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Home Equity Line of Credit

Use the Equity in Your Home Without Refinancing

Don't Refinance

A home equity line of credit may be the answer. Don't refinance your low interest rate mortgage just to take equity out of your house. With mortgage interest rates being much higher today, refinancing could increase your mortgage payment significantly. Instead, use a home equity line of credit and keep your low rate first mortgage.

Home Equity Line of Credit

dollar signA home equity line of credit (HELOC) is a revolving form of credit secured by your home. You can borrow as little or as much as you need, up to your approved credit line, and you pay interest only on the amount that you borrow. You can take advantage of flexible repayment terms, and you can use the credit again as you pay down the balance. However, be aware that the interest rates on home equity loans are not fixed and float with prime rate.

HELOCs are similar to credit cards in that they offer revolving lines of credit that you can access when needed. The difference with a HELOC is that your house is used as collateral to secure the credit line, and the amount you’re approved for is based on the equity you have in your home. HELOCs are available from many banks and financial institutions. The payment schedule and amount depend on the type of HELOC.two people seated at table

Interest Rates on Home Equity Loans

Interest rates on home equity loans are typically a few percentage points above rates for a first mortgage loan. But, the rate is signifcantly lower than credit card rates that range from 18% to 29%.


A lender will grant a home equity loan based on the value of your house, less the amount of the first mortgage. Home equity loans are like credit cards. You can borrow up to the limit of the loan and then pay the loan down and borrow again. However, if you default on a home equity loan, you risk losing your home. Therefore, it's essential to make sure you can afford the monthly payments before taking out a home equity loan.