Your equity, in a lump sum, at a fixed rate.
A home equity loan lets you borrow against what you have built without replacing your existing mortgage. One fixed payment, predictable for the life of the loan.
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Significant equity in your home
Fixed lump sum and fixed rate
Is this loan right for you?
A home equity loan lets you borrow against the equity you have built in your home. Unlike a cash-out refinance which replaces your existing mortgage, a home equity loan is a second lien. You keep your current mortgage and take out a separate fixed-rate loan on top of it. This works well for homeowners who have a low rate on their existing mortgage and do not want to replace it, but need access to a lump sum for a specific purpose.
- Direct access to your officer
- Significant equity in your home
- Fixed lump sum and fixed rate
- Keep existing first mortgage in place
- Renovation or other one-time large expense
- Credit score 620 or higher
- Comfortable with two monthly payments
Key benefits.
Keep your existing mortgage and its interest rate intact
Lump sum disbursement at closing, funds available immediately
Interest may be tax deductible if funds are used for home improvements
Predictable second payment makes budgeting straightforward
Tradeoffs to understand.
- You will have two mortgage payments each month
- Your home is collateral for both loans, defaulting puts your home at risk
- Closing costs apply, typically lower than a full refinance but still a real cost
- Fixed rate means you cannot benefit if rates drop without refinancing
- Second lien position means this loan is subordinate to your primary mortgage in a default situation
Compare your options.
| Feature | Home Equity Loan | Cash-Out Refinance |
|---|---|---|
| Structure | Second lien | Replaces primary mortgage |
| Rate | Fixed | Fixed or adjustable |
| Existing mortgage | Stays in place | Replaced with new loan |
| Disbursement | Lump sum at closing | Lump sum at closing |
| Monthly payments | Two payments | One new payment |
| Best for | Preserving existing low rate | Improving rate while accessing cash |
Structure
- Home Equity Loan
- Second lien
- Cash-Out Refinance
- Replaces primary mortgage
Rate
- Home Equity Loan
- Fixed
- Cash-Out Refinance
- Fixed or adjustable
Existing mortgage
- Home Equity Loan
- Stays in place
- Cash-Out Refinance
- Replaced with new loan
Disbursement
- Home Equity Loan
- Lump sum at closing
- Cash-Out Refinance
- Lump sum at closing
Monthly payments
- Home Equity Loan
- Two payments
- Cash-Out Refinance
- One new payment
Best for
- Home Equity Loan
- Preserving existing low rate
- Cash-Out Refinance
- Improving rate while accessing cash
What happens next
If rates drop significantly, refinancing both your primary mortgage and home equity loan into a single cash-out refinance may simplify your payments.
If you use funds for home improvements, the added value may increase your equity position further.
Track your combined loan-to-value ratio. As your home appreciates and balances decline, your equity options improve.
Consult a tax advisor about potential deductibility of interest on home improvement uses.
Keep exploring
Explore related paths
Compare with a HELOC
Want flexible access instead of one lump sum? Compare this with a HELOC.
Read guide →All refinance options
Compare rate-and-term, cash-out, and home equity paths for your goals.
Browse refinance options →Refinance questions
Break-even timing, equity access, and what to expect when you refinance.
Browse refinance FAQ →Common questions, plain answers.
Most lenders allow you to borrow up to 80% to 85% of your home's value across all loans combined. Subtract your existing mortgage balance from that number to find your maximum home equity loan amount.
Questions about rates or payment?
Want to access your equity without changing your mortgage? See your options.
No credit pull to get started. We compare your options and explain the tradeoffs.
5.0 Google Rating
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NMLS #2620605
Equal Housing Lender
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