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For many homeowners, the equity they've built up in their home is also one of their largest financial resources. After years of in many markets, the latest data shows that U.S. homeowners now hold — the highest level on record. For many homeowners, though, that equity is more than just a number on paper. It's also a tool that can be converted into a source of affordable funding.
And, borrowing against can be an especially smart option to consider in today's rate environment, where the rates on other borrowing options, , remain elevated. Tapping into your home's equity can also open the door to higher borrowing limits, making this route a smart one to take when you're facing big expenses, like paying for college, consolidating debt or making home upgrades.
Most homeowners have at least $50,000 of tappable equity to borrow against right now, for example, with the average homeowner having access to a lot more. How you choose to access that money, though, can make a big difference. , after all, and payment obligations, flexibility and affordability can vary, too. So, before committing, it can help to know what the best home equity borrowing options are right now.
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If you're looking to access $50,000 from your home's equity, you have several solid options available right now, including:
lets you borrow a lump sum — in this case, $50,000 — and repay it in fixed monthly installments over a set term. The biggest advantage here is predictability. Rates on home equity loans , meaning they won't change over time with wider rate environment shifts. As a result, you'll know exactly what your payment is each month, making it easier to budget.
are also typically lower than the rates offered on credit cards or personal loans, but they may be slightly higher than a primary mortgage refinance. The trade-off is that you lose flexibility since you're locked into a fixed borrowing amount and a firm repayment schedule.
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(HELOC) works similarly to a credit card that's secured by your home. Instead of receiving $50,000 upfront like you would with a home equity loan, you'll have access to a revolving line of credit you can draw from as needed. This is especially helpful if you aren't sure how much you'll need or in cases where you don't need access to the full $50,000 at once. For example, a HELOC would make sense for a home renovation project that will stretch over months with costs that could change over time.
HELOC payments are usually interest-only during the , with repayment of the principal starting later. That can be a big benefit for borrowers who want to keep the initial costs low when tapping their home equity. The downside is that , which means your payments could increase over time if rates rise.
With , you replace your existing mortgage with a new, larger loan and receive the difference between the loan amount and your mortgage balance in cash. For example, if you owe $200,000 on a $300,000 home and refinance into a new $250,000 loan, you could walk away with $50,000 in borrowed cash. Right now, this option may give you access to lower rates than a home equity loan or HELOC, as the are lower than the 8% or so you would get as a rate on either home equity-specific option.
However, you'll reset the clock on your mortgage by taking this route. That means paying interest over a potentially longer timeframe, which could cost more in the long run. And, for borrowers who locked in a record-low mortgage rate in recent years, it could also mean trading out a sub-3% mortgage loan rate with one at today's rates, which are significantly higher.
If you're 62 or older, could provide access to $50,000 of your home equity, and it could do so without monthly repayment obligations. What's unique about a reverse mortgage is that the loan balance only comes due when you die, sell the home or move out permanently. As a result, this option can help retirees tap into their home equity and cover expenses .
A reverse mortgage does, however, and comes with fees that can be higher than other equity products. , so make sure you do your research before deciding on this route.
Borrowing $50,000 of home equity can be a smart way to access cash at interest rates lower than most unsecured loans. The right option, though, depends on your needs and your financial situation, as home equity loans offer stability, HELOCs provide flexibility, cash-out refinances may combine debt goals and reverse mortgages serve as a specialized tool for seniors. Before moving forward, be sure to weigh the benefits, costs and risks of each to ensure you're making the choice that best supports your long-term financial health.
