Home Equity Line of Credit (HELOC)

There are some key differences that separate a home equity line of credit from a home equity loan. The main difference is that a home equity line of credit provides you with flexible access to funds, whereas a home equity loan provides you with a lump sum.

HELOC

• Typically adjustable rate (fixed-rate option available)
• Draw upon funds as needed
• Only pay interest on the money you use

HELOAN

• Fixed interest rate
• One-time payout
• Pay interest on the full amount borrowed

Some of the cons of a HELOC include: 

• Variable Interest Rates: HELOCs typically have variable interest rates, which can add an element of unpredictability to this type of financing. If you aren’t interested in a variable rate, you can opt to apply for our fixed-rate HELOC.
• Risk to Your Home: Since your home is used to secure the HELOC, you run the risk of foreclosure if you default on the loan. Be sure to read the terms and stay on top of the repayment schedule to avoid this.
• Potential for Overspending: The ease of access to funds might tempt some borrowers to overspend, leading to financial strain in the long run. It’s crucial to have a financial plan in place when taking out a HELOC and to be disciplined in how you use it. Download the Griffin Gold app to formulate a personalized financial plan, track your spending, leverage smart budgeting tools, and access valuable home financing resources.

A HELOC is a great way to use the equity in your home to secure cash. These loans operate much like a credit card. In the case of a HELOC, your “credit limit” is your loan amount. You can borrow as much as you need, up to that limit. 

There are many benefits to a HELOC: lower interest rates, interest-only payments for 10 years, a boost to your credit, and great flexibility in accessing funds. For many, it’s a great way to access funds quickly. 

Note that for tax years after 2025, HELOC interest may be tax deductible regardless of how the funds are used. This can make getting a HELOC a great option when you need the cash, especially when compared to credit cards and personal loans.

Your HELOC credit limit is typically based on your home’s appraised value, the amount of equity you have, your credit score, and your overall financial profile. Lenders often allow you to borrow up to 85–90% of your home’s value minus any outstanding mortgage balance.

You’ll be required to pay off the remaining HELOC balance at or before the time of closing, since the loan is secured by your home. This payoff is typically handled through the escrow process as part of the sale.

Yes, some lenders offer HELOCs for investment properties and second homes, though requirements are usually stricter and terms may differ from primary residences. You may face higher interest rates, lower loan-to-value (LTV) limits, and additional documentation requirements.

For tax years before 2018 and after 2025, homeowners may be able to deduct interest paid on home equity loans or home equity lines of credit, subject to certain dollar limitations.

Between 2018 and 2025, interest paid on home equity loans was typically not deductible unless the funds were used to buy, build, or significantly improve the residence. However, for tax years after 2025, interest paid on home equity loans and lines of credit may be deductible regardless of how the funds are used.

Griffin Funding specializes in personalized mortgage solutions designed for today’s homeowners. We offer a full suite of lending options, including conventional loans, VA loans, FHA loans, and non-QM loans, as well as flexible HELOC and home equity products.

Our clients benefit from fast approvals, competitive rates, and digital tools like the Griffin Gold app, which simplifies the mortgage process and helps track your financial journey. With expert support and nationwide service, Griffin Funding makes borrowing easier, faster, and more transparent.

Fixed-rate digital HELOCs are no-appraisal HELOCs with a fixed interest rate throughout the lifetime of the loan. Secure this home equity line of credit without appraisal and get cash out quickly, within 5 business days.

• Pre-approval is available within 5 minutes with only a soft-pull credit check and AVM over the phone (888) 699-3371. Complete everything else online at your convenience.
• Upon approval, funds are wired to your account in less than 5 business days!
• No appraisal is required – meaning no appraisal fees. Value is determined within seconds by an AVM and verified with a PCR.
• No title is required, which means no title fees.
• Loan amounts up to $400,000.
• Credit scores down to 640 for primary homes and 680 for investments.
• Tap equity up to 85% of the value of your home or 70% of the value of your second home or investment property.
• 5, 10, 15, or 30-year fixed terms.
• Draw periods of up to 5 years.
• Fully online and automated – nothing to upload except driver’s license – everything else can be synced.
• Online notary. If you are in a county that allows remote online notaries (RON), you can sign closing docs virtually from the comfort of your home.
• Income verification:
  • Full Documentation: 1 to 2 years of the most recent W-2s or tax returns.
  • Alternative Documentation: Alternative income documentation like the kind used with bank statement loans or DSCR loans is not available on the fixed-rate HELOC program.

A traditional variable-rate HELOC offers variable rates and a 30-year term. These HELOCs may or may not require a home appraisal to qualify. Get up to $500,000 with interest-only payments for the first 10 years of your loan.

• Pre-approval within 48 hours.
• Upon approval, funds are wired to your account.
• A licensed appraiser is required to perform a traditional interior and exterior appraisal. An AVM can be used in some cases along with a Property Condition Report (PCR).
• Loan amounts up to $500,000 ($400,000 if it is a no-appraisal HELOC).
• Credit scores down to 640 for primary homes and 680 for investments.
• Tap equity up to 90% of the value of your home, 85% of the value of your second home, or 75% of the value of your investment property.
• 30-year adjustable HELOC with a draw period of 3 years. Interest-only payments for the first 10 years.
• Income verification:
  • Full Documentation: 1 to 2 years of the most recent W-2s or tax returns.
  • Alternative Documentation: Bank statement loans for self-employed HELOC borrowers allow you to qualify with 12 months of personal or business bank statement deposits.

Variable HELOC rates typically adjust monthly or quarterly, depending on the terms set by your lender and changes in the underlying index. These changes can impact your monthly payment, so it’s important to review your loan agreement for details on rate caps and adjustment frequency.

Generally speaking, most lenders will require a home appraisal in order to qualify for a HELOC. In some cases, however, lenders will allow no-appraisal HELOCs.

These HELOCs typically use something called an automated valuation model (AVM) to estimate the value of your home. AVMs use a range of information, including similar homes around you that have recently sold, your property details, and information about pricing trends and your location to create these estimates. Think of it as a highly sophisticated home value estimator that can help streamline the approval process.

The AVM will be verified by a Property Condition Report (PCR) to ensure that the property is in good condition. A PCR is not an appraisal and is not performed by an appraiser. It simply provides a property‐condition overview—often used in tandem with an AVM to confirm both value (via the AVM) and condition (via the inspection).

Each lender has their own requirements surrounding no-appraisal HELOCs. At Griffin Funding, we make no-appraisal HELOCs accessible through our digital HELOCs. Borrowers can secure no-appraisal HELOCs in as little as 5 business days with loan amounts up to $400,000 and credit scores as low as 640.

Some automated valuation models (AVMs) or drive-by appraisal programs may allow borrowers to secure a HELOC without a traditional full appraisal, especially if the loan amount is relatively low or the borrower’s credit and equity position are strong.

In many cases, HELOCs under $400,000 or loans offered through digital lenders may qualify for appraisal waivers. However, requirements vary by lender and loan program, so it’s best to confirm eligibility during the application process.

If a home equity line of credit doesn’t fit your needs, several alternatives can provide financing based on your goals.

• Cash-Out Refinance: A cash-out refinance replaces your current mortgage with a new one for a larger amount, giving you the difference in cash. It’s ideal to refinance at a lower interest rate while accessing funds for significant expenses. Use our free cash-out refinance calculator to see what this loan could look like for you.
• Reverse Mortgage: If you’re 62 or older, a reverse mortgage allows you to convert your home equity into cash without monthly repayments while living in your home. Instead, the loan is repaid when you sell the house or move out. This option is great for retirees needing to supplement income or cover medical expenses. However, it reduces your home equity, so it’s worth considering long-term financial implications.
• Private Money Loans: Private money loans are short-term loans funded by private lenders rather than banks. They’re often used for real estate investments, such as flipping houses or purchasing properties. Although they have higher interest rates, they offer fast approval and flexible terms, making them a great option when time is critical.
• Personal Loan: A personal loan offers unsecured financing, meaning you don’t use your home as collateral. This makes it a less risky option for minor expenses, like paying off high-interest debt or funding a wedding. While rates are typically higher than those for home equity loans, personal loans are easier to obtain if you don’t have significant home equity. Griffin Funding does not offer personal loans.

Yes, you can refinance a home equity line of credit. By refinancing your HELOC, you can replace it with a new HELOC with a better rate or different terms or roll it into a new loan. For example, you might choose to convert your HELOC to a fixed-rate HELOC, a HELOAN, or a cash-out refinance.

Some reasons why you may refinance your HELOC include:

• Locking in a fixed interest rate
• Extending the draw period
• Lowering your monthly payments
• Rolling it into a different loan type

The right option depends on your financial goals and current mortgage situation:

• A cash-out refinance replaces your existing mortgage with a new, larger loan and gives you the difference in cash. It may offer a lower interest rate, but it increases your overall loan balance.
• A HELOC loan, on the other hand, is a revolving line of credit that allows you to borrow only what you need, without changing your existing mortgage. HELOC loans are more flexible but may carry higher variable interest rates. If you have a low current rate and want access to funds without refinancing your entire mortgage, a HELOC may be the better fit.