HELOC vs. Home Equity Loan: Keep Your Low Mortgage Rate

If you bought or refinanced a few years ago, you may have a mortgage rate you never want to give up. Today's 30-year rates are above 7%. The average homeowner's existing rate is about 4.4%.

At the same time, many Georgia homeowners have more equity than ever. You might want to use some of it for a renovation, to pay off high-interest debt, or to have a cushion for emergencies.

Refinancing your whole loan at today's rates to get that cash rarely makes sense when your current rate is much lower. That's why most homeowners in this spot borrow against their equity with a second loan and leave their first mortgage alone. There are two main ways to do it: a home equity line of credit (HELOC) or a home equity loan.

If you're still deciding whether a refinance could make sense for you, start with our guide to HELOCs vs. refinancing.

What They Have in Common

• Both are second loans secured by your home. Your first mortgage, and its rate, stay exactly as they are.
• Both are based on your equity. Lenders usually cap your first mortgage plus the new loan at a set share of your home's value, often 80% to 90%, depending on the lender and your credit.
• Here's an example. Your home is worth $400,000 and you owe $220,000. At an 85% limit, your total borrowing could be $340,000, so you could access up to about $120,000.

How a Home Equity Loan Works

A home equity loan gives you one lump sum at closing.

• Your rate is fixed, so your payment stays the same for the life of the loan.
• You start repaying right away over a set term, often 10 to 30 years.
• It works best when you know exactly what you need: a new roof, one big project, or paying off a set amount of high-interest debt.

How a HELOC Works

A HELOC is a line of credit you can draw from as you need it, much like a credit card secured by your home.

• You only pay interest on what you use.
• Most HELOCs have a draw period, often 10 years, followed by a repayment period. Some let you pay only interest during the draw period, so your payment can rise a lot once repayment starts.
• The rate is usually variable and tied to the prime rate, so your payment can change.
• It works best when costs come in stages or you're not sure of the total: a renovation paid as invoices come in, tuition by the semester, or a safety net you may never use.

Why the Rate Type Matters Right Now

When rates are rising, a fixed rate gives you certainty. According to ICE's October 2026 Mortgage Monitor, the median HELOC rate is 7.4%. HELOC rates move with the prime rate and can change monthly. ICE estimates a 0.25% increase adds about $9 a month to the median HELOC balance of $44,000. That's small on its own, but it adds up if rates keep climbing.

Some HELOCs let you lock part of your balance at a fixed rate. If you like the flexibility of a line but want some protection, ask about it.

Quick Comparison

• Need the money all at once, and want a payment that never changes? Look at a home equity loan.
• Need money over time, or want a backup you may not use? Look at a HELOC.
• Worried about rising rates? A home equity loan, or a HELOC with a fixed-rate lock option.
• Planning to move in a few years? A HELOC is often easier, since you only pay interest on what you use and the balance is paid off when you sell.

Georgia Costs to Ask About

• Georgia charges an intangible recording tax of $1.50 per $500 on most loans secured by real estate. On a HELOC, it's based on the full credit line, not just what you draw. A $100,000 line costs about $300 in tax, even if you never use it.
• You may also see appraisal, title and recording fees. Some lenders cover most closing costs on a HELOC but charge a fee if you close the line within the first few years.
• Compare the total cost, not just the rate.

A Few Cautions

• Your home secures the loan. Use your equity for things that build long-term value, not everyday spending.
• Paying off credit cards with home equity can save a lot of interest, but it turns unsecured debt into debt secured by your home. Make a plan so the cards don't fill back up.
• Under current IRS rules, interest on home equity debt is generally deductible only if you use the money to buy, build or substantially improve the home that secures the loan. Talk with your tax professional about your situation.
• Thinking about selling soon? Talk with a lender before you list. Most lenders won't open a new line on a home that's for sale, and the new payment counts when you qualify for your next mortgage.

Why Work With a Mortgage Broker

As a broker, we work with multiple lenders that offer both fixed-rate home equity loans and HELOCs. That lets us compare rates, fees and limits side by side, and find the option that fits your plans instead of a single bank's menu.

We help homeowners across Fulton, Cobb, DeKalb, Gwinnett, Clayton, Douglas, Cherokee, Fayette, Forsyth, Henry, and Rockdale counties, including Marietta, Smyrna, Kennesaw, Acworth, Woodstock, Roswell, and Sandy Springs.

The Bottom Line

You don't have to give up a great mortgage rate to use your home's equity. If you know what you need and want a payment that won't change, a home equity loan is usually the better fit. If you want flexibility and only pay for what you use, a HELOC may be the better fit. Either way, compare the total cost and make sure the payment fits your budget.

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This article is for general information only and is not tax or financial advice. Rates and terms are subject to change. All loans are subject to credit approval, income verification, property valuation and underwriting guidelines.