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How to unlock your home equity without changing your low mortgage rate


Jan 20, 2023



Tapping into your home equity with a HELOC won’t impact your mortgage rate.

National home values were up substantially over the last two years. Last year, housing prices rose 18% in 2021 alone. The average homeowner is now sitting on approximately $178,000 in home equity.  

Most homeowners purchased or refinanced homes while mortgage rates were at record lows. And now that home values are on the rise, some of those same homeowners are looking to cash in on their home equity. However, it no longer makes sense to do a cash out refinance as you would then lose your low rate.  

HELOCs allow a homeowner to unlock their home equity while keeping the low rate on their mortgage. A HELOC is a home equity line of credit. You can think of it as a second mortgage with a variable interest rate that is based on the prime rate. The prime rate is currently at its highest level in years, but it's still relatively low by historical standards.

There are two main types of HELOCs: closed-end and open-end. With a closed-end HELOC, the loan is for a specific amount of money and the interest rate is fixed for the life of the loan. The repayment period is usually between five and 15 years. An open-end HELOC works like a credit card. You can borrow against your line of credit as you need it, and you only pay interest on the money that you borrow. The repayment period is usually between five and 25 years.

Over 50% of homeowners used their HELOC for debt consolidation.  This is a great way to save money on interest and pay off your debt faster. You can also use a HELOC for home improvements, investments, or even large purchases like a new car.

If you're thinking of taking out a HELOC, there are a few things to keep in mind.  

First, be aware of the fees associated with HELOCs. There may be an annual fee, as well as closing costs and other fees. Second, remember that a HELOC is a loan secured by your home. If you can't make the payments, you could lose your home to foreclosure.

If you're looking for a way to access your home equity without losing your low mortgage rate, a HELOC may be the right option for you. Just make sure that you understand the terms and conditions before you sign on the dotted line.

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Equal Housing Lender

Hitch, Inc. NMLS #2383367 #2383367

2158 NW Toussaint Drive. Bend, Oregon 97703

1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.

2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.

3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.

4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.

5. The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.