What’s the Cheapest Way to Get Equity Out of My Home

July 4, 2025 - 4 min read

Key Takeaways

  • HELOCs are often the cheapest option thanks to flexible borrowing and low upfront costs.
  • Home equity loans offer fixed rates and lump sums, good for planned expenses.
  • Cash-out refinances can be costly due to high fees and restarting your mortgage.
  • Reverse and shared equity options skip monthly payments but may cost more long term.
  • The best choice depends on your goals, so compare rates, fees, and terms carefully.
Check your best options to tap home equity. Start here

If you’re thinking about tackling a big renovation, paying off debt, or just need a cushion for unexpected expenses, tapping into your home’s equity can be a smart way to make it happen.

But with several options available for accessing your equity, it’s not always clear which one makes the most sense or costs the least.

Let’s explore the cheapest way to get equity out of your house.

Three common ways to access home equity

When homeowners want to turn built-up equity into cash, they usually consider three primary tools:

  • Home equity loan – A second mortgage that provides a lump sum repaid in fixed installments. Good for one-time expenses.
  • Home equity line of credit (HELOC) – A flexible credit line you can draw from as needed. You only pay interest on what you borrow.
  • Cash-out refinance – Replaces your current mortgage with a larger one and gives you the difference in cash. This option can come with higher closing costs and may not be ideal if you already have a low rate.

Less common options like reverse mortgages and shared equity agreements exist but often carry more complex trade-offs.

Check your best options to tap home equity. Start here

What is the cheapest way to get equity out of a house?

If we’re just comparing costs, HELOCs often win out. They typically have lower rates than personal loans or credit cards, and you only pay interest on what you borrow.

Home equity loans are also competitively priced. Many lenders reduce or waive closing costs, and approval is often faster than a full refinance. Rates are fixed, but usually slightly higher than HELOCs.

Cash-out refinancing is usually the priciest if today’s rates are higher than your original mortgage. While monthly payments may be lower due to a 30-year term, you could pay much more in total interest and reset your mortgage timeline. If you’re looking for other ways to access equity without refinancing your entire loan, consider these alternatives to a cash-out refinance.

Here’s how the main options compare at a glance:

OptionCheapest?ProsCons
HELOCYesFlexible, interest-only payments, low feesVariable rates, possible rate increases
Home Equity LoanOftenFixed rate, lump sum, predictable paymentsSlightly higher rates and closing costs
Cash-Out RefinanceRarelyOne payment, access to large amountsHigh closing costs, resets mortgage rate
Reverse MortgageNoNo monthly payments (for seniors)High fees, reduces inheritance
Shared EquityNoNo monthly payments, flexible eligibilityShare future appreciation, upfront fees
Check your best options to tap home equity. Start here

Real-world cost breakdown

To help you visualize how these options affect your monthly budget and long-term costs, here’s a comparison of what it would look like to access $50,000 in home equity, using average rates and terms as of July 2025.

ProductInterest Rate / Cost StructureLoan TermMonthly Payment (for $50K)Key Features / Total Cost Example
Home Equity Loan8.24% fixed10 years$613Fixed rate and payments, straightforward terms. Total paid: $73,560
HELOC8.12% variable10 years$610*Variable rate, interest-only payments possible. Lower costs if you borrow less or repay early. Total paid: depends on usage
Cash-Out Refinance6.94% fixed30 years$331Lowest monthly payment, but highest total interest over time. Total paid: $119,160
Home Equity Agreement3–5% fee + share of appreciation10 years$0Lump sum, no monthly payments; at end of term, repay original amount plus 15–20% of home’s value (if home appreciates); fees deducted upfront. Total paid: $162,889

If you’re new to tapping into home equity, this table lays out the monthly payments and total cost for borrowing $50,000. It’s an easy way to compare your options and see what fits your budget best.

HELOC payment assumes full $50,000 is drawn and repaid over 10 years. If you borrow less or only make interest payments initially, the monthly payments would be lower.

HEA does not require monthly payments; repayment is a lump sum due at the end of the term or upon sale/refinance, and the total cost depends on your home’s appreciation.

All products except HEA have predictable monthly payments; HEA’s total cost can be much higher if your home appreciates significantly.

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Shared equity example breakdown

Let’s say your home is worth $500,000 and you enter into a home equity agreement (HEA) to access $50,000, essentially 10% of your home’s value. The company charges a 3.5%–5% fee upfront, which means you might only receive $47,500 to $48,250 in hand.

If your home appreciates at a modest 5% annual rate, it could be worth around $814,447 in 10 years. In that case, your repayment obligation might be around $162,889, over three times what you initially received.

If your home value doesn’t increase much, you may owe less, but most contracts still have minimum repayment terms based on your home’s original value.

The bottom line on the cheapest way to get equity out of a house

If you’re looking for the cheapest way to get equity out of your house, a HELOC typically offers the best blend of low costs and flexibility, especially if you don’t need all the cash upfront or want to avoid refinancing your entire mortgage.

For those who prefer predictability and need a lump sum, a home equity loan can still be a smart choice. But you’ll want to shop rates and weigh the upfront fees.

Cash-out refinancing might make sense in some situations, particularly if mortgage rates drop and you want to roll other high-interest debt into a new loan. But in most cases, it’s not the most cost-effective route, especially in today’s higher rate environment.

No matter which option you’re leaning toward, it pays to do your homework. Shop multiple lenders, calculate the long-term cost, and make sure the loan structure fits your financial goals.

Craig Berry
Authored By: Craig Berry
The Mortgage Reports contributor
With over 20 years in mortgage banking, Craig Berry has helped thousands achieve their homeownership goals.
Aleksandra Kadzielawski
Reviewed By: Aleksandra Kadzielawski
The Mortgage Reports Editor
Aleksandra is endlessly curious about the housing market and loves turning what she learns into helpful content. She's a DePaul alum, licensed real estate agent, and NAR member who traded Chicago winters for Phoenix sunshine.