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Compare Top Home Equity Loan Lenders of July 2024A home equity loan is a second mortgage that lets you borrow against the value of your home. Borrowers often use home equity loans to finance home improvement projects, educational expenses, debt consolidation, and more.
Applied Filters: Excellent (760+), Max loan amount: $100,000, State: California
Rocket Mortgage, LLC
Rocket Mortgage, LLCNMLS#3030
4.0
NerdWallet rating
Min. credit score
680
Max. loan amount
$350,000
Why we like it
Rocket Mortgage allows borrowers to take out a home equity loan on a second property, though they don't offer e-closing.
VIEW RATES
at Rocket Mortgage, LLC
Figure
FigureNMLS#1717824
Min. credit score
640
Max. loan amount
$400,000
Why we like it
Good for: Borrowers who want a fast closing and to receive their full loan balance upfront.
VIEW RATES
at Figure
Better
BetterNMLS#330511
Min. credit score
680
Max. loan amount
$500,000
Why we like it
Variety of property types
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at Better
New American Funding
New American FundingNMLS#6606
Min. credit score
580
Max. loan amount
$750,000
Why we like it
Good for: First-time home buyers and other borrowers looking for a broad array of loan choices.
VIEW RATES
at New American Funding
Achieve
AchieveNMLS#1810501
5.0
NerdWallet rating
Min. credit score
640
Max. loan amount
$150,000
Why we like it
Predictable payments that include both principal and interest
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at Achieve
Guaranteed Rate
Guaranteed RateNMLS#2611
Min. credit score
640
Max. loan amount
$400,000
Why we like it
Borrowers who want to know exactly what their payments will be can benefit from Guaranteed Rate's fixed-rate option.
VIEW RATES
at Guaranteed Rate
Bethpage Federal Credit Union
Bethpage Federal Credit UnionNMLS#449104
Min. credit score
670
Max. loan amount
$1,000,000
Why we like it
Good for: borrowers seeking a solid selection of mortgages and the membership-based, not-for-profit business model of a credit union.
VIEW RATES
at Bethpage Federal Credit Union
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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.

» MORE: Full comparison of home equity loans, HELOCs and cash-out refinances

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Frequently asked questions

  • 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.

  • 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.

  • 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.

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