvements, debt consolidation, or other major expenses.
HELOC: How It Works
A HELOC is a revolving line of credit. During the draw period (typically 10 years), you can borrow up to your credit limit, repay, and borrow again. After the draw period, you repay over 10–20 years.
Home Equity Loan: How It Works
A home equity loan gives a single lump sum at a fixed rate, repaid in equal monthly installments. Good for one-time expenses with a known cost.
Current HELOC rates average 8.5–9.5% — far below credit card rates of 21–28%. Borrowers with 700+ credit and 30%+ equity can get below 8%.
Best Uses for Home Equity
- Home renovations that add value
- Debt consolidation (swapping 22% cards for 8% home equity)
- College tuition
- Emergency fund establishment
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