9 Best Home Equity Loan Lenders of 2024
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A home equity loan is a second mortgage that allows you to borrow against the value of your home, minus what you owe. Consider your home equity loan needs and then shop the lenders below — and if you want to consider other home equity products, read on for more about your options.
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Best Home Equity Loan Lenders
- Offers a wide variety of purchase and refinance mortgages with an emphasis on helping underserved communities.
- Its home equity line of credit can be used for an owner-occupied or second home.
- Offers a program to enable buyers to make cash offers.
- Mortgage origination fees tend to be on the high end, according to the latest federal data.
- No application fee.
- Borrowers can apply within the lender’s mobile app.
- Home equity loans are available for second homes and investment properties.
- Home equity loan rates are not posted online.
- Home appraisal is required.
- Offers multiple low-down-payment loan programs.
- May consider alternative credit data, such as bank statements.
- You can view customized rates for purchasing a home and apply online.
- Doesn't offer home equity lines of credit.
- Lender fees are on the high side, according to the latest federal data.
- No application fee or appraisal required.
- Reported average closing timeline of 20 days is faster than many competitors.
- Borrowers who apply via mobile app may get a faster response.
- Home equity loan rates are not posted online.
- No application fee or closing costs.
- Sample rates customizable by location are posted online.
- Rate discount for banking customers.
- Maximum loan amount is 80% of home equity.
- Only two term lengths: 10 or 15 years.
- Not available in Delaware, South Carolina and Texas.
- Repayment terms range from 10 to 30 years.
- No penalty for early repayment.
- Borrowers must pay a $500 application fee and closing costs.
- Home equity loan rates are not posted online.
- Home equity loans aren’t available for second homes.
- Offers a wide range of loan types and products, including FHA, VA and USDA.
- Borrowers can apply and track loan status online.
- Offers customized online rate quotes with monthly payment estimates, including mortgage insurance, when applicable.
- Home equity loans are geographically limited.
- Origination fees are on the high side compared with other lenders, according to the latest federal data.
Andrews Federal Credit Union: NMLS#410421
N/A
95%
- Caters to first-time home buyers with incentives and education.
- Provides extra support for military borrowers, including branches near bases in Germany, Belgium and the Netherlands.
- Offers HELOCs and home equity loans at competitive interest rates.
- Physical branches in the U.S. are limited to Maryland, New Jersey, Virginia and Washington, D.C.
- Does not offer renovation or construction home loans.
- Borrowers can access up to 100% of equity, higher than most lenders.
- Flexible term options: 5, 10, 15 or 20 years.
- No application fee, closing costs or prepayment penalty.
- Minimum loan amount of $10,000.
- Can’t customize a rate estimate on the website.
- Credit union membership is limited to those with U.S. military connections.
How a home equity loan works
As you make monthly mortgage payments, you’re building equity in your home. You’re growing the share of your home that you actually own, and once you have enough equity (typically at least 15-20%), you can borrow against it and spend the cash as you wish.
You’ll receive it all at once in the form of a loan, which is why a home equity loan can be a popular choice for borrowers who know exactly how much they’ll need to accomplish their goals. Shopping around to multiple lenders can help ensure that you get the best rate, which is determined by your debt-to-income ratio, credit score and the amount of equity that you’re borrowing, among other factors.
Alternatives to a home equity loan
Home equity loans aren’t your only option for accessing equity. Along with home equity loans, HELOCs and cash-out refinances also allow you to turn some of your home equity into cash, to use as you see fit.
Your home is the collateral for all three of these loan types, so it's considered safest to use the cash in a way that will improve your financial position. That's one reason these are often used for value-adding home renovations.
Here are some of the key things to know when you're comparing home equity loans, HELOCs and cash-out refinances.
Provides you with a one-time payment that you pay back over time at a fixed rate. You'll pay off this loan in addition to your mortgage, since a home equity loan is technically a second mortgage.
Can have a shorter loan term, depending on how much you borrow and how quickly you want to repay the loan.
Gives you a line of credit that you borrow against as you need it, rather than requiring you to figure out an exact sum beforehand (though it's still good to have an idea of the approximate total).
Has an adjustable interest rate, which means that your interest rate will change over the life of the loan. Some lenders also offer a fixed-rate option.
Check out NerdWallet's best HELOC lenders.
Replaces your mortgage with a new home loan that's greater than the amount already owed on your existing mortgage. You get the difference between the higher loan amount and the amount owed as a cash payment.
Generally has a higher interest rate than a rate-and-term refinance, but a lower rate than home equity loans or HELOCs.
Check out NerdWallet's best lenders for a cash-out refinance.
More from NerdWallet
Last updated on October 1, 2024
Frequently asked questions
- What is a good rate for a home equity loan?
Home equity loan rates vary from day to day and from one lender to another. To make sure you're getting a good home equity loan rate, compare offers from at least three lenders. It may seem simpler to get a home equity loan from your current mortgage lender, but that might not get you the best deal.
- Is it worth getting a home equity loan?
If you need a large amount of cash, a home equity loan will likely get you a lower interest rate than a comparable personal loan. But if you need to borrow $10,000 or less, a personal loan, or even a credit card, could do the job — and you won't be using your home as collateral.
- What credit score do you need to get a home equity loan?
To qualify for a home equity loan, you'll need a credit score that is at least 620, though many lenders will look for a higher minimum score. You may also need to have at least 20% home equity, meaning you have paid off an amount of your original mortgage that's equal to 20% or more of your home's current value.
Methodology
The star ratings on this page reflect each lender's performance in NerdWallet’s home equity loans category. For inclusion in this roundup, lenders must offer home equity loans and achieve a star rating of 4 or above in the home equity loan rubric from NerdWallet. We scored the category and chose lenders for this page using the following methodology:
NerdWallet reviewed more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (measured among lenders with at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country.
All reviewed mortgage lenders that offer home equity loans were evaluated based on (1) maximum CLTV, (2) application fees, (3) closing costs, (4) whether or not an appraisal is required, (5) ease of application, (6) prepayment penalties, (7) repayment term options and (8) rate transparency. The highest scoring lenders appear on this page.
NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews.
NerdWallet's Best Home Equity Loan Lenders of 2024
- New American Funding: Best for low fees
- Rocket Mortgage, LLC: Best for high customer satisfaction
- Carrington: Best for existing Carrington customers
- Network Capital: Best for high borrowing limit
- US Bank: Best for no closing costs
- Pennymac: Best for flexible repayment terms
- Flagstar: Best for high borrowing limit
- Andrews Federal Credit Union: Best for high borrowing limit
- Navy Federal: Best for high borrowing limit
