Homeowners considering borrowing against their home equity in September 2026 face a median 8.14% interest rate on home equity loans, according to Money.com. This rate, combined with record-high home equity levels, is prompting borrowers to weigh the costs and risks of tapping into their property’s value.
A $100,000 home equity loan at 8.14% would cost approximately $740 per month over a 15-year term or about $1,000 per month over a 10-year term, based on standard amortization calculations. The fixed-rate structure of these loans provides predictable payments, but the long-term financial impact depends on the borrower’s current mortgage rate and financial situation.
Homeowners are sitting on a record $18 trillion in home equity, according to Bankrate’s research, but the decision to borrow is influenced by whether their existing mortgage rate is lower than today’s averages. For those who secured rates below 4% between 2020 and 2022, alternatives like a HELOC (Home Equity Line of Credit) or home equity loan may preserve their lower rate, while a cash-out refinance could be more advantageous for those with higher existing rates.
Key considerations for borrowers
The choice between a cash-out refinance, HELOC, or home equity loan hinges on several factors, including the borrower’s financial goals, risk tolerance, and current mortgage terms. A cash-out refinance replaces the entire mortgage balance at today’s rates, which may be higher than a borrower’s existing rate but could simplify debt management. In contrast, a HELOC or home equity loan allows borrowers to retain their original mortgage rate while accessing additional funds, though these options come with variable rates (HELOC) or fixed rates (home equity loan) and require careful budgeting.
Cost breakdown for a $100,000 home equity loan
The median home equity loan rate of 8.14% as of August 24, 2026, serves as a benchmark for calculating monthly payments. Borrowers should note that rates vary by lender, credit score, and loan-to-value ratio. For example:
- 10-year term: ~$1,000 per month (principal + interest)
- 15-year term: ~$740 per month (principal + interest)
Risks and responsibilities
Borrowing against home equity is not without risk. The home serves as collateral, and failure to repay could result in foreclosure. Additionally, home equity loans disburse funds as a lump sum, requiring immediate repayment. Borrowers should assess their ability to manage an additional monthly expense, particularly if they are already facing financial strain.
Expert perspective
Tim Choate, founder and CEO of Red Awning, emphasizes that the decision between refinancing options is not one-size-fits-all. "Choosing between a home equity loan, HELOC or cash-out refinance isn't a one-size-fits-all decision," Choate states. "Each option has unique characteristics that align with different financial needs, risk profiles, and flexibility requirements."