How to Pull Equity Out of Your Home Without Refinancing
You can access your home's equity through a few different options, such as refinancing or, if current interest rates are higher than the current rate on your mortgage, you can access your equity through a home equity line of credit (HELOC) or a home equity loan (HELOAN).
What is Home Equity
Home equity is the part of your home's value that you own outright. It's the difference between the total amount your home is worth and what you owe on your home (your mortgage). It can be a valuable tool to help you build wealth over time as your home increases in value. The equity in your home can be used for just about anything, from home improvements or debt consolidation to education expenses and beyond. Whatever you plan to use it for, it's always a good idea to consult a financial advisor and think through your current and future financial situation and your goals.
HELOC vs HELOAN
Both a HELOC and a HELOAN are secured by the equity you've built in your home. You can also learn more in our article What is a Home Equity Loan (HELOAN) and How Does it Work. Either option can be far less expensive than a credit card and therefore a more affordable way to borrow. A HELOC is a line of credit available for you to borrow from and pay back as needed with a variable interest rate. With a HELOAN, you get one lump sum of money that is paid back over time with a fixed interest rate.
Benefits of a WaFd Home Equity Loan and Line of Credit
- We pay closing costs for our existing WaFd home loan clients on lines of credit up to $250,000.*
- Discount of 0.25% on your interest rate when you make automatic payments from your WaFd checking account.
- Your loan stays with us and will never be sold, so you always know who to go to if you've got questions.
| Detail | HELOAN |
|---|---|
| Uses your home's equity as collateral | Yes |
| Has closing costs | Yes |
| Potential tax deductions available | Yes (check with a tax advisor) |
| How you can use it | For just about anything |
| Interest rate type | Fixed |
| Monthly Payment | Set |
| Amount borrowed | Receive a lump sum for the total amount you applied for |
| Loan changes | None |
| Detail | HELOC |
|---|---|
| Uses your home's equity as collateral | Yes |
| Has closing costs | Yes |
| Potential tax deductions available | Yes (check with a tax advisor) |
| How you can use it | For just about anything |
| Interest rate type | Variable |
| Monthly Payment | Changes, payments are interest only during the draw period |
| Amount borrowed | Access to a line of credit for the total amount you applied for (only pay back what you actually borrow) |
| Loan changes | After the draw period, your HELOC will change to an amortized loan with principal and interest, called the repayment period (15 years at WaFd Bank) |
| Detail | HELOAN | HELOC |
|---|---|---|
| Uses your home's equity as collateral | Yes | Yes |
| Has closing costs | Yes | Yes |
| Potential tax deductions available | Yes (check with a tax advisor) | Yes (check with a tax advisor) |
| How you can use it | For just about anything | For just about anything |
| Interest rate type | Fixed | Variable |
| Monthly Payment | Set | Changes, payments are interest only during the draw period |
| Amount borrowed | Receive a lump sum for the total amount you applied for | Access to a line of credit for the total amount you applied for (only pay back what you actually borrow) |
| Loan changes | None | After the draw period, your HELOC will change to an amortized loan with principal and interest, called the repayment period (15 years at WaFd Bank) |