Homeowners often overlook the significant financial advantage they have: their home’s equity. Home equity is the difference between the current market value of your home and the outstanding balance on your mortgage.
If your home’s value has increased, or if you’ve paid down your mortgage significantly, you may be sitting on a valuable financial resource that can be used for other needs, such as home improvements, debt consolidation, or emergency expenses.
One of the most popular ways to tap into this equity is through a home equity loan.
In this comprehensive guide, we will explore the top 10 home equity loans for homeowners in 2024. These loans come with varying terms, interest rates, and eligibility requirements.
By understanding your options, you can make an informed decision about which lender and loan type is best for your specific needs.
What is a Home Equity Loan?
Top 10 Most Popular Online Universities
A home equity loan, also known as a second mortgage, is a type of loan where the borrower uses the equity in their home as collateral. Home equity loans are typically available in two forms:
- Traditional Home Equity Loan: This loan provides a lump sum of money that is paid back over time with a fixed interest rate and fixed monthly payments.
- Home Equity Line of Credit (HELOC): A revolving line of credit that allows you to borrow as needed up to a certain limit, with a variable interest rate.
In both cases, the loan is secured against your home, which means that if you default, the lender can seize your property to recover the debt.
Why Consider a Home Equity Loan?
Home equity loans can be a great option for homeowners who need funds for large expenses or projects, such as:
- Home Improvements: Increase the value of your property with renovations or repairs.
- Debt Consolidation: Pay off higher-interest debt with a lower-interest home equity loan.
- Major Purchases: Finance big-ticket items like a new car or education expenses.
- Emergency Expenses: Cover unforeseen medical bills or urgent financial needs.
Because these loans use your home as collateral, they tend to offer lower interest rates than other unsecured loans. However, they also carry more risk—if you fail to repay the loan, the lender could foreclose on your home.
Top 10 Home Equity Loans for Homeowners (2024)
In this section, we will dive into some of the best home equity loan options available for homeowners in 2024. Whether you’re looking for the best rates, the most flexible terms, or the simplest approval process, there’s an option for you.
1. SoFi Home Equity Loans
Best for Fast Online Approval and Low Fees
SoFi is a leading online lender that offers home equity loans with some of the most competitive interest rates and flexible terms in the industry.
The company is known for its user-friendly platform, which allows borrowers to apply for and manage their loans online.
Key Features:
- APR: Starting at 5.74% for fixed-rate loans.
- Loan Amounts: From $5,000 to $500,000.
- Loan Terms: Available for 5, 10, 15, or 20 years.
- Eligibility Requirements: Requires a minimum 680 credit score, 15% to 20% equity in your home, and stable income.
Pros:
- No origination fees or prepayment penalties.
- Flexible loan amounts and terms.
- Competitive interest rates, especially for borrowers with excellent credit.
- Fast online application and approval process.
Cons:
- Best rates are available only to those with excellent credit.
- Not available in all states.
SoFi is a great choice for homeowners who want a simple, quick, and cost-effective way to access their home equity.
2. Discover Home Equity Loans
Top 10 Universities Offering Flexible Online Degrees
Best for Clear Terms and No Fees
Discover is well-known for its transparency and no-hidden-fee policy. Their home equity loans are straightforward, with no application fees, appraisal fees, or closing costs.
Key Features:
- APR: Starting at 5.99%.
- Loan Amounts: From $35,000 to $200,000.
- Loan Terms: Available for 10 to 30 years.
- Eligibility Requirements: Requires a minimum 620 credit score and sufficient home equity.
Pros:
- Fixed interest rates and predictable payments.
- No application, appraisal, or closing fees.
- Fast approval and funding.
Cons:
- Higher rates for borrowers with less-than-perfect credit.
- Limited loan amounts compared to other lenders.
Discover offers a straightforward option for homeowners who value transparency and low fees.
3. LendingTree Home Equity Loans
Best for Comparing Multiple Lenders
LendingTree is not a direct lender, but rather a loan marketplace that allows you to compare home equity loan offers from multiple lenders. This platform is ideal for homeowners who want to shop around for the best rates and terms.
Key Features:
- APR: Rates vary by lender, but typically start around 5.5%.
- Loan Amounts: Varies by lender, but generally from $10,000 to $500,000.
- Loan Terms: Typically 5 to 30 years.
- Eligibility Requirements: Lenders set their own eligibility criteria.
Pros:
- Ability to compare multiple loan offers in one place.
- Access to a wide variety of lenders with different loan amounts and terms.
- Free to use with no commitment.
Cons:
- Rates and terms vary significantly by lender.
- Additional time may be needed to review and select offers.
LendingTree is perfect for borrowers who want to explore different options and find the best home equity loan deal for their situation.
4. Best Egg Home Equity Loans
Best for Quick Online Application and Funding
Best Egg is an online lender that provides home equity loans with competitive rates and flexible terms. Known for its simple application process and fast funding, Best Egg is an excellent choice for homeowners who need quick access to funds.
Key Features:
- APR: Starting at 5.99%.
- Loan Amounts: From $5,000 to $500,000.
- Loan Terms: Available for 5 to 20 years.
- Eligibility Requirements: Requires a minimum 620 credit score, proof of income, and sufficient home equity.
Pros:
- Fast application process with funding often available in as little as 1-2 weeks.
- Competitive rates and flexible loan terms.
- No prepayment penalties.
Cons:
- Origination fees may apply (around 0.99% to 5.99%).
- Higher interest rates for borrowers with lower credit scores.
Best Egg offers a fast and efficient way for homeowners to secure a home equity loan with minimal hassle.
5. Wells Fargo Home Equity Loans
Best 10 Universities by Country
Best for Existing Customers and Low Fees
Wells Fargo offers home equity loans with competitive rates, especially for existing customers. With no application fees or closing costs, Wells Fargo is an excellent choice for those who already bank with them.
Key Features:
- APR: Starting at 6.00%.
- Loan Amounts: From $10,000 to $500,000.
- Loan Terms: Available for 5 to 30 years.
- Eligibility Requirements: Requires a minimum 660 credit score and sufficient home equity.
Pros:
- No application, appraisal, or closing fees.
- Convenient for existing Wells Fargo customers.
- Access to both fixed-rate and variable-rate options.
Cons:
- Best rates available to existing Wells Fargo customers.
- Higher rates for those with less-than-perfect credit.
Wells Fargo is a solid option for those who want a straightforward home equity loan with no hidden fees and great customer support.
6. HomePoint Financial
Best for Large Loan Amounts
HomePoint Financial specializes in home equity loans and offers competitive rates for large loan amounts, making it a great choice for homeowners looking to tap into significant home equity.
Key Features:
- APR: Starting at 5.75%.
- Loan Amounts: From $50,000 to $750,000.
- Loan Terms: Available for 5 to 30 years.
- Eligibility Requirements: Requires a minimum 620 credit score and adequate equity in your home.
Pros:
- Offers large loan amounts (up to $750,000).
- Fixed-rate options with flexible terms.
- No prepayment penalties.
Cons:
- High credit score required for best rates.
- Loan terms and conditions can be more complex than some other lenders.
HomePoint Financial is an excellent choice for homeowners who need larger loan amounts and are comfortable navigating a more detailed application process.
7. Citizens Bank Home Equity Loans
Top 10 Universities for MBA in the World
Best for Low-Interest Options with Flexible Terms
Citizens Bank offers a range of home equity loans and lines of credit with competitive rates and flexible repayment terms. This makes them a solid choice for homeowners seeking affordability and flexibility.
Key Features:
- APR: Starting at 5.74%.
- Loan Amounts: From $10,000 to $500,000.
- Loan Terms: Available for 5 to 30 years.
- Eligibility Requirements: Requires a minimum 620 credit score and a steady income.
Pros:
- Competitive interest rates and no application fees.
- Flexible loan terms with both fixed and variable rate options.
- Quick online application process.
Cons:
- Best rates available only to borrowers with higher credit scores.
- Not available in all states.
Citizens Bank offers a solid combination of low rates, flexibility, and fast funding for homeowners who meet the eligibility requirements.
8. PNC Bank Home Equity Loans
Best for Long-Term Loan Options
PNC offers a range of home equity loans with longer repayment periods, making them an attractive option for homeowners who need lower monthly payments and longer terms.
Key Features:
- APR: Starting at 6.99%.
- Loan Amounts: From $10,000 to $500,000.
- Loan Terms: Available for 5 to 30 years.
- Eligibility Requirements: Requires a minimum 660 credit score and adequate home equity.
Pros:
- No application fees.
- Long loan terms available (up to 30 years).
- Fixed and variable interest rate options.
Cons:
- Higher interest rates for those with lower credit scores.
- Limited loan amounts for smaller needs.
PNC Bank is a good option for homeowners who need a longer repayment term to keep their monthly payments affordable.
9. KeyBank Home Equity Loans
Best for Personalized Service and Expert Guidance
KeyBank offers personalized home equity loans with competitive rates. This lender is known for providing excellent customer service and expert advice to help borrowers navigate the process.
Key Features:
- APR: Starting at 6.00%.
- Loan Amounts: From $10,000 to $500,000.
- Loan Terms: Available for 5 to 30 years.
- Eligibility Requirements: Requires a minimum 620 credit score and a stable income.
Pros:
- Personalized service with expert guidance.
- Fixed-rate loans with no prepayment penalties.
- Flexible loan terms and amounts.
Cons:
- Higher rates for borrowers with lower credit scores.
- May take longer to process than some online lenders.
KeyBank is a great choice for homeowners who want more personalized service and professional advice during the loan application process.
10. SunTrust (now Truist) Home Equity Loans
Top 10 Affordable Online Universities
Best for Large Home Equity Lines of Credit
SunTrust (now Truist) offers home equity loans and lines of credit with some of the most favorable rates for larger loans. Truist’s products are designed to meet the needs of homeowners seeking to borrow substantial amounts.
Key Features:
- APR: Starting at 6.00%.
- Loan Amounts: From $25,000 to $500,000.
- Loan Terms: Available for 5 to 30 years.
- Eligibility Requirements: Requires a minimum 620 credit score and a strong equity position.
Pros:
- High loan limits (up to $500,000).
- Fast online application process.
- Low fees and no prepayment penalties.
Cons:
- Best rates are available for those with excellent credit.
- Somewhat more complex for first-time borrowers.
SunTrust is an excellent choice for homeowners who need larger amounts of home equity financing, offering competitive rates and flexible loan options.
Conclusion: Choosing the Right Home Equity Loan
In 2024, homeowners have numerous options for securing a home equity loan. The best loan for you will depend on factors like your credit score, how much equity you have in your home, and your specific financial goals.
Whether you’re looking for a low-rate, long-term loan, or need access to a large line of credit, the lenders listed above offer excellent choices.
Before applying for a home equity loan, take the time to research your options, compare rates, and assess your eligibility.
By doing so, you can ensure that you’re choosing a loan that best meets your financial needs and long-term goals.
Frequently Asked Questions (FAQs)
1. What is the difference between a home equity loan and a HELOC?
A home equity loan provides a lump sum of money with a fixed interest rate and fixed monthly payments.A HELOC (Home Equity Line of Credit) is a revolving line of credit that allows you to borrow as needed, with a variable interest rate.
2. Can I use a home equity loan for anything?
Yes, you can use the funds from a home equity loan for various purposes, including home improvements, debt consolidation, major purchases, or even medical expenses. However, it’s important to remember that the loan is secured by your home.
3. How do I qualify for a home equity loan?
Lenders typically require a minimum credit score of 620, sufficient equity in your home (usually 15% to 20%), and a stable income. Lenders may also consider your debt-to-income ratio.
4. Are home equity loans tax-deductible?
In some cases, the interest on a home equity loan may be tax-deductible if the funds are used for home improvement. However, it’s important to consult a tax professional for specifics.
5. What are the risks of a home equity loan?
The primary risk of a home equity loan is that it is secured by your home. If you fail to repay the loan, the lender can foreclose on your property. Therefore, it’s essential to ensure that you can manage the monthly payments before taking out a home equity loan.