Home Equity Lines of Credit (HELOCs): What you need to know

MortgageCS now offers HELOCs

We're excited to offer a digital HELOC with no out-of-pocket costs to close, no appraisal, and funding in as few as 5 days. Borrow $25,000 to $750,000 with fixed-rate terms from 10 to 30 years. Learn more about our HELOC or keep reading for a deeper look at how HELOCs work.

What is a HELOC?

A Home Equity Line of Credit (HELOC) lets you borrow against the equity in your home. Think of it like a credit card secured by your house. You get a credit limit based on your equity, and you can draw from it as needed during what's called the "draw period" (usually 5-10 years).

HELOCs have variable interest rates, which means your payment can go up or down based on market conditions. This is different from a home equity loan, which has a fixed rate and fixed payments.

When does a HELOC make sense?

HELOCs work well when you:

• Need flexible access to funds over time (like for ongoing home improvements)
• Want to pay interest only on what you actually borrow
• Have a plan to pay it back relatively quickly
• Are comfortable with variable interest rates

They're not ideal if you need a lump sum with predictable payments. For that, a home equity loan or cash-out refinance might be better.

Where to get a HELOC

Through MortgageCS

Our digital HELOC is a fast, cost-effective option. No out-of-pocket costs to close, no appraisal, and fixed-rate terms so your payment stays predictable. It works for primary homes, second homes, and investment properties.

Local banks and credit unions

Banks and credit unions are another solid option, especially if you have an existing relationship. Credit unions in particular tend to offer competitive terms because they're member-owned. Check out our list of HELOC providers for options.

A few things to look for:

• Introductory rates: Many banks offer low intro rates for the first 6-12 months
• Rate caps: Look for limits on how high the rate can go
• Fees: Some charge annual fees, others don't
• Draw period length: Longer is usually better for flexibility

What to compare

When shopping for a HELOC, compare:

• The margin (what's added to the prime rate)
• Annual fees
• Early closure penalties
• Minimum draw requirements
• How payments work during the repayment period

HELOC vs. cash-out refinance

If you're tapping your equity, you might also consider a cash-out refinance. Here's the difference:

HELOC:

• Variable rate
• Flexible borrowing
• Keeps your first mortgage intact
• Better for ongoing expenses or uncertain amounts

Cash-out refinance:

• Fixed rate option available
• Lump sum
• Replaces your current mortgage
• Better if you also want to lower your mortgage rate

We help with both HELOCs and cash-out refinances, so if you're not sure which makes more sense, we'd be happy to talk.

Need help deciding?

Whether you go with our HELOC or explore options from a local bank, we're happy to help you figure out the best approach. Sometimes a quick conversation can save you from going down the wrong path.

Schedule a call and we'll help you figure out the best option for your situation.