Compare Home Equity Loans

From services and loan types to loan details and customer support, we research everything you need to compare home equity loans and make a decision. Learn how our editors compare the different factors of home equity loans below.
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Home equity loans, also called second mortgages, allow homeowners to borrow money by leveraging the amount of equity they’ve accumulated in their homes. The interest on these loans is tax-deductible up to $100,000. Home equity loans are divided into fixed-rate loans and home equity lines of credit (HELOCs).

Fixed-rate loans provide a single, lump payment to the borrower, which is repaid in fixed monthly payments over a set period of time. HELOCs are variable-rate loans that work a lot like a credit card. A maximum loan amount is determined, and the borrower can take out money against that credit line, as needed. HELOCs are divided into two periods—the draw period, in which you draw funds and only pay for the interest, and the repayment period, during which you repay both the principal and the interest. They have variable interest rates, based off an index rate with and additional markup that’s subject to your credit profile.

Either type of home equity loan can be an excellent way to obtain funds for home improvement, pay off and consolidate high-interest debt, or finance future earnings potential by paying for college or launching a small business. When choosing a lender carefully consider the terms, repayment plan, interest rates (some lenders have caps), and closing costs. If you take out a HELOC, another factor to think about is a conversion clause which essentially turns part of your it into a fixed-rate loan.

The main issue with home equity loans is maintaining a cycle of debt, in which borrowers spend, borrow, and then continue to spend irresponsibly. Additionally, defaulting on a home equity loan could result in foreclosure, since they’re secured by your home. Finally, with HELOCs, watch out for initial interest “teaser” rates, prepayment penalties, and balloon payments at the end of the draw period.


 

How we Compare Home Equity Loans

Services - 20%
Loan Types - 15%
Qualifications - 20%
Accreditation - 15%
Loan Details - 20%
Customer Support - 10%

Services

Mortgage calculators, online application and other loan related tools are some of the services and features that helps streamline the loan process and help them make more informed decisions.

  • Home Equity Mortgage Calculator
  • Refinancing
  • Online Quotes
  • Online Application
  • Financial Guide
  • HELOC Draw Period

Home Equity Loans with the Best Services:

LendingTreeSoFiLoan DepotNationwide
Home Equity Mortgage Calculator
Refinancing
Online Quotation
Online Application
Financial Guide
HELOC Draw Period5 to 10 Years10 Years 10 Years

Loan Types

The types of Home Equity Loans may vary from lender to lender. The maximum loanable amount, draw periods and rates (fixed, variable) depend on the type of home equity loan availed. Consider companies with multiple home equity loan options.

  • Fixed Rate Loan is a one-time single lump-sum payment to the mortgagor. The interest rate and payment remain the same during the loan period.   
  • Home Equity Lines of Credit has a variable rate interest. Within the draw period, borrowers can withdraw the certain amount of home equity funds.

Home Equity Loans with the Best Loan Types:

LendingTreeSoFiLoan DepotNationwide
Fixed Rate Loans
Home Equity Lines of Credits (HELOC)

Qualifications

There are certain qualifications you should consider before applying for Home Equity Loans. Just like any type of loan, lenders should take into consideration all of these factors to determine their eligibility. Primary consideration is the borrower’s credit score. Other things to consider includes the amount of equity in their homes for those with mortgage properties.

  • Borrower’s age
  • Home equity – determines the amount available for a home equity loan.  
  • Credit Score - A FICO rating is fundamentally in light of a credit report data regularly sourced from credit agencies. It is usually use to represent the creditworthiness of the borrower.
  • Primary Homeowner- The borrower should be a title owner and own any of the following: single-unit dwelling, family home, manufactured home, townhouse, approved-condominium, or two-to-four unit owner occupied home. 

Home Equity Loans with the Best Qualifications:

LendingTreeSoFiLoan DepotNationwide
Ageat least 18 years oldVariesat least 18 years oldat least 18 years old
Credit Score (Minimum)580Varies500
Primary Home Owner

Accreditation

Home equity loan borrowers should consider the lender’s credibility and accreditations. This provides an added level of security for the borrower during the life of the loan. Check your home equity loan lender for permits and accreditations with these organizations:

  • U.S Department of Housing and Urban Development
  • Federal Housing Administration
  • Equal Housing Opportunity

Home Equity Loans with the Best Accreditation:

LendingTreeSoFiLoan DepotNationwide
Member of US Department of Housing and Urban Developme
Member of FDIC
Insured by FHA
Approved by Equal Housing Lender

Loan Details

Origination fee, maintenance cost, application fee, and closing cost vary according to each lending institution. Rather than just focusing on loan rates, it is important that borrowers take a closer look at other loan-related fees to have a better view of how much a home equity loan is really going to cost them.

  • Origination Fee
  • Loan Rates
  • Closing Cost
  • Maintenance Cost
  • Application Fee
  • Variable Rate APR
  • Fixed Rate APR

Home Equity Loans with the Best Loan Details:

LendingTreeSoFiLoan DepotNationwide
Origination FeeYesVariesYes 1% of the total mortgage loan
Closing CostFreeVariesYes $750
Maintenance Cost$0$0Not StatedNot Stated
Application FeeFreeFreeFree$250-$500
Variable Rate APR4.11%4.8%Not Stated3.25%
Fixed Rate APR Not Stated5.95%Not StatedNot Stated

Customer Support

The true value of your Home Equity Loan services offer does not end with helping you get that loan. This should also include professional customer support for its clients. A number of communication channels should be made available for any customer queries. This can be done over the telephone, email and mobile app. It should also offer online resources, online detailed information about their product, and FAQs for self-help resources.   

  • Mobile App
  • Telephone Support
  • Live Chat
  • Email
  • FAQs     

Home Equity Loans with the Best Customer Support:

Full Home Equity Loans Comparison

ServicesLoan TypesQualificationsAccreditationLoan DetailsCustomer Support
LendingTree Home Equity Loans9.610.09.79.09.510.0
SoFi Cash Out Refinance10.08.09.010.010.010.0
loanDepot Home Equity Loans9.59.59.79.09.59.6
Rate Marketplace Home Equity Loans10.09.010.08.09.09.0
Rocket Mortgage Home Equity9.08.09.08.010.010.0
Quicken Loans Home Equity9.09.59.08.08.510.0
RefinanceCalculator Home Equity9.08.59.08.09.210.0
AmeriValue Home Equity9.08.59.09.09.08.8
Nationwide Home Equity Loans8.010.010.010.07.08.0
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FAQ

What is a home equity loan?

A home equity loan is a form of loan which uses the equity of a home as collateral. Borrowers typically use these loans as a means of covering critical expenses. These can include tuition costs and out-of-pocket medical bills.

Are home equity loans tax deductible?

The interest from a home equity loan may be tax-deductible. In order to qualify, the loan must be secured by your home and must have been obtained after Oct 13, 1987. The total deduction limit depends on what the loan money is used for. Loans used to buy, build, or improve your home have a $1,000,000 limit. Loans used for other purposes have a $100,000 limit.

What is a cash-out refinance?

Cash out refinancing is the refinancing of a pre-existing home mortgage that allows the borrower to turn built-up home equity into cash. If the amount refinanced is greater than that of the original mortgage, the borrower will then be given the cash difference.

What can you do with a home equity loan?

There are several uses for home equity loans. To name a few, they can be used for renovating a home, financing education, generating retirement income, paying off previous debt, or for investing.

Should I get a home equity loan?

The pros and cons of home equity loans depend on what you intend to do with the money. With home improvements and major, necessary purchases the answer is almost always yes. If you intend to use the money as retirement income, for investments, or to pay credit card debt then the answer is more complicated.

Using a home equity loan to finance home improvements, like updating kitchens and bathrooms, or rebuilding a garage or basement, can increase the value of your home in the long run and therefore the overall equity. Paying off high interest credit cards or loans with home equity might seem a good idea on the surface, but it doesn’t get to the root of the problem of how this toxic debt is accumulated in the first place. Given the fact that debt is so easy to incur, you can effectively just be digging a bigger hole for yourself.

How does a home equity line of credit work?

A home equity line of credit advances you a credit line using your home equity as collateral. You can then borrow up to the credit limit during a set time called the draw period. Monthly payments are usually just interest and the whole loan becomes due at the end of the draw period.

How big of a home equity loan can I get?

Typically, lenders will allow you to borrow between 80%-90% of your home’s equity. So if your home is worth $300,000 and your mortgage balance is $150,000, you have $150,000 in home equity. Banks might offer you loans of $120,000 - $135,000. These are general figures not including taxes and associated fees.

What is home equity?

Home equity is the portion of your home that you actually own. As you pay off your mortgage, the value of ownership you've built up in the house increases. For most people, their home equity is their largest source of net worth.

What is a HELOC?

A HELOC is a Home Equity Line of Credit, which is when you borrow money using your home equity as collateral, or a guarantee for your loan. Your lender sets a borrowing limit, which is used as a line of credit: using the money, paying it off, and then borrowing again as needed.

How does a home equity loan work?

A home equity loan uses your home equity as collateral for the loan. The lender will determine the maximum loan amount based on the value of your property, and you make monthly payments until the loan is paid off. The value of the property is established by an appraiser from the lending company.

Latest Reviews

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Los Angeles, California
1/2/2017
Really liked it and am very interested

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3/3/2017
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