Homeowners considering a HELOC or home equity loan face borrowing costs above 7% as they decide whether to tap equity without replacing their existing mortgage. The average HELOC rate stood at 7.43% on July 15, 2026, while the average home equity loan rate was 8.12% as of June 17, according to current rate surveys.
The products remain attractive to owners who secured lower first-mortgage rates and do not want to refinance their entire balance. That preference helped second-lien borrowing, including HELOCs and home equity loans, post its strongest first-quarter volume in 18 years, according to the June ICE Mortgage Monitor.
For real estate agents, the choice can affect renovation plans, buyer qualification, seller proceeds, title work, and closing timelines. The discussion should begin with how the client expects to use the money and whether a purchase or sale is approaching.
Does the client need one lump sum or ongoing access?
A home equity loan provides a lump sum at closing. It is generally repaid through fixed monthly principal-and-interest payments over a specified term. That structure may suit a defined expense, such as a roof replacement or a contractor’s fixed renovation bid.
A HELOC provides a revolving credit line. The borrower can draw funds, repay the balance, and borrow again during the draw period, subject to the agreement’s limits. Most HELOCs have variable rates, so payments can change as rates or balances move, according to federal consumer guidance.
A HELOC may better accommodate renovation costs that arrive in stages. A home equity loan may offer more certainty when the borrower knows the total amount needed before closing.
How much payment uncertainty can the client manage?
A borrower’s rate will depend on credit, income, property type, equity, combined loan-to-value ratio, lender requirements, and fees. Advertised averages do not represent the offer every client will receive.
HELOC borrowers also need to understand what happens after the draw period. Some plans allow interest-only payments at first and later require higher principal-and-interest payments. Other plans amortize the outstanding balance over a repayment term, while some may require a balloon payment.
A fixed-rate home equity loan offers steadier payments, but interest generally begins accruing on the full amount after funding. With a HELOC, interest ordinarily applies only to the amount drawn.
Could the new debt affect a sale or purchase?
Both products create obligations secured by the home. An outstanding balance can reduce seller proceeds, while an open lien may require payoff documentation or additional title work before closing.
Clients using one property’s equity to fund another purchase should speak with their purchase lender before opening or drawing from a credit line. The new monthly obligation may affect debt-to-income calculations, reserve requirements, or loan approval.
Agents can also ask whether proposed renovations support the client’s sales strategy. Borrowing $40,000 for prelisting improvements does not guarantee an equivalent increase in the eventual sale price. The projected benefit should be weighed against interest, fees, carrying costs, and the expected listing date.
Are the fees and tax assumptions accurate?
Borrowers should compare application, appraisal, title, closing, annual, inactivity, and early-closure fees. A promotional HELOC rate may also increase after the introductory period, changing the total borrowing cost.
Interest is not automatically deductible. Under IRS guidance, interest may qualify when proceeds are used to buy, build, or substantially improve the home securing the debt, subject to applicable limits. Clients should confirm their circumstances with a tax professional.
Identify the transaction impact before comparing rates
Agents should leave product recommendations, qualification decisions, and tax determinations to lenders and tax professionals. Their role is to identify the intended use, payment structure, equity position, and transaction timeline before the client commits.
A loan opened for renovations or a future purchase can later change underwriting calculations, reduce seller proceeds, or delay title clearance. Raising those issues early can keep a borrowing decision from becoming a closing problem.