Home equity
Use the equity built up in your home
Equity is the value of the home minus what is owed. A HELOC, a home equity loan, and a cash-out refinance are three different ways to use it.
Written by Allen Hong, NMLS 1295255·Last updated: October 8, 2026
Who this is for
This is for homeowners who have built up equity and have a use for some of it.
How qualifying works
- We start with the home, what is owed, the rate on the current mortgage, and what you want the money to do.
- The choice is mostly about whether you keep the current mortgage and how you want to borrow and repay.
- The home is collateral. Missed payments can put the home at risk.
| HELOC | Home equity loan | Cash-out refinance | |
|---|---|---|---|
| Does it replace your mortgage? | No. It sits in addition to the current mortgage. | No. It is a separate loan with its own payment. | Yes. A new, larger first mortgage pays off the current one. |
| How you borrow | Draw what you need, up to the credit line, during the draw period. | A lump sum at closing. | A lump sum. The new loan is larger than today's payoff. The difference is the cash. |
| How repayment usually differs | Payments often cover interest while you can still draw, then principal and interest. The rate is often variable, so the payment can change. | A fixed rate and a fixed payment are common. You know the amount and the term up front. | One new payment on the full new balance. Compare the new rate and term with the mortgage you already have, plus closing costs. |
These are the usual shapes of the three options. A lender's draw period, rate, and fees can differ. The right one depends on the amount, how long you need it, and the rate you would be giving up.
What you'll need
- Property and ownership details
- A mortgage statement
- Income documentation
- Photo identification