Here are the benchmark rates to shop for

Average rates for home equity lines of credit and home equity loans continue to drop closer to 7%. Which should you choose: a HELOC or HEL? There are benefits to both. One thing is certain: rates on home equity products haven’t been this low in years.

The average HELOC rate is 7.25%, according to real estate data analytics company Curinos. The national average rate on a home equity loan is 7.56%.

Both rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of less than 70%.

A HELOC allows you to draw from your approved line of credit as you need it. A home equity loan gives you a lump sum.

With mortgage rates refusing to budge, homeowners with home equity and a favorable primary mortgage rate may feel the frustration of not being able to access that growing value in their home.

The Federal Reserve estimates that homeowners have $34 trillion of equity locked within the walls of their homes. For those who are unwilling to give up their low home loan rate, a second mortgage in the form of a HELOC or HEL can be a workable solution.

HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which has just fallen to 6.75%. If a lender added 0.75% as a margin, the HELOC would have a rate of 7.50%.

A home equity loan may have a different margin because it is a fixed-interest product.

Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home.

And average national HELOC rates can include “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a higher rate.

Again, because a home equity loan has a fixed rate, it’s unlikely to have an introductory “teaser” rate.

The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.

Today, FourLeaf Credit Union is offering a HELOC rate of 5.99% for 12 months on lines up to $500,000. That’s an introductory rate that will convert to an adjustable rate later. When shopping for lenders, be aware of both rates.

The best home equity loan lenders may be easier to find, because the fixed rate you earn will last the length of the repayment period. That means just one rate to focus on. And you’re getting a lump sum, so no draw minimums to consider.

And as always, compare fees and the fine print of repayment terms.

Rates vary from one lender to the next. You may see rates from nearly 6% to as much as 18%. The national average for a HELOC is a variable rate of 7.25%, and a fixed-rate of 7.56% for a home equity loan. Those can serve as your benchmarks when shopping rates from second mortgage lenders.

Is it a good idea to get a HELOC or a home equity loan right now?

For homeowners with low primary mortgage rates and a chunk of equity in their house, it’s probably one of the best times to get a HELOC or home equity loan. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Or virtually anything else.

If you withdraw the full $50,000 from a home equity line of credit and pay a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are best if you borrow and repay the balance within a much shorter period.