With interest rates expected to drop in 2026, many Maryland homeowners are revisiting their mortgage. Some are hoping to lower their monthly payments. Others are exploring ways to tap into equity to improve cash flow, fund home improvements, cover major expenses, or pay down debt.
If you’re asking questions like, “Should I refinance my mortgage this year?” “What’s a HELOC and how does it work?” or “How do I know if now’s the right time?” you’re not alone.
We work with homeowners across Maryland who are weighing these same options. Here’s what to know before you take your next step.
Interest rates are shifting. What does that mean for 2026?
After several years of rate hikes, data suggest things are starting to level out or drop, offering homeowners a potential window to refinance at a lower cost.
This could be especially valuable for Maryland homeowners who purchased or refinanced when rates were closer to 7% or higher. A lower rate could mean hundreds of dollars in monthly savings or a shorter path to owning your home outright.
Maryland home values have held strong
In many parts of the state, property values have remained steady or even increased. Areas like Howard, Montgomery, and Harford Counties continue to see strong buyer demand. This is good news if you’re thinking about using your home equity.
More value means more potential borrowing power, whether you’re looking to refinance or open a line of credit.
Two options for leveraging your home’s value
Your home equity can be used in different ways, depending on your goals. The two most common options are refinancing your mortgage or opening a home equity line of credit (HELOC). What does each entail?
Refinance your mortgage
Refinancing means replacing your existing mortgage with a new one. This can help you lower your monthly payment, pocket increased equity with a cash-out option, pay off your loan sooner, or lock in a new, lower fixed rate.
In 2026, a refinance could be worth considering if:
- You locked in your current mortgage at a much higher rate.
- Your house has increased in value and you want to access that equity.
- You’d like to shorten your loan term and pay it off sooner.
Refinancing may help you save money over time, but it’s not always the right fit. If you’re planning to move soon or already have a competitive rate, the costs may outweigh the benefits.
Here’s what lenders typically look at.
- Your credit score and financial history
- How much equity you’ve built in your home
- Your income and debt-to-income ratio
- Your current interest rate and loan details
Use a HELOC to borrow as needed
A home equity line of credit (HELOC) allows you to borrow against your home’s available equity on your own timeline. Think of it like a credit card with a lower interest rate and a much higher limit.
This option gives you flexibility without changing your existing mortgage. You can draw funds as needed and only pay interest on what you borrow.
Homeowners often use HELOCs for things like:
- Home improvement projects
- Medical bills or emergency costs
- College tuition
- Debt consolidation
HELOCs typically offer interest-only payments during the initial draw period, which helps with cash flow. If you already have a low mortgage rate and want to preserve it, a HELOC may be the better choice.
Many Maryland homeowners choose local credit unions like SECU for HELOCs because of personalized service, member-first rates, and lower fees than national lenders.
Which one is right for you?
| If your goal is to… | Refinance | HELOC |
| Lower monthly payments | Best if your current rate is higher | Best if you want to keep your mortgage rate |
| Improve cash flow | Helpful if you need one large payout | Helpful if you need flexible, ongoing access |
| Simplify repayment | Fixed monthly payments on one loan | Variable payments, separate from mortgage |
| Preserve your current loan | Requires replacing your mortgage | Keeps your existing loan in place |
If you’re unsure which direction to take, that’s normal. Start by understanding your current mortgage, how much equity you have, and how long you plan to stay in your home.
FAQs from Maryland homeowners
Will I lose my current rate if I refinance?
Yes. Refinancing does replace your current mortgage, so your current rate will change. Remember, if your existing rate is lower than what’s currently available, it may not make sense to refinance.
Is a HELOC better than a personal loan?
For many homeowners, HELOCs offer more advantages than personal loans. HELOCs tend to have lower rates and offer more flexibility since they’re backed by your home. If you’re unsure of which option is right for you, explore our FAQs or talk with our team about your unique situation.
Before you decide, get a clear understanding of your options
Rates are shifting, home values are strong, and your equity could give you the flexibility to improve your home, reduce your debt, or plan for what’s next. Before you apply for anything, make sure you understand the pros, cons, and long-term impact of each option. You don’t need to figure it out alone. We’re here to help Maryland homeowners navigate these decisions with clarity and move forward with confidence. Visit our SECU borrower center to get more information, review all your options, or connect with a mortgage expert.
