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Home Equity Loan Providers Compared
Before you start comparing home equity line of credit rates, take a look at some of the differences among major lenders. Read on to learn more about home equity loan providers to see which one might be right for you.
LendingTree got its start in 1996 when founder Doug Lebda experienced the complicated process of getting a home loan before he bought his first house. His innovative idea to create a method that let banks compete for borrowers’ business launched in 1998. This loan marketplace connects you with lenders in addition to offering informational resources and tools to make it easier to manage your finances.
LendingTree advertises rates as low as 2.88% for home equity loans, depending on your credit profile and loan terms. To get a home equity loan, simply fill out the online application. LendingTree then connects you to lenders who offer customized loan offers based on your creditworthiness. If you have a solid credit history, you may receive as many as five loan offers in a few minutes. Once the offers roll in, you can choose the one that works well. LendingTree doesn’t charge any application fees or loan origination fees. The closing costs, processing fees and other loan fees vary from lender to lender.
You have a three ways to apply for a home equity loan with Citibank: online, by phone or at a local branch. This big-name lender offers home equity loans and home equity lines of credit (HELOC).
Both loan options include no application fees, no points and no closing costs, although you can choose to pay closing costs for some home loans in exchange for a rate reduction of 0.25%–0.50%. Closing costs range from 2–, 527, and Citibank charges an annual fee during the draw period of a HELOC.
HELOC rates are variable and range from 0.59% plus the prime rate to 3.74% plus the prime rate. Fixed-rate home equity loans have an APR that ranges from 5.99%–7.99%. If you choose to have your payments automatically deducted from your bank account, you qualify for lower interest rates than people who opt for another payment method.
In 2015, the Wells Fargo home equity loan phased out of the lender’s line of financial products. Instead, the company switched to only offering HELOCs. It offers several loan types, including a standard line of credit with a variable rate and several lines of credit that feature a fixed-rate advance (FRA) for a specific period before rolling into a variable rate. To understand how Wells Fargo HELOC options work, consider the following table. Rates are based on a borrower with a credit score of 740 who lives in Philadelphia, Pennsylvania. The borrower’s home is worth $300, 000, he owes $100, 000 on his mortgage and he applies for a $100, 000 HELOC.
Wells Fargo offers a relationship discount if you have a Wells Fargo account and sign up for automatic payments. Wells Fargo also lowers your interest rates if you pay for closing costs. The amount that you qualify to borrow and the APRs depend on your credit history and the transaction details.
Third Federal has been providing mortgage and savings products since 1938 when Ben and Gerome Stefanski founded it in Cleveland, Ohio. Third Federal offers several options if you’re looking for a home loan, including fixed-rate home equity loans with 5- and 10-year terms, HELOC and a 5/1 adjustable equity loan, which features a fixed rate for the first 5 years. Home equity loans and HELOCs are offered in the following states:
- North Carolina
- New Jersey
One of the features that makes Third Federal special is its Lowest Rate Guarantee. If you find a rate lower than the one it offers you, it either matches that rate or pays you , 000. Third Federal charges variable APRs determined by your creditworthiness and the details of your loan.
With its online rate estimate tool, U.S. Bank makes it fast and easy to get an approximation of the rates available based on the value of your home, where you live and the amount of money you want to borrow.
Apply for a U.S. Bank HELOC, which has a variable APR, or a fixed-rate home equity installment loan with a term of 5, 10, 15, 20 or 30 years. Variable rates typically range from 3.99%–8.24%. Fixed rates range from 5.99%–8.49%. The application process is simple to complete online.
To apply, you need to be age 18 or older, a legal U.S. resident and a current homeowner. The application asks for information about your current mortgage, the estimated value of your home, your Social Security number, the annual household income and your employer’s information.
Bank of America
Like Wells Fargo, the Bank of America home equity loan offerings were discontinued in 2015. As a borrower, you now have access to the Bank of America HELOC, which features a 10-year draw period and a 20-year repayment term. You can request , 000–, 000, 000 for a primary home and up to 0, 000 for a second home. The lender has zero application fees, no fees for making transfers using online banking, no closing costs on HELOCs of , 000, 000 or less and no fee to convert a variable rate HELOC to a fixed-rate loan option.
The fixed-rate loan option lets you convert all or a portion of your Bank of America HELOC to a loan with a fixed rate and predictable monthly payments for the term of the loan. Additionally, members of Bank of America’s Preferred Rewards program qualify for APR discounts of 0.125%–0.375% based on their reward level. Bank of America bases its reward levels on the combined balances in your BOA banking accounts and Merrill Edge or Merrill Lynch Investment accounts. Levels include:
- Gold: Members carry average combined balances of $20, 000–$50, 000
- Platinum: Members carry average balances of $50, 000–$100, 000
- Platinum Honors: Members carry average combined balances of more than $100, 000
Chase is a big-name lender with more than 5, 000 branches in 25 states. With no closing costs, easy online banking and rate discounts ranging from 0.25%–0.50% just for having a Chase checking account, Chase offers reasonable terms and a healthy dose of convenience when you borrow here. This lender consistently receives high ratings for its stellar customer service and easy application process.
There’s no option for a Chase home equity loan, but the Chase HELOC loan offers competitive terms if you have a good loan-to-value ratio. Chase’s Fixed Rate Lock option lets you convert all or a portion of your HELOC to a fixed rate with predictable payments and no extra fees.
Home Equity Loans Basics
Before you start shopping for a home equity loan, it’s helpful to understand exactly how this type of loan works. Read on to learn more about the types of home equity loans available and what to expect when you apply.
What Is a Home Equity Loan?
Even the top unsecured loans can’t beat home equity loans for borrowing power, low APRs and long repayment terms. Often called “second mortgages, ” these loans allow you to access the cash value of the difference between the fair market value of your home and the balance of your mortgage.
For example, if you have a home with a fair market value of $300, 000 and a mortgage balance of $100, 000, then you have a total of $200, 000 in equity. You can apply for a loan to borrow against that equity.
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I agree with Michael Cheng. If you have a great credit score, stable, verifiable income, verifiable cash on hand or assets, you are a dream client. By comparison shopping, you will be able to obtain a Loan Estimate from at least three different types of lenders: Talk with the mortgage department of where you currently bank. You already have a banking relationship with them. This is a good place to start. Next, apply with a local, licensed non-bank mortgage lender. Somebody located in the town in which you live. Last, apply with a local mortgage broker.