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7 best home equity loans and rates

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If your home goes up in value, if you make a large down payment, or if you pay off your mortgage, you are building equity in your home. Home equity is the difference between the value of your home and what it is owed.

Home equity loans allow you to borrow against the equity in your home, giving you access to the money locked in your home. They often have lower interest rates than other types of debt because the loans are secured by your home.

Lenders have different interest rates, eligibility requirements, and loan repayment periods that you should consider. This guide will help you compare your options and learn more about how home equity loans work.

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Lowest current average rate on home equity

4.14% Based on the lowest rates from 6 lenders, as of March 1, 2021

Best Home Equity Loan Companies

Below are reviews of our picks for the best home equity loans. You can click on a link below to access this lender’s review:

Spring EQ Home Equity Loan

Better: Online lender

terms

10, 12, 15, 20, 30 years old

Spring equalizer operates in 36 states and Washington, DC The lender promises fast financing for qualified borrowers, but only home equity loans are available. Some of the key things to know about Spring EQ are as follows.

  • Interest rate: From 6.51%
  • Loan limits: $ 2,000 at $ 500,000
  • Loan repayment terms: 5 to 30 years
  • Maximum loan / value ratio: 100%
  • Fresh: Original fees from $ 700 to $ 2,000

TD Bank Home Equity Loan

Better: Bank

Interest rate

4.39%10.26%

TD Bank operates in Connecticut, Delaware, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York State, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and Washington DC Some of the Key Features of Home TD Bank Equity Loans include the following.

  • Interest rate: From 4.79%
  • Loan limits: From $ 25,000
  • Loan repayment terms: 5 to 30 years
  • Maximum loan / value ratio: 80%
  • Fresh: $ 99 original fee

Discover Home Equity Loan Review

Interest rate

4.99%11.99% Fixed APR

terms

10, 12, 15, 20, 30 years old

Discover does home equity loans available to borrowers with a credit score of 620 or more who have verifiable employment and income as well as sufficient home equity. Here are some of the top things you need to know about Home Equity Loans from Discover.

  • Interest rate: From 4.99%
  • Loan limits: $ 35,000 at $ 150,000
  • Loan repayment terms: 10 to 30 years
  • Maximum loan / value ratio: 95%
  • Fresh: Nothing

Bank of the regions home equity loan

Interest rate

4.125%11.75%

Regions Bank provides loans to customers in the South, Midwest and Texas, where the bank operates local branches. If you are an existing Regions customer and signed up for Relationship Rewards, you can earn points by opening a home equity loan with Regions. Some of the key things to know about Regional Bank home equity loans are as follows.

  • Interest rate: From 4.125%
  • Loan limits: $ 10,000 at $ 250,000
  • Loan repayment terms: 7 to 15 years
  • Maximum loan / value ratio: 89%
  • Fresh: Nothing

PNC Home Equity Loan

Interest rate

Rates as low as 3.74% APR*

terms

5, 10, 15, 20, 25, 30 years old

PNC operates at 2,400 locations in 21 states as well as in the District of Columbia. It offers home equity loans, as well as a quick home equity refinance product. Here are some key details you need to know about PNC Bank home equity loans.

  • Interest rate: From 3.74%*
  • Loan limits: $ 1,000 at $ 150,000
  • Loan repayment terms: 5 to 30 years
  • Maximum loan / value ratio: 89.9%
  • Fresh: $ 12 to $ 250 original fees may be required

* This APR was provided for a person living in zip code 07030.

Temporarily suspended.

Interest rate

Rates as low as 5.75% APR

terms

5, 10, 15 or 20 years old

Navy Federal Credit Union offers home equity loans to members of credit unions. You must be a member of the military, a veteran, or a family member to be eligible for a home equity loan with the Navy Federal Credit Union. Here are some of the main features to know.

  • Interest rate: From 5.75%
  • Loan limits: $ 10,000 at $ 500,000
  • Loan repayment terms: 5 to 20 years
  • Maximum loan / value ratio: 100%
  • Fresh: Nothing

Citizens Bank Home Equity Loan Review

Interest rate

Rates as low as 5.24% APR

Citizens Bank is the third largest retail bank in the United States. It operates in 11 states in the New England, Mid-Atlantic and Midwest regions and offers home equity loans. Here are some key features of Citizens Bank home equity loans.

  • Interest rate: From 5.24%
  • Loan limits: $ 10,000 at $ 400,000 +
  • Loan repayment terms: 10 to 20 years
  • Fresh: Nothing

How to find the best home equity loan rates

When shopping for a home equity loan, you should always take steps to try and find the best interest rate possible. It will reduce your costs. Here are some tips for finding the best rates:

  • Watch the evolution of interest rates: Interest rates can change over time, either because of economic conditions or because financial institutions change the special promotions they offer. Make sure to monitor interest rate trends and see how rates change over time.
  • Improve Your Credit Before Applying: Borrowers with high credit scores are offered loans at lower interest rates. Work on improving your credit score by paying off debt, paying bills on time, correcting errors on your credit report, and avoiding opening too many new types of credit before getting your home equity loan. (Find out how to qualify for a home equity loan with bad credit)
  • Compare the prices: There is often a lot of variation in rates from one lender to another. Compare the rates of several lenders to find the best deal for your situation. Try to get at least three quotes, but look for lenders who do credit checks rather than do a thorough investigation of your credit report. Too many inquiries could hurt your credit.

>> Read more: Home equity loan requirements

Fixed rate vs variable rate: which is better?

There is no one right answer to whether you should go with a fixed or variable rate home equity loan.

  • Floating rate loans are loans whose interest rate is linked to a financial index. The rate usually starts below the cost of a fixed rate loan, but can go up or down over time. As the rate changes, your interest payments will change.
  • Fixed rate loans have the same rate throughout the life of the loan. While this rate may be higher than the starting rate for variable rate options, you don’t have to worry about it increasing over time. These loans provide stability and certainty because you will know the required monthly payments and other costs up front.

If you think interest rates might drop in the future, you can go with an adjustable rate loan, but you run the risk of your rate going up and payments becoming potentially unaffordable. Variable rate loans can also be a good option if you plan to sell your home soon after borrowing, as you could benefit from the low introductory rate and sell before rates rise. However, if you are unable to sell the house, you could end up with unaffordable payments.

If you want to be sure and know your costs up front, a fixed rate loan is a safer option.

Home equity borrowing limits

Most banks and lenders do not allow you to borrow 100% of the value of your home. Your combined loans against your home, including mortgages and home equity loans, typically can’t exceed 80-90% of your home’s value. This is called your loan to value ratio (LTV).

To determine the current value of your home, banks will want a recent appraisal. You can then borrow a percentage of that market value. If your home is valued at $ 200,000 and you owe $ 140,000, your home equity is currently worth $ 60,000.

However, you cannot borrow all of the $ 60,000. If you are allowed to borrow up to 90% of the value of your home, your total combined loan balances cannot exceed $ 180,000 (90% of the total value of the home). Since you already owe $ 140,000, you can only borrow $ 40,000 more.

Lenders may also have maximum or minimum loan balances for their home equity loans, which could also limit the amount you are allowed to borrow.

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