Rates for home equity lines of credit and home equity loans are in the low to mid-7% range. The average monthly HELOC rate is 7.23%, and the average home equity loan rate is 7.44%. Rates are based on a credit score of 780 and a CLTV of less than 70%.

HELOCs allow you to draw cash from your approved line of credit, pay it off, then tap it again. Home equity loans give you a lump sum. Homeowners with low primary mortgage rates may consider a second mortgage in the form of a HELOC or HEL to access home equity.

Second mortgage rates are based on an index rate plus a margin. The prime rate is at 6.75%, with a margin added by the lender. Most importantly, HELOC rates can include below-market introductory rates that may only last for six months or one year.

The best HELOC lenders offer flexibility in using your home equity and below-market introductory rates. Pay attention to minimum draw amounts and compare rates from different lenders. Home equity loan lenders offer fixed rates for the repayment period, with no draw minimums to consider.

Rates can vary significantly from one lender to the next, ranging from nearly 6% to as much as 18%. Homeowners with low primary mortgage rates and significant equity may benefit from considering a HELOC or home equity loan now, as rates are the lowest in years.

If you withdraw $50,000 from a HELOC at a 7.25% interest rate, your monthly payment during the draw period would be about $302. Remember, the rate is variable, so payments will increase over the repayment period. HELOCs and HELs are best if the balance is borrowed and repaid within a shorter period.

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