If you need cash for a major home remodeling project or other expense, you may be worried about the rates on home equity loans and 澳洲幸运5官方开奖结果体彩网:cash-out refinance mortgages, which have been rising. But which of these two financing options 澳洲幸运5官方开奖结果体彩网:has lower fees and rates? 

Home equity loans are usually more expensive than mortgages, but they may have more fees. However, your cost will depend on the lender, your creditworthiness, and your desired loan term. So, you'll have to do your research to determine whether home loans or mortgages offer you the lowest rates. 

What Is a Mortgage? 

꧙Mortgages are specific types of loans used to purc🐓hase property. With a conventional mortgage, you borrow money to buy a house. The amount you borrow is based on the value of the home minus your down payment. 

However, a cash-out refinance mortgage is a tool you can use to get a large amount of cash. You take out a new mortgage for more than you owe on the existing one, and you get the difference to use for your expenses or projects.

What Is a Home Equity Loan? 

A home equity loan is for current homeowners who have 澳洲幸运5官方开奖结果体彩网:accu🀅mulatﷺed equity in their property, meaning it’s worth more than they owe on their current mortgage. In general, lenders require you to have built up at least 20% of loan equity to qualify for a loan.

How Do Home Equity Loans Di⭕ffer From Mortgages? 

Both home equity loans and cash-out refinance loans 澳洲幸运5官方开奖结果体彩网:use your home as collateral. But there are some ܫmajor differences to keep in mind: 

• Terms: A cash-out refinance loan is a type of mortgage. Like conventional mortgages, they usually have terms of 15 or 30 years. 
• Closing costs: Although home equity loans tend to be more expensive t✤han mortgagജes, they usually have lower closing costs.
• APR: Home equity loans usually have 澳洲幸运5官方开奖结果体彩网:fixed interest rates. Cash-out refinance loans, like other mortgages, can be fixed- or adjustable-rate mortgages. 

Typical Rates for Home Eไquity L𝓡oans and Mortgages

When it comes to rates, home equity loans, and cash-out refinance mortgages can differ significantly. The 澳洲幸运5官方开奖结果体彩网:rates on home equity loans tend to be higher than th🎃ose for cash-out ref💜inance mortgages.

As of Feb. 2025, the average rate for a 30-year fixed-rate mortgag♊e was 6.91%, w☂hile the average rate for a home equity loan was 7.57%.

Home Eꦚquity Loans vs. Mortgages: Wh✤ich Is Right for You? 

Now that you know the typical interest rates for home equity loans and mortgages, 🐭you can think about which loan option makes the most sense for you. If you’re still not sure, ask yourself the following three🐠 questions: 

Do I Have Cash for Closing Costs? 

Although home equity loans have higher rates than mortgages, 澳洲幸运5官方开奖结果体彩网:they usually have lower fees. That’s because you have to pay 澳洲幸运5官方开奖结果体彩网:closing costs as a percentꦐage of the entire loan amount. 

For a home equity loan, you can choose exactly how much money you want to borrow and pay closing costs only on that amount. But with a cash-out refinance loan, you have to pay closing costs on the entire loan: the amount that covers your current mortgage and the additional sum you’re adding to it.

If you don’t have the cash handy in savings, you may be 澳洲幸运5官方开奖结果体彩网:better off with a home equity loan or finding a lender that allo🍎ws you to roll closing cost🏅s into the loan. 

How Much Money Do I Need? 

Think about how much money you need. If you’re planning🔯 home renovations or a vacation, create a budgetꦦ—and add some wiggle room to give yourself some cushion. 

The amount—and the available equity in your home—will help determine which loan option is right for you. Cash-out refinance loans can typically get you more money than home equity loans.

Does My Existing Loan Have a Low Rate? 

Depending on when you took out your current mortgage, you may have a ratꦫe that is substantially lower than the rates available today. If that’s the case, utilizing a cash-out refinance loan may not make sense; you’d move your loan to a higher rate an𝕴d pay that rate on a larger loan balance. 

Instead, using a home equity loan—and leaving your existing mortgage in its current state—may lower your oℱverall repayme🍷nt cost. 

The Bottom Line

Mortgages can have lower interest rates than home equity loans, but that doesn’t mean they’re always a better choice. When deciding which loan type is best for you, consider your goals, credit, and current loan terms. Keep in mind that the rates for home equity loans and mortgages are always changing, so it’s important to 澳洲幸运5官方开奖结果体彩网:shop around with multiple lenders to see the latest rates.