Understanding Home Equity Loans

Understanding Home Equity Loans

If you have plans to take a home equity loan or you would want more information on how the loans work and some of the best providers, you need to read this article. You will also learn more about home equity loans options available and products that will meet your needs. Some of the factors that most loan applicants consider include the minimum down payments, online resources available, closing time, rates applied, and the face to face services provided.

Different Uses of Home Equity Loans

Home equity loans can help to improve your financial position. However, it is recommendable to take the loan only if you have plans of how to use it. There are numerous ways that you can use a home equity loan, but this will depend on how much you owe your primary mortgage lender. The following are some of the main ways you can use the loan:

  • Home Improvements.

It is one of the most common uses of a home equity loan. Home improvements help to improve the value of a property, which is important if you intend to sell the property soon. For example, you should consider using a home equity loan to buy carpets or new floors for your bathroom or kitchen.

  • Paying Tuition Fees.

It is another common way of spending a home equity loan. You can apply for a loan to pay for your child’s education. However, you should check whether there are other more affordable options before you pay tuition fees using this type of loan.

  • Debt Payment.

If you have credit card bills that you would like to pay, a home equity loan is one of the options you should consider. Taking a home equity loan for debt consolidation is suitable for individuals with good credit scores.

Shopping for Home Equity Loans.

Most mortgage lenders and banks also offer home equity loans to their clients. However, it will depend on a lender. You can also get the loans by visiting local bank branches and mortgage brokers in your area. Below is a list of home equity loan providers you can consider if you need the loan:

1. Regions Bank.

It a suitable option if you need a loan for paying credit card bills or other debts and do not have a lot of equity. One of the reasons why the lender is considered as one of the best is that it offers low-interest rates on loans. You can get a home equity loan from the company at an interest rate of as low as 4.125%. One of the challenges of individuals who may want to take a loan from Regions is inaccessibility as only those people residing in areas with a Regions branch can secure a loan.

2. TD Bank.

It is a perfect choice if you need a loan to finance different home improvement projects. TD Bank is ranked as one of the best as it allows applicants with high loan balances, offers competitive interest rates, and clients have a wide variety of terms when taking a loan.

You can secure a loan from the lender at a low-interest rate, which starts from 4.49%. However, only residents in areas near a TD Bank branch can benefit from the company’s home equity loans.

3. Discover.

The financial institution allows customers to apply for home equity loans for different uses, including personal expenses, mortgage refinancing, and debt consolidation. Some of the things that make the institution a popular choice among home equity loan borrowers include multiple repayment terms for loans, no application fees are charged, and it has convenient online tools that customers can use.

You cannot access the services of Discover if you are in Texas and Iowa residents cannot access. Another drawback for customers is that loans are only issued at fixed rates. Discover charges between 2% to 5% of the loan as closing costs.

4. LoanDepot.

The financial institution has branches in all states. One of the exciting provisions of LoanDepot is that no lender fees are charged if a borrower intends to refinance a mortgage that was acquired through the company. The lender has an online platform where customers can apply for a loan or find a branch near them. One of the drawbacks for potential clients is that the firm does not disclose eligibility requirements.

5. Figure.

You can secure a home equity loan of up to $150,000 from the institution which you can repay for up to 15 years. Customers can inquire about the services offered by the company easily as it has a live-chat customer service platform. There are no user fees applicable to home equity loans.

However, you only qualify for the loan if your loan to value ratio is 80% or less. Other drawbacks for customers include having a minimum credit score of 680 and a 3% origination fee that is charged during an application. Qualified loan applicants can use the loan to finance different home improvement projects and any other purchases.

6. U.S. Bank.

You can get a home equity loan from the lender and repay in flexible terms for up to 30 years. The financial institution offers a 10-year home equity loan at an interest rate of 5.49% and 5.74% if you have plans to repay the loan in 15 years. Customers can borrow up to $750,000 through the bank’s online platform at the
comfort of their home.

Other reasons why the bank is ranked among the best is that it has adopted several measures to ensure high
levels of customer satisfaction. Borrowers are also not required to pay any closing or annual fees, and it does not have a mandatory origination fee.

7. PenFed Credit Union.

You can apply for home equity loans from the company and repay the amount for up to 20 years if you have a maximum loan balance of $400,000. Customers can contact the company through its online portal, and some may be exempted from paying closing costs. Another exciting provision of the lender is that you can pay a loan at an interest rate of as low as 5.34%. You can secure a loan even if you have a loan to value ratio of 90%. However, there are better terms for individuals with a loan to volume ratio of not more than 80%.

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