About Home Equity Loans
A Home Equity Loan allows you to borrow a lump sum of money against the equity in your home. It typically comes with a fixed interest rate, meaning your monthly payments remain the same throughout the life of the loan.
Expert Tips for Smart Borrowing
⏳Pro Tip
Match Term to Project
Don't finance a roof (20-year life) with a 30-year loan. Try to match the loan term to how long the renovation will last.
🏷️Pro Tip
Shop for APR, not Rate
Home Equity Loans can have high fees. The APR (Annual Percentage Rate) includes these fees. A 7% rate with high fees might be worse than a 7.5% rate with no fees.
⚠️Pro Tip
Lump Sum Warning
You pay interest on the full amount from Day 1. If you don't need all the cash immediately, a HELOC might be cheaper.
⚓Pro Tip
Fixed Stability
If you are on a fixed income, the predictability of a Home Equity Loan is worth the slightly higher rate vs a variable HELOC.
Frequently Asked Questions
This calculator assumes a fixed rate, fixed term, and immediate disbursement of funds. It calculates a standard amortization schedule (like a car loan or mortgage), unlike the two-phase calculations for HELOCs.
Yes, almost always. This provides certainty. Your payment on day 1 is the same as your payment in year 15. No surprises from the Federal Reserve.
Usually yes, without penalty. Paying it off early saves you interest, just like with a HELOC. Check your specific loan terms for 'prepayment penalties'.
Yes, subject to the same IRS rules: The money must be used to buy, build, or improve your home.
Common terms are 5, 10, 15, 20, and 30 years. Shorter terms have lower rates but higher monthly payments.