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Best Lenders for Home Equity Loans
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June 14, 2018 / Hollie Shuttlewood.
Best Lenders for Home Equity Loans
June 14, 2018 / Hollie Shuttlewood.
If you’re a home owner and find yourself in need of a large amount of cash to fund a major expense such as a renovation, medical expenses, or your kids’ college tuition, one type of loan you should consider is a home equity loan.
Top 3 Lenders for Home Equity Loans

Closing costs for HELs usually reach around 2-5% of the loan amount. As with first mortgages, lenders are open to negotiating the closing costs, so always make sure to speak to a few of the best lenders before applying for a home equity loan.

#1
Years of operation: 22 | States: 50 | Annual Closed Mortgage Volume: | NA

Pros
  • + Free service
  • + Compare multiple HEL lenders
  • + Handy educational resources
Cons
  • - Not a direct lender
  • - Rates shown only by entering contact details
  • - Calls from multiple lenders
LendingTree is an online loans marketplace that connects borrowers to the best HELs and other types of mortgages and reverse mortgages from a network of trusted lenders. It’s free and easy to use the Lending Tree online platform, and quotes are displayed within a few seconds of completing the short online form. Just enter some basic details about your home’s value, the amount of equity you have in your home, and the loan amount you’re looking for, and Lending Tree will show you the cheapest rates.
mortgages.crosscountry
#3
Years of operation: 33 | States: 50 | Annual Closed Mortgage Volume: | $90 billion +

Pros
  • + Quick application process
  • + Nation’s largest FHA lender
  • + Handy educational resources
Cons
  • - Live chat only available in business hours
  • - Rates aren’t always lowest
Quicken Loans is one of the nation’s largest lenders, offering a whole range of loans including home equity loans. It prides itself on approving loans quickly and with a minimum of fuss. Quicken provides HELs to residents of all 50 states and its loan agents are available to help you with your home equity loan over the phone or in person at the many branches located around the country.
What is a Home Equity Loan?
A home equity loan, or HEL, is a type of secured loan in which the borrower puts their home up as collateral. It is also known as a “second mortgage”, because it works in reverse to a traditional mortgage. In a traditional mortgage, the borrower pays the lender and the borrower’s home equity increases. With a HEL, or second mortgage, the lender pays the borrower a lump sum, and the borrower’s home equity decreases.
Another type of home equity loan worth considering is the home equity line of credit, or HELOC. Whereas a HEL is a fixed-rate loan paid in one lump sum, a HELOC is an adjustable-rate loan and is paid to the borrower up to an approved credit limit and on a per-needs basis.
Regular Home Loan HEL HELOC
Who makes payments? Borrower Lender Lender
Frequency of payments Monthly Lump sum Per borrower’s needs
Type of interest rate Fixed or adjustable Fixed Adjustable
Effect on borrower’s equity when payment is made Increases Decreases Decreases
Is home used as collateral? Yes Yes Yes
Regular Home Loan

Who makes payments?
Borrower
Frequency of payments
Monthly
Type of interest rate
Fixed or adjustable
Effect on borrower’s equity when payment is made
Increases
Is home used as collateral?
Yes
HEL

Who makes payments?
Lender
Frequency of payments
Lump sum
Type of interest rate
Fixed
Effect on borrower’s equity when payment is made
Decreases
Is home used as collateral?
Yes
HELOC

Who makes payments?
Lender
Frequency of payments
Per borrower’s needs
Type of interest rate
Adjustable
Effect on borrower’s equity when payment is made
Decreases
Is home used as collateral?
Yes
Who is Eligible for a Home Equity Loan?
Home equity loans are available to anyone who owns a significant portion of the equity in their home, set by most lenders at a minimum of at least 80-90% of equity. It can be applied to any major expense, including a home renovation or repair, medical expense, paying off credit card debt or other debts, or funding a child’s college tuition.
The process of applying for a HEL is roughly similar to that of applying for a first mortgage. Your lender will mostly likely inform you of the following requirements and limitations:
  • Your credit will be checked, although your score may have a lesser impact on your lender’s decision than it would for a regular mortgage or an unsecured loan.
  • You will need to have your home appraised, and your loan-to-value ratio (the ratio of equity or ownership you have in your home) will be closely examined when the lender makes its decision.
  • Depending on the lender’s examination and the loan amount you requested: some lenders may be willing to offer you a loan worth up to 125% of your home’s value, i.e. 1.25 times the value of your home.
Benefits of Home Equity Loans
HELs and other secured loans take a lot of the risk away from the lender and place it on the borrower. In return for assuming the risk, lenders are willing to offer borrowers better loans with a number of significant benefits. Here are just a few of the benefits HELs offer to borrowers:
  • Lenders are willing to overlook a less-than-perfect credit rating.
  • Rates are typically lower than for personal loans and other types of unsecured loans.
  • The payment periods are generally longer, giving you plenty of time to pay off the debt.
  • According to the IRS, if the home equity loan is used to buy, build or substantially improve the taxpayer’s home that secures the loan, interest paid to the lender is tax-deductible.
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