Common Home Equity Options

2026 · COMMON HOME EQUITY OPTIONS
WHO IS THIS OPTIONGENERALLY BEST FOR?WHAT ARE SOMECOMMON USE CASES?1HOME EQUITY LINE OF CREDIT (HELOC)Homeowners who want flexible access tofunds over time with minimal initial required payments, and who are comfortable with non-guaranteed interest ratesIt allows one to borrow against their homeequity as needed, with interest-only payments due during the draw period and a full repayment schedule that begins after the draw periodHome renovations, additional emergencyfunds, unexpected one-off expenses, etc.More flexibility to borrow as needed and alower initial payment obligation in the beginning (via interest-only payments)Variable interest rates that can change,potential for overspending, and repaymentshock after the interest-only periodTYPEHOW DOES THISOPTION WORK?WHAT ARE THE BENEFITSOF THIS STRATEGY?WHAT ARE THE RISKSOF THIS STRATEGY?Revolving line of credit(second-lien)HOME EQUITY LOANHomeowners needing a one-time lump sum with a predictable repayment scheduleand guaranteed interest rate, and who do not want to refinance their mortgageIt provides one with a lump sum loan of cash against their home equity, which is tobe paid back immediately with fixed payments over a specific period of timeDebt consolidation, major plannedpurchases, home renovations, etc.Fixed payments and interest ratesthat are guaranteed, predictable, andeasier to plan aroundHigher fixed interest rates than first-lien mortgages, greater pressure on cash flow due to full payments beginning immediatelyLump-sum installment loan(second-lien)CASH-OUT REFINANCEHomeowners wanting to refinancetheir mortgage (e.g., lower interest rate,different payment schedule, etc.) andaccess cash at the same timeIt allows one to refinance and take the available equity in their home as extra cash, which then gets rolled into the new (larger) mortgageDebt consolidation, major plannedpurchases, home renovations, etc.Typically lower interest rate than otherloans, and a single mortgage paymentHigher monthly payments due to alarger mortgage, resets the loan term,and additional closing costsAs needed, during draw periodHOW ARE FUNDSDISTRIBUTED?Lump sumLump sumVariableIS THE INTEREST RATETYPICALLY FIXED ORVARIABLE?FixedFixed or variableMonthly, based on the average daily balanceHOW IS THE INTERESTTYPICALLY CALCULATED?Monthly, based on the remaining principalMonthly, based on the remaining principalInterest-only payments during the drawperiod, and a full amortized repaymentschedule after the draw periodWHEN ARE PAYMENTSREQUIRED?Monthly payments begin immediatelyMonthly payments begin immediatelyNew mortgage loan(first-lien)
© fpPathfinder.com. Licensed for the sole use of Ryan Weiser, CFP® of Weiser Financial Planning. All rights reserved. Used with permission. Updated 12/15/2025.
2026 · COMMON HOME EQUITY OPTIONS
1 Generally speaking, there are not many restrictions on how one can use their funds. However, it is worth checking with the lender to ensure one is properly adhering to their lending agreement.2 Though uncommon, lenders may freeze, reduce, or suspend one's HELOC under specific circumstances (e.g., significant decline in home value, deterioration of borrower's financial circumstances, etc.).3 Mortgage interest and PMI are deductible only on the portion of acquisition debt up to the federal limit of $750,000, with PMI also subject to AGI-based phase-out limits.HOW LONG DOES THISOPTION TYPICALLY TAKETO SET UP?HOW INVOLVED IS THEUNDERWRITING PROCESS(E.G., PROOF OF INCOME,ASSETS, ETC.)?HOME EQUITY LINE OF CREDIT (HELOC)Fast (e.g., 1–2 weeks)The debt must be settled by the estateModerate80–90%Yes2WHAT ARE THE TYPICALCLOSING/SETUP COSTS?WHAT HAPPENS TOTHE DEBT WHEN THEHOMEOWNER PASSESAWAY?HOW MUCH EQUITY CANONE TYPICALLY BORROWUP TO USING THIS OPTION?CAN THE LENDER FREEZE,REDUCE, OR SUSPENDEDACCESS TO THE FUNDS?Low to moderateHOME EQUITY LOANModerate (e.g., 2–4 weeks)The debt must be settled by the estateModerate80–90%NoModerateCASH-OUT REFINANCESlow (e.g., 1–2 months)The debt may be settled by the estate, or the heirs may assume the mortgageExtensive80%NoModerate to highIS THE MONTHLY PAYMENTTYPICALLY FIXED ORVARIABLE?VariableFixedFixed or variableWHAT IS THE TYPICALTERM LENGTH OF THISSTRATEGY?10-year interest-only draw period,and 10-20 year repayment5 to 30 years15, 20, or 30 yearsARE THE INTERESTPAYMENTS TAX-DEDUCTIBLE?3Yes, if funds are used for qualified home improvements (subject to limitations)Yes, if funds are used for qualified home improvements (subject to limitations)Yes, if funds are used for qualified home improvements (subject to limitations)
© fpPathfinder.com. Licensed for the sole use of Ryan Weiser, CFP® of Weiser Financial Planning. All rights reserved. Used with permission. Updated 12/15/2025.
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Weiser Financial Planning, LLC is a Fiduciary, and Fee-Only Financial Planning Firm. A Registered Investment Adviser in Lewis Center, OH that provides Comprehensive Financial Planning and Investment Management Services to clients in the Columbus & Central Ohio area, as well as Nationwide though online virtual meetings. Ryan J. Weiser CFP®, CDFA® is the president and founder of Weiser Financial Planning LLC. He helps people connect their money with the things that are most important to them by making wise financial decisions, so they can maximize their money and live the best life possible. 

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