Compare Home Equity Loans
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
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
- Online Quotes
- Online Application
- Financial Guide
- HELOC Draw Period
Home Equity Loans with the Best Services:
|Home Equity Mortgage Calculator|
|HELOC Draw Period||5 to 10 Years||10 Years||10 Years|
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.
|Fixed Rate Loans|
|Home Equity Lines of Credits (HELOC)|
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.
|Age||at least 18 years old||Varies||at least 18 years old||at least 18 years old|
|Credit Score (Minimum)||580||Varies||500|
|Primary Home Owner|
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
|Member of US Department of Housing and Urban Developme|
|Member of FDIC|
|Insured by FHA|
|Approved by Equal Housing Lender|
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
|Origination Fee||Yes||Varies||Yes||1% of the total mortgage loan|
|Maintenance Cost||$0||$0||Not Stated||Not Stated|
|Variable Rate APR||4.11%||4.8%||Not Stated||3.25%|
|Fixed Rate APR||Not Stated||5.95%||Not Stated||Not Stated|
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
Full Home Equity Loans Comparison
|Services||Loan Types||Qualifications||Accreditation||Loan Details||Customer Support|
|LendingTree Home Equity Loans||9.6||10.0||9.7||9.0||9.5||10.0|
|SoFi Cash Out Refinance||10.0||8.0||9.0||10.0||10.0||10.0|
|loanDepot Home Equity Loans||9.5||9.5||9.7||9.0||9.5||9.6|
|Rate Marketplace Home Equity Loans||10.0||9.0||10.0||8.0||9.0||9.0|
|Rocket Mortgage Home Equity||9.0||8.0||9.0||8.0||10.0||10.0|
|Quicken Loans Home Equity||9.0||9.5||9.0||8.0||8.5||10.0|
|RefinanceCalculator Home Equity||9.0||8.5||9.0||8.0||9.2||10.0|
|AmeriValue Home Equity||9.0||8.5||9.0||9.0||9.0||8.8|
|Nationwide Home Equity Loans||8.0||10.0||10.0||10.0||7.0||8.0|
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.