28-07-2025
Is a HELOC or home equity loan the better choice this August? Here's what experts say
Many homeowners are reassessing their borrowing options as market conditions continue to shift in the second half of 2025. While home values have climbed nationwide to a record high median of $396,000, elevated interest rates, rising inflation and uncertainty surrounding the Federal Reserve's rate moves continue to complicate financing decisions.
And, if you're a homeowner who's looking to tap into your home equity, you may wonder: Is it better to get a home equity line of credit (HELOC) or a home equity loan right now? Given how much the rate environment has changed, it's worth understanding how each option fits your circumstances. Below, mortgage professionals share what you should consider when deciding between these products in August.
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"In August 2025, we're recommending home equity loans more often than HELOCs for clients seeking predictability," says Ryan Leahy, senior loan officer and regional production manager at Leahy Lending. "With interest rates still elevated and the Fed keeping markets on edge about future hikes, locking in a fixed rate with a home equity loan gives peace of mind."
Steven Glick, director of mortgage sales at real estate investment fintech company HomeAbroad, is leaning toward recommending HELOCs.
"If the Fed follows through with one or two more cuts this year, HELOC rates could drop further, saving [you] money without needing to refinance," Glick says.
Ultimately, though, both experts emphasize that the choice depends on your financial situation and how you plan to use the money.
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"A HELOC makes sense when [you] need flexibility or anticipate multiple expenses over time," Glick says. This approach shines for multi-phase renovations, medical bills or situations where you're unsure how much you'll need to borrow.
But before opening a HELOC this month, you should weigh the benefits and drawbacks:
Pros
Cons
A home equity loan makes sense when you need all the money at once for a specific purpose. A good example would be "consolidating credit card debt or funding a major home repair," says Glick.
If you're considering a home equity loan, experts encourage weighing the trade-offs:
Pros
Cons
Three factors should guide your decision between a HELOC and a home equity loan, experts say:
"[Start by looking at] the annual percentage rate (APR)," Gennarelli says. This includes all fees, giving you a complete picture of what you'll pay.
Beyond comparing APR, Glick recommends preparing your finances and shopping strategically:
With mixed signals on Fed policy and inflation continuing into August, Calixto advises against trying to predict rate movements. Instead, choose the loan that fits your financial needs and what you can afford each month. For personalized guidance, speak with at least two to three reputable home lenders. They'll help you compare terms and fees, and match the right product to your situation and long-term goals.
