Check your best options to tap home equity. Start here
If you’re thinking about tackling a big renovation, paying off debt, or just need a cushion for unexpected expenses, tapping into your home’s equity can be a smart way to make it happen.
But with several options available for accessing your equity, it’s not always clear which one makes the most sense or costs the least.
Let’s explore the cheapest way to get equity out of your house.
When homeowners want to turn built-up equity into cash, they usually consider three primary tools:
Less common options like reverse mortgages and shared equity agreements exist but often carry more complex trade-offs.
Check your best options to tap home equity. Start here
If we’re just comparing costs, HELOCs often win out. They typically have lower rates than personal loans or credit cards, and you only pay interest on what you borrow.
Home equity loans are also competitively priced. Many lenders reduce or waive closing costs, and approval is often faster than a full refinance. Rates are fixed, but usually slightly higher than HELOCs.
Cash-out refinancing is usually the priciest if today’s rates are higher than your original mortgage. While monthly payments may be lower due to a 30-year term, you could pay much more in total interest and reset your mortgage timeline. If you’re looking for other ways to access equity without refinancing your entire loan, consider these alternatives to a cash-out refinance.
Here’s how the main options compare at a glance:
| Option | Cheapest? | Pros | Cons |
| HELOC | Yes | Flexible, interest-only payments, low fees | Variable rates, possible rate increases |
| Home Equity Loan | Often | Fixed rate, lump sum, predictable payments | Slightly higher rates and closing costs |
| Cash-Out Refinance | Rarely | One payment, access to large amounts | High closing costs, resets mortgage rate |
| Reverse Mortgage | No | No monthly payments (for seniors) | High fees, reduces inheritance |
| Shared Equity | No | No monthly payments, flexible eligibility | Share future appreciation, upfront fees |
Check your best options to tap home equity. Start here
To help you visualize how these options affect your monthly budget and long-term costs, here’s a comparison of what it would look like to access $50,000 in home equity, using average rates and terms as of July 2025.
| Product | Interest Rate / Cost Structure | Loan Term | Monthly Payment (for $50K) | Key Features / Total Cost Example |
| Home Equity Loan | 8.24% fixed | 10 years | $613 | Fixed rate and payments, straightforward terms. Total paid: $73,560 |
| HELOC | 8.12% variable | 10 years | $610* | Variable rate, interest-only payments possible. Lower costs if you borrow less or repay early. Total paid: depends on usage |
| Cash-Out Refinance | 6.94% fixed | 30 years | $331 | Lowest monthly payment, but highest total interest over time. Total paid: $119,160 |
| Home Equity Agreement | 3–5% fee + share of appreciation | 10 years | $0 | Lump sum, no monthly payments; at end of term, repay original amount plus 15–20% of home’s value (if home appreciates); fees deducted upfront. Total paid: $162,889 |
If you’re new to tapping into home equity, this table lays out the monthly payments and total cost for borrowing $50,000. It’s an easy way to compare your options and see what fits your budget best.
HELOC payment assumes full $50,000 is drawn and repaid over 10 years. If you borrow less or only make interest payments initially, the monthly payments would be lower.
HEA does not require monthly payments; repayment is a lump sum due at the end of the term or upon sale/refinance, and the total cost depends on your home’s appreciation.
All products except HEA have predictable monthly payments; HEA’s total cost can be much higher if your home appreciates significantly.
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Let’s say your home is worth $500,000 and you enter into a home equity agreement (HEA) to access $50,000, essentially 10% of your home’s value. The company charges a 3.5%–5% fee upfront, which means you might only receive $47,500 to $48,250 in hand.
If your home appreciates at a modest 5% annual rate, it could be worth around $814,447 in 10 years. In that case, your repayment obligation might be around $162,889, over three times what you initially received.
If your home value doesn’t increase much, you may owe less, but most contracts still have minimum repayment terms based on your home’s original value.
If you’re looking for the cheapest way to get equity out of your house, a HELOC typically offers the best blend of low costs and flexibility, especially if you don’t need all the cash upfront or want to avoid refinancing your entire mortgage.
For those who prefer predictability and need a lump sum, a home equity loan can still be a smart choice. But you’ll want to shop rates and weigh the upfront fees.
Cash-out refinancing might make sense in some situations, particularly if mortgage rates drop and you want to roll other high-interest debt into a new loan. But in most cases, it’s not the most cost-effective route, especially in today’s higher rate environment.
No matter which option you’re leaning toward, it pays to do your homework. Shop multiple lenders, calculate the long-term cost, and make sure the loan structure fits your financial goals.
