Here’s what the latest HELOC rates look like now. Should you take one out?

Home equity interest rates (HELOC) for loans with a 20-year repayment period are 7.71%, while those with a 10-year repayment period are 7.57%, according to Bankrate data for the week ended February 20. You can check out the best HELOC rates you can qualify for here. Here are some things to know before you take one out.

A major benefit of HELOC is that they typically offer lower interest rates than credit cards or personal loans. For this reason, homeowners with significant equity in their homes might consider a HELOC to fund major expenses like home renovations or even debt consolidation. “If you own a home that’s estimated to own over 20% of the value, you can benefit from opening a HELOC,” says Certified Financial Planner Autumn Campbell of Facet Wealth.

And instead of having to borrow the entire amount at once like you would with a home equity loan, a HELOC lets you borrow exactly what you need, when you need it from the line of credit. According to Greg McBride, Bankrate’s chief financial analyst, this is particularly “well-suited for a do-it-yourself project where costs are built up incrementally,” said Greg McBride, Bankrate’s chief financial analyst.

However, HELOCs are not risk-free, and defaulting on payments can have dire consequences, like losing your home and hurting your credit score. Additionally, not everyone will qualify, as you’ll likely need good or excellent credit, a low debt-to-income (DTI) ratio, and substantial equity in your home.

HELOC payback can be confusing. HELOCs consist of a two-part structure and typically include a 10-year draw period and a 20-year repayment period, which together equal a 30-year term. During the drawing period, a borrower can withdraw any amount of the money available to them, but once the drawing period ends and the repayment period begins, no more money can be withdrawn and the borrower must start paying back the principal in addition to the interest. At this point, the total monthly payment of interest and principal can be a steep hill to climb for anyone in a difficult financial position. Additionally, HELOC rates tend to be variable, so your payments can change, making budgeting difficult.

If you are considering a HELOC, get your finances in order first. The most competitive interest rates will most likely require good or excellent credit, a low debt-to-income (DTI) ratio, and substantial equity in your home. To calculate your DTI, add up your monthly expenses including your mortgage payment, credit card, child support, insurance, other debt, etc. and divide by your gross monthly income. It’s also important to shop around to make sure you’re getting the best rates and terms available to you.