When the Federal Reserve issued a larger-than-expected cut to its federal funds rate in September, hope was high that relief was imminent. And, for a brief time, it appeared to be. Right before the Fed issued its 50 basis point cut, mortgage rates plunged, hitting their lowest level in more than two years. And with additional cuts expected for when the Fed meets again this week and in December, it appeared that cooler rates were on the horizon.

Unfortunately, for many borrowers, that hasn’t been the case. Without an October Fed meeting and with a series of complex factors like unemployment, inflation, and more, interest rates rose again on mortgages and mortgage refinance loans — and they’re now even higher than they were before the Fed began this recent rate-cutting campaign. This has left borrowers hoping to access equity via a cash-out refinance or to simply put more money back into their pocket via a traditional refinance with limited alternatives. 

Fortunately, there are still two cost-effective ways to get equity out of your home despite refinancing rates being high again. Below, we’ll break down two of them.

Start by seeing what home equity loan rate you could qualify for here.

How to get equity out of your home with refinance rates high again

Refinancing your home, either in a traditional way or via a cash-out refinance, would require you to exchange your current, likely low mortgage rate for an average refinance rate of 6.73% for a 30-year refinance instead. Here are two ways, then, to access that same home equity without having to sacrifice your existing mortgage rate:

Home equity loans

Home equity loans function as a lump sum withdrawal from your accumulated home equity (what you owe to your lender deducted from your current home value). And, right now, the average homeowner has a lot of equity to potentially tap into. With the median home equity amount approaching $330,000 currently, homeowners can borrow a six-figure sum of equity without having to exchange their current mortgage rate to get it. And if they use their home equity loan for eligible home projects, they may even qualify to have that interest deducted from their taxes for the year (or years) in which they used the loan, thus maintaining a tax credit many may have assumed was only applicable for mortgage interest deductions.

Get started with a home equity loan online now.

Home equity lines of credit (HELOCs)

If you prefer the flexibility of a revolving line of credit similar to credit cards, then a HELOC may be a benefit for you. You’ll maintain your existing mortgage interest rate with this option as well and the same tax benefits will apply for any interest paid on the line of credit. But there’s an added incentive, too. You’ll only have to pay interest on the amount used, not the full line of credit applied for. 

For example, if you’re approved for a $20,000 HELOC but only use $5,000 of it, you’ll only be responsible for interest on the latter amount (and, again, that may be tax-deductible, depending on the use). Home equity loans, on the other hand, will require you to pay interest on the full amount (in this case $20,000). Plus, HELOCs have variable interest rates, which may be more attractive than the fixed rates home equity loans come with now that the overall rate climate seems to be on a downward trend again.

Learn more about your HELOC options here.

The bottom line

Homeowners hoping to refinance this fall may have to pivot but they still have viable ways to access their home equity, even with refinance rates high again. Home equity loans and HELOCs both offer alternative ways to do that cost-effectively. Borrowers should know, however, that their home is put up as collateral in these circumstances, so it’s critical to only withdraw an amount of equity that’s easy to pay back or they could jeopardize their homeownership in the process.