Maximizing Your Home Equity

Homeownership comes with many advantages, including the ability to tap into your home’s equity. As your property value increases and you pay down your mortgage over time, you build equity that can be accessed to fund various financial goals.

In this article, we’ll explore ways to maximize your home equity by examining three popular programs: Home Equity Line of Credit (HELOC), Home Equity Loan (HELOAN), and Cash-Out Refinance. Each program offers unique benefits depending on your financial situation. Whether you’re looking to fund a major home renovation, build a pool, consolidate high-interest debt, or finance other large expenses, understanding your home equity options can help you make an informed decision about which is right for your specific needs.

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What is a Home Equity Line of Credit (HELOC)?

A HELOC is a revolving line of credit secured by your home as collateral. It allows you to borrow funds as needed, up to a set credit limit, without requiring a full refinance. You can withdraw money during the draw period and repay only interest during this time. Afterward, the repayment period begins, requiring full principal and interest payments. Some benefits of a HELOC include:

Flexibility to borrow only what you need without refinancing.
Available for primary residences, second homes, and investment properties.
Borrowing power up to 95% of your home equity (varies by lender and property type).
Interest-only payments during the draw period.
No prepayment penalties or early payoff fees.
Typically has lower interest rates than credit cards and personal loans.

While some HELOCs come with fixed-rate terms, most HELOCs have variable interest rates, meaning payments can increase over time. Additionally, some lenders may require a minimum withdrawal amount.

Great for: Covering large or ongoing expenses like home improvements, unexpected medical costs, or tuition.

FBC Tip

A HELOC is great for flexibility, but if you prefer predictable payments, a Home Equity Loan might be a better fit.

What is a Home Equity Loan (HELOAN)?

Unlike a HELOC, a Home Equity Loan is a fixed-term, lump-sum loan secured by your home as collateral. You receive the full amount upfront and make fixed payments over time, similar to a traditional mortgage. HELOANs are taken as second mortgages, so there’s no need to refinance your current one. While not as flexible as a HELOC, a Home Equity Loan comes with its benefits:

Maximize your home equity by accessing cash without refinancing.
Available for primary residences, second homes, and investment properties.
Peace of mind with a fixed interest rate and predictable monthly payments.
Borrowing power up to 95% of your home equity (varies by lender and property type).
Typically has lower interest rates than credit cards and personal loans.

Great for: Large, planned expenses such as renovations, medical bills, or debt consolidation.

FBC Tip

A Home Equity Loan is ideal when you need a set amount of money and want to avoid fluctuating payments.

What is a Cash-Out Refinance?

A Cash-Out Refinance replaces your existing mortgage with a new, larger loan – allowing you to take out the difference in cash. Unlike a HELOC or HELOAN, which are considered second mortgages, a Cash-Out Refinance completely replaces your current mortgage. Some benefits include:

Access to a large lump sum of money.
Available for primary residences, second homes, and investment properties.
Potentially lower your interest rate or change your loan terms.
Access up to 85% of your home value (varies by lender and property type).

Since this mortgage replaces your current one, your interest rate will change – potentially higher or lower, depending on market conditions. You will also pay closing costs similar to your original mortgage when opting for a refinance.

Great for: Lowering your mortgage rate or term while accessing cash for major expenses.

FBC Tip

If you’re already considering refinancing, a cash-out option could give you additional funds while restructuring your mortgage.

Which Home Equity Option is Right for You?

While HELOCs, HELOANs, and Cash-Out Refinances all give you access to your home equity, consider the following when trying to decide between them:

Choose a HELOC if you need flexible borrowing for large expenses.
Choose a HELOAN if you want a lump sum with predictable payments.
Choose a Cash-Out Refinance if you want to change your mortgage terms while accessing cash.

Always consult with a licensed mortgage loan originator when exploring your options. Ready to learn more? We can help you compare the costs of borrowing and select the right option for your situation.

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Why Choose FBC Mortgage?

FBC Mortgage, LLC is a leader in helping home buyers with fast and simple loans. We’re dedicated to exceptional customer service and are always available when you need us most, even at night and on the weekend. We’ll help you navigate your new home purchase, and keep you updated along the way with weekly check ins, so you know you’re taken care of. That’s one of the many reasons why 95% of our clients would recommend us to their friends and family. It’s also why the nation’s top home builders and Realtors trust FBC to help their new home buyers.

Buying a home is one of the most important financial decisions you will make. Understanding mortgages and the home buying process can help make it less stressful, and so can partnering with a mortgage lender you can trust. At FBC Mortgage, LLC, we’re dedicated to helping home buyers finance their dream home.

All information presented is for educational purposes only and not intended as financial advice. FBC Mortgage, LLC is a national mortgage lender headquartered in Orlando, Florida. Specializing in residential mortgage lending, including purchase, refinance, construction, and renovation loans. See what our clients have to say. NMLS#152859 EHL ©2025.