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Compare Home Equity Products in February 2024

Find the Best Home Equity Option For You

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Best for a Home Equity Line of Credit

Figure

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Apply on Figure’s Secure Site
5.0
Quicken Compare Score

The Quicken Compare score is based on multiple factors such as the most popular choice, consumer feedback and our internal evaluation. The score is unbiased and its goal is to provide you with a relative recommendation of offers as you compare the brands listed in our marketplaces. We do receive monetary compensation if you utilize the brands listed which allows us to keep this service free.

Check My Rate
Apply on Figure’s Secure Site
Cash Out Refinance
100% Digital Experience

Figure is the fastest way to turn home equity into cash with a 100% digital app & online appraisal.  Use your funds to consolidate debt or finance your next home project.

Quicken Compare Review
Getting a HELOC with Figure is a seamless and empowering experience. Their innovative online platform simplifies the application process, making it quick and convenient. With minimal documentation requirements, Figure provides an instant decision, leveraging technology to offer competitive rates and personalized offers based on your creditworthiness and home equity. Once approved, the funding is disbursed rapidly, often within days, and the HELOC card grants you instant access to your funds. Figure’s commitment to superior customer service ensures a smooth journey, with knowledgeable support available to address any questions or concerns. Whether you’re seeking financial flexibility for home improvements, debt consolidation, or unexpected expenses, Figure’s HELOC solution is designed to unlock the potential of your home equity effortlessly.
Pros and Cons
pro
Streamlined Application Process
pro
Competitive Rates and Personalized Offers
pro
Fast Funding
con
Limited Availability
con
Potential Fees
con
Variable Interest Rates
Featured Benefits
  • Largest non-bank HELOC lender in the US
  • Approval in 5 minutes. Funding in as few as 5 days
  • Flexible terms, redraw up to 100%, borrow $20K-$400K
Best for customer satisfaction

Rocket Mortgage

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Begin Application on Rocket Mortgage’s Secure Site
5.0
Quicken Compare Score

The Quicken Compare score is based on multiple factors such as the most popular choice, consumer feedback and our internal evaluation. The score is unbiased and its goal is to provide you with a relative recommendation of offers as you compare the brands listed in our marketplaces. We do receive monetary compensation if you utilize the brands listed which allows us to keep this service free.

VIEW RATES
Begin Application on Rocket Mortgage’s Secure Site
Customer Satisfaction

Rocket Mortgage has been ranked #1 by JD Power for customer service for 11 years, which is based entirely on client feedback collected by the independent research firm

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Overall, getting a refinance through Rocket Mortgage can be a good option for those who prefer a fast, streamlined, and convenient online experience. However, if you prefer a more personalized approach or have specific questions or concerns, you may want to consider a lender with more hands-on service. As with any financial decision, it’s always best to compare rates and terms from multiple lenders to find the best deal for your situation.
Pros and Cons
pro
Online Application
pro
Fast Pre-Approval
pro
Multiple Refinance Options
con
Limited Personal Interaction
con
Fees
con
Credit Requirements
Benefits
  • Loans customized to your needs
  • Fast streamlined application
  • Millions of satisfied borrowers
Top Recommended

Unlock

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A Home Equity Agreement could help you access up to $300,000. With no monthly payments and no interest charges, this is a great alternative to taking out a loan.
  • Introducing Unlock, a flexible HELOC alternative that can get you cash now in exchange for a percentage of your home’s future value
  • Unlock isn’t a lender, and doesn’t offer loans, so you don’t need perfect credit to qualify
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Benefits of Home Equity Products

Both a home equity loan and a home equity line of credit (HELOC) allow you to tap into the equity built up in your home, but they work in slightly different ways. Here are the benefits of each:

Benefits of a Home Equity Loan

Lump sum payment

With a home equity loan, you receive a lump sum of money upfront, which you can use for a specific purpose such as home renovations, debt consolidation, or education expenses. This provides predictability and allows you to plan your budget accordingly.

Fixed interest rate

Home equity loans often come with fixed interest rates, which means your monthly payments will remain the same over the life of the loan. This can be beneficial if you prefer a stable payment schedule and want to avoid the uncertainty of interest rate fluctuations.

Predictable repayment term

Home equity loans typically have a fixed repayment term, usually ranging from five to 30 years. Having a set timeline for repayment allows you to plan your finances and budget effectively.

Potential tax benefits

In some cases, the interest paid on a home equity loan may be tax-deductible, subject to certain limitations. Consult with a tax professional to understand the specific tax implications based on your individual circumstances.

Benefits of a Home Equity Line of Credit (HELOC)

Flexibility

A HELOC provides you with a revolving line of credit, similar to a credit card, allowing you to borrow and repay funds multiple times during the draw period, which is usually 5-10 years. This flexibility can be advantageous if you have ongoing or variable expenses, such as home improvements over time.

Variable interest rates

HELOCs often come with variable interest rates, which can be lower than fixed rates initially. If interest rates decrease, your borrowing costs may also decrease. However, it’s important to note that variable rates can fluctuate over time, potentially increasing your monthly payments.

Interest-only payments during draw period

In many cases, during the draw period of a HELOC, you may only be required to make interest payments on the amount you’ve borrowed. This can provide temporary relief on your monthly budget, as you’re not required to repay the principal during this period.

Access to funds when needed

With a HELOC, you have access to a predetermined credit limit and can withdraw funds whenever necessary, up to that limit. This can be useful for managing unexpected expenses or projects that require varying amounts of money over time.

It’s important to note that both home equity loans and HELOCs use your home as collateral, so failure to repay the borrowed funds could result in the loss of your home. Additionally, the specific terms, interest rates, and eligibility criteria for these loans vary among lenders, so it’s advisable to shop around, compare offers, and carefully consider your financial situation before making a decision.

Frequently Asked Questions (FAQ)

What is the difference between a HELOC and Home Equity Loan?

HELOCs and home equity loans are two types of ways for people to get equity out of their homes. Both of these lending products require that you have equity in your house, but they’re slightly different.

A home equity loan is a lump sum amount that you need to pay back in equal installments. The benefit of getting a home equity loan is that you’ll have a set repayment amount. Rates tend to be lower than a personal loan or credit card if you have a good credit score, but you’ll also have to use your house as collateral.

HELOC stands for “Home Equity Line of Credit.” It acts like a credit card, and you only use it when you need it.  That isn’t a lump sum payment, and the interest rate can be variable. With that said, you can find fixed-rate HELOCs from some lenders too.

The benefits of HELOCs are that they usually offer a low-interest rate and are easy to get so long as you have adequate equity in your home and good credit.

The main disadvantage of a HELOC is that the interest rates can be unpredictable and variable, depending on how much you borrow.

What is a home equity loan?

A home equity loan is also known as a second mortgage, equity loan, and term loan. It’s when a mortgage lender lets you borrow money that’s against the current equity in your home. If your mortgage isn’t paid off yet, you’ll pay your home equity loan every month along with your mortgage.  It’s a way to have money for different financial goals such as medical bills or college tuition. It can also prevent you from continuing to build up credit card debt. Credit card debt is worrisome since high-interest rates can make you owe more money over time.

If you don’t pay your monthly payments, then the bank can take your home from you with a home equity loan. This loan also decreases your home’s equity. If you haven’t paid, and you’re looking to sell your home, you’ll have to pay both your mortgage and home equity loan with the profit from the sale. A home equity loan isn’t the same thing as a home equity line of credit (HELOC). If you have a home equity line of credit, you’ll receive a credit that’s secured by your home, and you can use it when you need it. It’s similar to a credit card. You won’t receive a large sum of money with a line of credit.

How does a home equity loan work?

How much you can borrow with a home equity loan depends on how much equity is in your home. It’s the difference between how much you owe on your mortgage and the value of your home. A lender will also take a look at your income and credit score to calculate how much you’ll receive.  It’ll also tell them how much of an interest rate to charge you as well. When you accept this type of loan, you’ll receive the money all at once. They’ll also require closing costs just like your first mortgage. Ensure you shop around to find the best lender since rates will vary.

How to get a home equity loan?

Before even applying for a loan or lines of credit, first, make sure you’re in a financial position to pay back the loan on time. Determine all of your necessary expenses such as your mortgage, food, car payments, etc. Make sure you factor in the closing costs as well.  Next, decide how much equity you have, and how much you’ll need to borrow. Keep in mind that if your loan is bigger than the value of your home, then the fees will be higher.

After this, you can start shopping for different lenders. Try to find the best deal you can before choosing the first one you find. Check out your local credit unions and banks for different options.   You’ll want to take a look at the different fees, monthly payments, interest rates, the length of the loan, and any penalties for missing a payment. Also, ask your mortgage lender for a rate since they might give you a competitive rate.

How to apply for a home equity loan?

When you’ve decided on a lender, ensure that you meet the eligibility requirements since they can have application fees. Applying for a home equity loan is very similar to applying for your original mortgage. You’ll provide proof of income, your property tax bill, and apply with your current mortgage statement. After this, you’ll need to have a home appraisal done. When you’re approved, you’ll receive the amount you’re approved as a lump sum. You’ll pay the loan amount in regular payments for the term of the loan.

Most of the time, the loans will have a fixed interest rate.  A fixed interest rate means your interest stays the same even if the market forecast changes. If you don’t pay on your loan, you could have the lender foreclose on your home. Normally, how much you can borrow is up to 85% of the equity in your home. You can either apply in person or online. Before signing, ensure you read all the terms of the loan. Any questions you have as you’re reading over it, make sure you ask your lender. Each lender will vary depending on whether they accept in person or online.

What bank has the best home equity loans?

One option for home equity loans is through Discover. They’re a national bank that offers credit cards with rewards. They also offer banking such as savings, student loans, personal loans, and checking accounts. Discover is available in many states and has a lower interest rate. You can choose a loan that’s 10, 15, 20, or 30 years. You don’t have to worry about application fees, origination fees, cash at closing, or home valuation fees. This is a great option for those who have great credit. If your credit needs to be improved, there are plenty of other lenders out there.

Are home equity loans tax deductible?

Tax deductions are limited but available for home equity loans. They’re normally available if you have the loan to take care of capital improvements. Speak with your tax professional to see if you qualify.

Can I use a home equity loan to buy another house?

Yes, you can use your equity from your one property to buy another. Home equity loans tend to have low-interest rates as well since you’re using your home as collateral.

Can you get a home equity loan with bad credit?

Yes, you can get a home equity loan even with bad credit. Since you’re using your home’s equity as collateral, lenders feel more comfortable offering you a loan.  To improve your chances of getting approved with a lower interest rate, you’ll want to know your debt-to-income ratio. It’s what you make divided by what you owe. If your debt-to-income ratio is in the lower 40s or less, you’ll be highly regarded by lenders.  It’s important to shop around since some lenders will still approve you even if you’re above the 40s. If your debt-to-income ratio is high, it’s helpful if your credit score is higher.

Can you refinance a home equity loan?

Home improvements are a good reason to borrow from your home’s equity. Most of the time you can refinance this type of loan. If you notice that home equity loan rates today are lower than your original rate, it’s a good idea to see if refinancing is a good financial option for you.  Some reasons to refinance are:

  • Switching from an adjustable-rate to a fixed-rate loan
  • Avoiding balloon payments
  • Receive more cash from the equity
  • Receive a lower interest rate

Keep in mind that you’ll still need to pay this new home loan or you could risk losing your home. If your home goes down in value, you could wind up owing more in your loan balance than the value.   It’s not always beneficial to refinance, so make sure you take a look at all factors. Some lenders will require you to pay closing costs or other fees to refinance. You’ll also have extra interest as well since you’re starting a new loan now.

Is a home equity loan a mortgage?

A home equity loan is also known as your second mortgage. The key difference between a traditional mortgage and home equity loan is that a home equity loan you receive after you have equity in your property. Whereas your traditional mortgage you take out to afford your home. A home equity loan is the same as a traditional mortgage where you pay a loan over time with a fixed term. A home equity loan isn’t considered a second mortgage if you own your home and decide to take out a home equity loan on your home’s value. This loan option can have lower closing costs but higher interest rates.

Is a home refinance or home equity loan better?

Lenders will usually pay most of your closing costs on home equity loans but not a cash-out refinance. A home equity loan would go further if the rates are better now than your existing mortgage.  If you can lower your interest rate on your first mortgage and take out cash, then a cash-out refinance is a better option. Interest rates tend to be lower for cash-out refinances than home equity loans.  Both options have fixed interest rates, but rates can be adjustable with a cash-out refinance. Both will give you a lump sum. Cash-out refinances tend to be easier to be approved for since it’s taking over your primary mortgage.  Cash-out refinance can last for several years, similar to your primary mortgage. Home equity loans tend to be shorter when you need to pay them back.

Should I get a home equity loan?

When you’re deciding if a home equity loan is right for you, you’ll need to think about different questions such as if you have credit card debt with high-interest rates. Many choose a home equity loan to pay off any credit card debt.
Check out other loan and mortgage options before deciding if this loan is right for you. Compare interest rates, terms of the loan, and initial loan costs. Consider if you have a large purchase to make whether it’s home improvement or a wedding.

When your expenses come at one time, that’s when it’s better to choose this equity loan instead of a line of credit.  Keep in mind how long you plan to stay in your current home. If you sell your home, your equity loan and primary mortgage will be paid off. If you’re not planning on moving soon, then a longer loan term is good to keep your payments lower.  If you choose a shorter loan, that’ll regain the equity quicker so you’ll have more funds when your home is sold. Avoid a home equity loan for non-essentials such as a vacation. Make sure you can pay the loan off and are financially secure.

Ask your lender about possible fees such as:

  • An early pay-off fee
  • Closing fees
  • Originator fees
  • Appraisal fees
  • Title fees

Keep in mind that home equity loans tend to be lower rates than credit cards so they can be more financially sound than a credit card. Before taking it out, ensure it makes more sense for you than a home equity line of credit. A home equity line of credit you’ll only take what you need, and pay that amount back instead of a lump sum.

What can a home equity loan be used for?

A home equity loan can be used for paying off high-interest credit card debts, your child’s college tuition, or home repairs.  It can be used for any large remodeling or upgrades to your home, as well.

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We are an independent, advertising-supported comparison service. The offers that appear on this site are from companies from which we receive compensation. This compensation may impact how and where products appear on this site, including for example, the order in which they may appear within listing categories. The ranking is determined at our own discretion and should not be considered an endorsement (express or implied). The information and vendors which appear on this site is subject to change at any time. To the extent that ratings and rankings appear on this site, these are determined by both our subjective opinion and based on a methodology that aggregates a number of factors, including but not limited to, our analysis of brand market share based on origination volume and number of leads purchased, reputation according to such factors as JD Power customer service awards, compensation paid to us, and general consumer interest and awareness. For Credit Cards, Quicken Compare has partnered with CardRatings for our coverage of specific credit card products. Quicken Compare and CardRatings may receive a commission from card issuers.

Quicken Compare Score

The Quicken Compare score is based on multiple factors such as the most popular choice, consumer feedback and our internal evaluation. The score is unbiased and its goal is to provide you with a relative recommendation of offers as you compare the brands listed in our marketplaces. We do receive monetary compensation if you utilize the brands listed which allows us to keep this service free.

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Quicken Compare, a LMB Opco, LLC company, is compensated by third-party advertisers, however, any opinions, analyses, reviews or recommendations expressed in editorial content are of the author alone and have not been reviewed, approved, or otherwise endorsed by the advertiser. We make every effort to provide up-to-date information, however we do not guarantee the accuracy of the information presented. Consumers should verify any terms and conditions with the institution providing the products. Articles may contain some sponsored content, content about affiliated entities or content about clients in the network. QuickenCompare does not include all lenders or offers available in the marketplace. The content displayed on QuickenCompare or in this video does not provide legal, financial, accounting or tax advice. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.