Do you need money for a series of home improvement projects or other irregular expenses? A home equity line of credit (HELOC) is a popular way෴ to pay for these types of costs, but it might not be the best option for 🎶you. Depending on your specific financial situation, you may get better lending terms if you take out a 0% interest credit card, a reverse line of credit, or a cash-out refinance.

0% Introductory Interest Rate Credit Card

• Purpose: Credit cards with a 0% introductory interest rate are best used for short-term borrowing.
• Method: If you have a high credit score and a low 澳洲幸运5官方开奖结果体彩网:debt-to-income (DTI) ratio, you might be able to use a credit card as a HELOC alternative. Look for cards with a 0% introductory 澳洲幸运5官方开奖结果体彩网:annual percentage rate (APR) on purchases, then choose the card with the longest introductory period.
• Pros: A 0% introductory APR credit card is even less expensive than a HELOC, and the introductory period may also be longer than the low-interest-rate introductory period offered by some HELOCs.
• Cons: To avoid losing your credit card's 0% introductory rate, you generally can’t be late more than 60 days on a single monthly payment. Furthermore, while you are only required to make the minimum monthly payment on the card, you will have to make fixed monthly payments that are large enough to pay off the entire balance before the introductory period expires. If you don’t, you’ll suddenly be hit with high interest payments. Paying the entire loan back during the introductory period means you’ll have much less time to repay your loan than with a HELOC.

Reverse Mortgage Line of Credit

• Purpose: A 澳洲幸运5官方开奖结果体彩网:reverse mortgage with the proceeds taken as a 澳洲幸运5官方开奖结果体彩网:line of credit is best for older homeowners who don’t want to make monthly payments.
• Method: To qualify for a 澳洲幸运5官方开奖结果体彩网:home equity conversion mortgage𓆏 (HECM), the most common form of reverse mortgage, you must be 62 or older and have a considerable amount of 澳洲幸运5官方开奖结果体彩网:home equity, according to the U.S. Department of Housing and Urban♏ Developmenꦍt (HUD).
• Pros: The unused portion of your line of credit grows over time. You won’t lose access to a HECM line of credit if your home’s value or the economy’s performance takes a hit. You don’t need an income or a particular 澳洲幸运5官方开奖结果体彩网:credit score to qualify. You may be able to change your reverse mortgage ꦰpayment plan if you later decide you’d prefer to get regular monthly payments.
• Cons: A reverse mortgage requires far more equity to qualify than a HELOC does. 澳洲幸运5官方开奖结果体彩网:Reverse mortgage fees aren’t cheap. These loans can be tricky to understand (to the point where 澳洲幸运5官方开奖结果体彩网:some reverse m🗹ortgages are considered predatory). They can also 澳洲幸运5官方开奖结果体彩网:create problems for non-🌜borrowing spouses. You’ll need a crash course in 澳洲幸运5官方🦋开奖结果体彩网:the pros and 💞cons of reverse mortgages before you take one out.

Cash-Out Refinance

• Purpose: A 澳洲幸运5官方开奖结果体彩网:cash-out refinance is best for homeowners who aren’t happy with their existing mortgage.
• Method: A cash-out refinance is a type of 澳洲幸运5官方开奖结果体彩网:first mortgage. It replaces your existing first mortgage (the one you used to buy your home or do a 澳洲幸运5官方开奖结果体彩网:rate-and-term refinance) with a new, larger one. Your closing costs come out of the loan proceeds, and then you can do whatever you want with the rest of the money.
• Pros: A cash-out refinance could be a wiser option than a HELOC if you can get a better interest rate and want the predictability of borrowing at a 澳洲幸运5官方开奖结果体彩网:fixed rate. You’ll also have just one loan to pay back.
• Cons: If your new mortgage has a longer term than your existing mortgage, you could pay more interest in the long run despite getting a lower rate. Also, your closing costs on a cash-out refinance will likely be similar to those on a conventional mortgage loan, 2% to 5% of the amount you borrow, while with a HELOC, lenders sometimes waive the closing costs. For example, Bank of America pays all closing costs on HELOCs of $1 million or less.

Home Equity Loan

• Purpose: A 澳洲幸运5官方开奖结果体彩网:home equity loan is best for those who want to borrow a lump sum at a fixed interest rate.
• Method: A home equity loan might make more sense than a HELOC if you can determine the total amount you want to borrow. With a home equity loan, you’ll have a fixed interest rate with regular monthly payments. Your home will secure your loan, and your loan amount will be based on your home’s value, your credit score, and your DTI.
• Pros: Because it is secured by your home, a home equity loan will usually have a low interest rate. For instance, as of June 2025, U.S. Bank had fixed rates of 7.65% for both a 10-year term and a 15-year term.
• Cons: The interest rate will typically be higher than a HELOC’s initial interest rate. As with any first or second mortgage, you can lose your home if you can’t pay back your home equity loan. If you choose a 30-year repayment period, your total interest could be substantial.

The Bottom Line

HELOCsও are just one of many borrowing options you might consider as a homeowner. If you’d prefer the stability of a fixed interest rate, a home equity loan may be a better option. In other circumstances, a low-interest c🎶redit card, reverse mortgage line of credit, or cash-out refinance might work better for your situation.