Home Equity Loans: Reviews & Comparisons
Are you considering taking out a loan to gain access to the equity in your home? Home equity loans can be a great way to pay for education, make home improvements, consolidate debt, and more.
How should you compare home equity loans?
With so many lenders to choose from, finding the best option for your circumstances can be a challenge. The first step is to find lenders with excellent company rating and consumer reviews. But that’s just the beginning.
Here are the questions you should ask to narrow down your options.
What are the lender’s home equity loan requirements?
Most lenders require you to have at least 20% in home equity, solid proof of income, and a credit score of 680 to qualify for a home equity loan. However, requirements will vary from one lender to the next so compare the requirements before applying to find those that match your situation.
How much does the lender charge in fees for a home equity loan?
Home equity loans can come with a small army of fees. These fees are particularly common:
- Application fee: Covers the costs of reviewing, considering, and processing an application.
- Origination fee: Paid to initiate the loan and often ranges from 0.5% to 2% of the loan amount.
- Appraisal fee: Covers the cost of having the home appraised by a professional to determine the home’s value.
- Broker fee: Paid if you hire a broker to help you find and get a home equity loan.
- Document preparation fee: Covers the cost to prepare any loan-related documents.
- Prepayment fee: Covers the amount a lender loses in interest if you pay off your loan early.
The fees will vary from one lender to the next in terms of the types of fees charged and the amounts. Be sure to be diligent when reviewing them to ensure you factor everything into the loan.
What interest rates does the home equity lender offer?
Home equity loans typically come with fixed interest rates, meaning you pay equal monthly payments over a fixed term. The interest rate will be expressed as an annual percentage rate (APR) which encompasses interest, financing charges, and points.
Lenders will typically advertise a range of APRs. The rate you receive will depend on the lender’s approval criteria, which can include your credit score and income. The housing market and the equity in your home also play a role.
However, you should always get quotes from multiple home equity lenders and compare them to find the best deal.
What loan terms are available through the home equity lender?
A loan term is the amount of time you are given to repay a loan. In the case of home equity loans, terms often range from five to 30 years. Be sure to check the loan terms available from a lender and ensure they suit your situation. The longer the term, the lower the monthly payment amount but the higher the overall interest cost.
How much will the home equity lender let you borrow?
The loan amount offered to you will vary from one lender to the next because each company defines its unique loan amount range and set of criteria. According to the Federal Trade Commission, most loans max out at around 85% of your available equity. However, the amount you can get will also depend on personal factors such as your credit report, income, etc. Again, it’s a good idea to get quotes from a few lenders to find out what loan amounts are available to you. Then, you can pick the one that best suits your needs.
What is the home equity lender’s funding time?
A home equity lender’s time-to-funding is how long it takes them to deliver the money to you after approving your loan. If time is of the essence with your loan, this will be an important factor to check.
What do home equity loans reviews say about their customer service?
Your experience with a home equity loan matters. Look for lenders who makes it easy and convenient to apply, originate, repay, and manage the loan. User-friendly online account dashboards, mobile apps, live chat services, and quality customer service all help to make the loan process more enjoyable.
Check what other borrowers say about lenders by reading SuperMoney’s free home equity loan reviews and company ratings.
Find the best home equity loan for your needs
Now you know what to ask when comparing home equity lenders but where should you start? Below you’ll find SuperMoney’s carefully curated list of home equity lenders. The list is complete with real-user reviews, APR ranges, loan amounts, and loan terms. To learn more about any lender, simply click the name to read our in-depth review.
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