Anna Helhoski

It's more or less how most loans work, right? You borrow the money and then you pay it back. Where home equity loans get tricky is that relatively few lenders offer them relative to other home equity borrowing options. Thinking about the dozens of lenders that we review and research at NerdWallet, Cash-out refinance, I would say, is by far the most common.

It's more or less how most loans work, right? You borrow the money and then you pay it back. Where home equity loans get tricky is that relatively few lenders offer them relative to other home equity borrowing options. Thinking about the dozens of lenders that we review and research at NerdWallet, Cash-out refinance, I would say, is by far the most common.

Most lenders that are offering refi offer you a cash-out option. Keylock comes in second, and then home equity loan is like a distant third. So if there's interest in going down that path, it might take a little bit more research to find lenders that are actively offering home equity loans. So HELOCs are more common, but HELOCs are also kind of more complicated.

Most lenders that are offering refi offer you a cash-out option. Keylock comes in second, and then home equity loan is like a distant third. So if there's interest in going down that path, it might take a little bit more research to find lenders that are actively offering home equity loans. So HELOCs are more common, but HELOCs are also kind of more complicated.

Most lenders that are offering refi offer you a cash-out option. Keylock comes in second, and then home equity loan is like a distant third. So if there's interest in going down that path, it might take a little bit more research to find lenders that are actively offering home equity loans. So HELOCs are more common, but HELOCs are also kind of more complicated.

So with a home equity line of credit, it's a line of credit, right? So it's a little bit like a credit card in that you have your total dollar amount that you can borrow up to, but you don't have to borrow that dollar amount. You kind of borrow the money individually. as you need it to do the different things.

So with a home equity line of credit, it's a line of credit, right? So it's a little bit like a credit card in that you have your total dollar amount that you can borrow up to, but you don't have to borrow that dollar amount. You kind of borrow the money individually. as you need it to do the different things.

So with a home equity line of credit, it's a line of credit, right? So it's a little bit like a credit card in that you have your total dollar amount that you can borrow up to, but you don't have to borrow that dollar amount. You kind of borrow the money individually. as you need it to do the different things.

So that can be really helpful for something like a renovation where, like you said, you have an idea of how much you hope it will cost, but other costs might come up. You also might need the money at different times. So with a HELOC, you're taking the money out as you need it. And then because of that, you're also only paying interest on what you've actually borrowed.

So that can be really helpful for something like a renovation where, like you said, you have an idea of how much you hope it will cost, but other costs might come up. You also might need the money at different times. So with a HELOC, you're taking the money out as you need it. And then because of that, you're also only paying interest on what you've actually borrowed.

So that can be really helpful for something like a renovation where, like you said, you have an idea of how much you hope it will cost, but other costs might come up. You also might need the money at different times. So with a HELOC, you're taking the money out as you need it. And then because of that, you're also only paying interest on what you've actually borrowed.

So with a home equity loan, since you've borrowed the whole thing right at the beginning, you are paying interest on the whole thing the whole time. With a HELOC, you're paying interest on what you've spent out of it. The downside is that most HELOCs are adjustable rate. And so that means that the interest rate changes constantly. Pretty regularly, it's going to change along with the prime rate.

So with a home equity loan, since you've borrowed the whole thing right at the beginning, you are paying interest on the whole thing the whole time. With a HELOC, you're paying interest on what you've spent out of it. The downside is that most HELOCs are adjustable rate. And so that means that the interest rate changes constantly. Pretty regularly, it's going to change along with the prime rate.

So with a home equity loan, since you've borrowed the whole thing right at the beginning, you are paying interest on the whole thing the whole time. With a HELOC, you're paying interest on what you've spent out of it. The downside is that most HELOCs are adjustable rate. And so that means that the interest rate changes constantly. Pretty regularly, it's going to change along with the prime rate.

So people who have HELOCs get really into what the Federal Reserve is doing and other kinds of wonky interest rates, stuff like that, because suddenly you're very conscious of interest rates going up or down. There are some different tricks you can do with a HELOC. Some lenders will allow you to convert part of it to a fixed rate. But in general, it gets a little bit wonky, a little bit complex.

So people who have HELOCs get really into what the Federal Reserve is doing and other kinds of wonky interest rates, stuff like that, because suddenly you're very conscious of interest rates going up or down. There are some different tricks you can do with a HELOC. Some lenders will allow you to convert part of it to a fixed rate. But in general, it gets a little bit wonky, a little bit complex.

So people who have HELOCs get really into what the Federal Reserve is doing and other kinds of wonky interest rates, stuff like that, because suddenly you're very conscious of interest rates going up or down. There are some different tricks you can do with a HELOC. Some lenders will allow you to convert part of it to a fixed rate. But in general, it gets a little bit wonky, a little bit complex.

That said, HELOC is often a really good option for home renovation just because of that flexibility. You can usually borrow from the HELOC for like a 10-year period before you go into all the repayment.

That said, HELOC is often a really good option for home renovation just because of that flexibility. You can usually borrow from the HELOC for like a 10-year period before you go into all the repayment.

That said, HELOC is often a really good option for home renovation just because of that flexibility. You can usually borrow from the HELOC for like a 10-year period before you go into all the repayment.