3 home equity loan moves borrowers should make for 2026

Home equity loans can serve as valuable and cost-effective borrowing tools for millions of homeowners. But there can also be a tendency to take a "set it and forget it" approach to this unique product, as well. With a fixed interest rate that won't change until refinanced, and with the equity often provided as a lump sum upfront, homeowners may find that their financial needs have already been satisfied. But that could be faulty thinking right now, especially considering that home equity levels are now at a record high, and home equity loan interest rates are slowly but steadily declining again.

In today's economic climate and especially as borrowers head into 2026, there are some smart and cost-effective ways in which owners can get a bit more value out of their home equity loans. These won't apply to each and every homeowner, but they're still worth careful consideration, especially if it means significant interest savings both now and over the typical 10 or even 15-year repayment period many home equity loans come with.

So, what specific home equity loan moves should borrowers be considering for 2026? Below, we'll detail three to know now.

Start by seeing how low today's current home equity loan interest rates are here.

3 home equity loan moves borrowers should make for 2026

Want to improve your chances of home equity loan success in the new year? Consider these three moves now:

Reconsider your current interest rate

When did you initially secure your home equity loan? If it were during the high-interest-rate climate of recent years, you may have an opportunity to refinance it into a considerably lower one now. Home equity loan rates have been declining for much of the last 18 months, approximately, and with some time spent shopping around online, borrowers may be able to find a rate around 8% or lower right now.

That could mean lower monthly payments, significant interest savings and maybe even a quicker payoff timeline, depending on your approach. Start, then, by reconsidering your current interest rate. You may be pleasantly surprised at how much lower your options are now versus what they were a few years ago.

Shop for home equity loans online today.

Reevaluate your HELOC options

Did you know that you can refinance your home equity loan into a home equity line of credit (HELOC)? While not always the right approach, it can make sense now considering that HELOC rates are down by more than two full percentage points, on average, from where they sat in September 2024. And thanks to the variable rate the product employs, HELOCs could soon become even more affordable, especially if other interest rate cuts are issued next year. 

While a variable rate is a bit riskier, if managed correctly, it can also be much more affordable in today's cooler rate climate. Speak to a lender, then, who can better help you determine the value of making such a move for 2026.

Calculate your current home equity amount

With home equity levels hitting a record high in 2025 and with the average homeowner in possession of hundreds of thousands in equity to work with, you may be overdue to calculate your current home equity amount. You may have significantly more to borrow now than you did a few years ago, and you may need that money for expenses that were not nearly as prevalent when you first borrowed with the loan. 

That said, it never makes sense to overborrow with a home equity loan either, even if levels are higher than usual now. But with the right approach and intended use, it can be advantageous. Take the time to first calculate how much you actually have available and then determine if it makes sense to boost the amount you currently have.

The bottom line

A home equity loan can be beneficial for homeowners as long as they take the right, strategic approach. That means being proactive even when it may not seem advantageous to. By revisiting your home equity loan rate now, comparing it to readily available HELOC options and considering the home equity amount you now have to leverage, you can potentially improve your chances of home equity loan borrowing success even further. For many homeowners, their home equity loan is already working as best as it possibly can. But for a not insignificant number of other borrowers, a new approach in the new year may be the exact thing they need.