Homeowners have more options than ever to tap equity. Each one solves a different problem and carries a different cost. The fastest way to make a calm decision is to know what is on the menu before you start shopping.
The most common loan-based options are the HELOC, the home equity loan, and the cash-out refinance. All three are loans secured by your home and carry monthly payments.
Homeowners 62 and older may also consider a reverse mortgage or a reverse mortgage for purchase, which convert equity into cash, a line of credit, or a purchase tool without a traditional monthly payment.
Outside the loan world, Home Equity Investments (HEIs) and Home Equity Agreements (HEAs) let third-party investors give you cash today in exchange for a share of your home's future value. They are not loans and typically have no monthly payment, but the back-end cost can be significant in a rising market.
Related glossary terms
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Both let you tap home equity. The right tool depends on what you need the money for, how long you need it, and what your current first mortgage looks like.
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