Home equity loans and home equity lines of credit (HELOCs) allow homeowners to tap into the value of their homes. A home equity loan is a fixed-rate, lump-sum loan that allows homeowners to borrow up to 85% of their home’s value and pay that amount back in monthly installments.

That said, these products operate in different ways, and they come with unique pros and cons in the interest rate environment of early 2025. So, prospective borrowers need to explore both before applying. But which will be better for 2025? A $100,000 home equity loan or $100,000 HELOC? That's what we'll explore below.

Home equity rates are still down substantially from the highs of this time last year, with HELOCs near a two-year low. McBride forecasts that HELOC rates will continue to decline in 2025, averaging 7.25 percent, their lowest level in three years.