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By Edgar Nieves
Updated: February 10, 2021 12:31 PM ET | Originally published: February 26, 2020
Money; Getty Images

Do you need extra money to pay down high-interest debt, make home improvements, or cover unexpected medical costs?

You might have that extra cash right under your feet.

If you’ve been paying down your mortgage for years, you might have a nice chunk of equity in your home. Equity is the current market value of your home minus what you still owe on your mortgage.

So, if your place is worth $300,000 and you have $200,000 left to pay on your current mortgage loan, you have $100,000 of equity.

How to Tap Into Your Home’s Equity

That home equity could then be used to pay down debt or undertake renovations, among other things, but only if the equity is liquified through:

  • A cash-out refinance
  • A home equity line of credit (HELOC)
  • A home equity loan
  • Selling your home outright

(We’ll explore these types of loans below.)

“Home equity loans or mortgage refinance may make sense for current homeowners as they are secured debt and the average interest rate is typically lower than what you’ll pay on an average credit card or other form of unsecured debt,” according to Discover Home Loans.

The Best Home Equity Advice: Get Advice

The idea of accessing $50,000 or $100,000 in home equity is alluring, but you need to make sure it’s the right move to make, especially during tough times.

Home equity loans aren’t one-size-fits-all products. Their variables go beyond loan amounts, interest rates, and loan terms. Plus, your new loan options may depend on your current mortgage.

So you should work with an expert who can help you view all the pros and cons of each loan option.

“Don’t try to sort it through yourself,” says Troy Molitor, founder of Molitor Financial Group. “The best advice that I would say to people is get advice.”

If you’re interested in home equity loans or home equity lines of credit, we’ve rounded up the best lenders that can provide you with one.

The 5 Best Home Equity Loan Companies

A variety of different lenders offer home equity loans and home equity lines of credit (HELOCS). You can always start by requesting a quote from the company that wrote your primary mortgage — which some lenders will call your “first mortgage.”

But shop around – there’s no rule saying you have to take out a home equity loan or a HELOC from your original lender.

Below are some of the best companies that offer home equity loans and HELOCs.

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Best Home Equity Loan Company Reviews

We’ve gathered the five top picks for the best home equity loan companies. Learn more about them, why they made the list, and what types of home equity loans they offer.

Navy Federal Credit Union: Best Customer Experience

July 2 update: Navy Federal has temporarily stopped accepting new applications for home equity loans or lines of credit. Applications that were already accepted are not affected by this decision and are being processed.

Navy Federal is a credit union, which means it is a membership-owned financial corporation. In order to become a member of Navy Federal Credit Union, you have to meet certain criteria, namely being associated with the military.

If you’re eligible and want to apply for a HELOC or home equity loan, Navy Federal Credit Union is known for its attention to the customer experience. Navy Federal Credit Union ensures all of its customers have a smooth application process through HomeSquad, a customized digital experience that you can use to apply for your home equity loan. It will create a checklist for you to help keep your paperwork organized, and you’ll have team members helping you every step of the way.

This system of combining technology with personalized attention helped Navy Federal Credit Union earn a spot on this list.

Figure: Fastest Approval and Funding

If you want to get a home equity line of credit quickly, try Figure. Figure is a newer mortgage company that offers mortgage refinance loans as well as HELOCs. However, it does not offer home equity loans at this time.

You can apply for a HELOC in five minutes, and Figure even offers same-day approval. You can get funding in as little as five days as well. According to Figure, obtaining a traditional HELOC could take 30 to 45 days, so it truly is among the fastest in the industry. The lender offers an online notary feature to help make the closing smooth and completely online.

Keep in mind, though, speed doesn’t always mean the lowest rates. If you have time to shop around, it’s wise to do so. Figure does have some fees that other lenders don’t, a tradeoff for its quick approval time. Interest rates will start at 3.49% for borrowers with excellent credit, plus a 4.99% origination fee. It depends on your priorities, and if getting a HELOC as quickly as possible is one of yours, Figure might be a good fit for you.

Discover Home Loans: Best Cost Transparency

Discover Home Loans has been around for more than 30 years. It made the list because it has a commitment to transparency when it comes to home equity loan fees. This means no surprise charges for borrowers.

With Discover Home Loans you can access from $35,000 up to a maximum of $200,000 of home equity. Interest rates are fixed and will start at 3.99% and go as high as 8.99% for first liens and 11.99% for second liens, although these rates are subject to change without notice. You can easily see if you qualify by providing some basic information before you formally apply for a home equity loan. Closing on your loan won’t be a problem either, as Discover’s eClosing feature allows for the electronic signing of many closing related documents prior to the physical closing, and should be available nationwide by the end of May.

Discover Home Loans also offers a range of repayment plans, from 10 to 30 years of fixed payments. You should have good credit and adequate equity in your home before applying for a Discover home equity loan. Once you do, you’ll get assigned a banker who will help you through the application process. At the moment Discover Home Loans does not offer HELOCs.

Regions Bank: Highest Customer Satisfaction

According to the 2019 J.D. Power and Associates U.S. Home Equity Line of Credit Satisfaction Study, Regions Bank took the top honors, beating out national industry heavyweights. This study rated loan offerings and terms, customer interaction, the billing process, and more.

Regions Bank offers a fixed introductory rate of 0.99% for the first six months of a HELOC, with rates shifting to adjustable after the introductory period. Adjustable interest rates range between 3.75% and 10.38%, with a maximum cap at 18%. An interesting feature of the Regions Bank HELOC is its Loan in a Line option, which allows you to convert part or all of your remaining adjustable rate loan balance into a fixed rate loan.

In addition to HELOCs, Regions Bank also offers home equity loans. In fact, it has a handy tool that helps you decide which loan product might be best for you. Unfortunately, it doesn’t have branches in every state, and the property you take the loan out on must be located in a state where there are bank branches, but if you live near one, this could be a great option for you.

BB&T Review: Best Customer Perks

Ranked third in the 2019 J.D. Power and Associates U.S. Home Equity Line of Credit Satisfaction Study, BB&T offers both home equity loans and HELOCs. We value it as one of our top picks due to the great perks it offers.

For example, there is no prepayment penalty if you want to pay back your loan early. BB&T will also pay the appraisal fee for you to get the current value of your house, a benefit that could save you several hundred dollars. The company also has many different options when it comes to HELOCs, including both fixed-and variable-rate loans and no-closing-cost options.

How We Found the Best Home Equity Loan Companies

Not every mortgage lender offers home equity loans and HELOCs, so our first step was identifying which lenders carried one or both of these types of products.

Then, we checked the rankings on to see which companies came up first in a nationwide search for the best home equity loans.

We also relied heavily on the most up to date 2019 J.D. Power and Associates U.S. Home Equity Line of Credit Satisfaction Study.

Some other factors we considered were client satisfaction, customer service, variety of loan offerings, perks, price transparency, and overall customer experience.

Here’s why these qualities are important in a lender:

Price Transparency

When you take out a HELOC or home equity loan, you’re taking out a second mortgage. That means paperwork and fees. Some banks roll many of these fees into your loan so you might not notice them or feel their impact as much.

However, it’s still important to know about them so you can adequately compare lenders. That’s why we value lenders that are upfront about their fees and clearly state what they charge.

Client Satisfaction

Going through the process of getting a home equity loan can involve a lot of work. However, lenders can go a long way to ensure their clients are satisfied. They can also ensure excellent customer service and make the process as smooth as possible.

The lenders who made this list all put significant effort into customer satisfaction.

Customer Perks

Banks constantly compete against each other when it comes to interest rates and other perks, such as convenient account access, competitive fixed interest rates, and no prepayment penalty options.

Naturally, we ranked companies that provided the most customer friendly service advantages higher.

HELOC vs. Home Equity Loan vs. Cash-Out Refinance

Aside from selling your home, you can access your home equity in three ways:

  • Home equity lines of credit
  • Home equity loans
  • Cash-out refinancing loans

Each one of these lending products requires that you have equity in your home, but they are all have different strengths and weaknesses. You should consider all three options carefully before making a decision.

“Don’t limit your research to one product,” according to Discover Home Loans.

Your family and friends may share their good experiences with a loan type, but this doesn’t mean the same loan would work best for you.

“It is important to understand what features are the most meaningful for your individual financial situation,” Discover Loans says.


HELOC stands for home equity line of credit. This loan type resembles a credit card because you’d use the credit line only as needed. You wouldn’t get a lump sum payment or start out with a large mortgage balance.

Most HELOCs feature a variable interest rate, although some lenders on this list offer fixed-rate HELOCs.

  • Pro: HELOCs typically offer a low interest rate and are easy to get if you have a good credit history and adequate equity in your home.
  • Con: Payments can be variable and unpredictable depending on how much of your credit line that’s in use.

Home Equity Loan

A home equity loan is a lump-sum amount that you pay back in equal installments. You’d have a fixed interest rate and fixed monthly payments.

Rates are typically lower than a credit card or personal loan if you have a good credit score, but you will have to use your house as collateral.

A home equity loan is a second mortgage; you’ll still keep your first mortgage loan as well.

  • Pro: Home equity loans have fixed rates and repayment terms.
  • Con: You’d have two mortgage payments — the home equity loan and your first mortgage.

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with an entirely new mortgage.

Your new loan amount would be larger than your current mortgage balance. The new loan would pay off your existing loan and also generate additional cash which you’d keep.

You could use the cash on home improvements, debt consolidation, or just about any other purpose.

With this option, you wouldn’t have two mortgages, but getting this loan requires a more time-intensive process and could involve more fees and closing costs.

  • Pro: Your new loan could also lower your mortgage rates and/or loan term.
  • Con: Your new mortgage balance would be higher than your existing loan’s balance.

Determine the Best Option For Your Needs

You have options when it’s time to borrow against the equity in your home. Your job is to determine which is the best option for you.

That answer, according to Eddie Wilson, president of the American Association of Private Lenders, will depend on your situation.

“It really comes down to how you’re going to use the money, how much of the money you’re going to use, that actually determines what method to use,” he says.

It’s important to study all alternatives before choosing how to use your equity.

HELOC Pros & Cons

A HELOC offers flexibility and a reusable pool of money.

“The nice thing is that HELOCs give you the ability to expand and contract based on the money that’s needed, like a credit card,” says Wilson. You only pay interest on the funds you withdraw from your line of credit, so it could make for an excellent source of an emergency fund.

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Say you take out a $40,000 HELOC and use $10,000 for a needed home repair. You’ll pay interest only on the $10,000, while keeping $30,000 available. Once you pay down the $10,000, you’ll once again have $40,000 to use.

The key with HELOCs, according to Molitor and Wilson, is to only use what you need to use, and make sure you can pay that balance down within a reasonable period of time.

You should also know your HELOC’s draw period — the period in which you can withdraw money from the line of credit. At some point, usually in about 10 years, the draw period will end.

Also, some lenders may charge annual fees for their HELOCs. But compared to closing costs, the annual fee should be affordable.

Home Equity Loan Pros & Cons

A home equity loan may be an option if you need a lump sum to cover a specific debt or need. For example, if you have $40,000 worth of credit card debt at a high interest rate, a home equity loan could be a better option.

You could pay off that high interest debt and convert it into a lower interest loan that you pay off over a longer period of time with a lower monthly payment.

With a home equity loan, or second mortgage, know that you’ll have that additional monthly payment on top of your primary mortgage payments. While primary mortgages have insurance and other federal guarantees, second mortgages don’t. Make sure you can afford the additional payments.

Cash-Out Refinance Pros & Cons

As with a home equity loan, a cash-out refinance might be a good choice if you need a large amount of cash to pay off higher interest debt or take care of an unexpected medical bill or home repair, while reducing the interest rate on your primary mortgage.

Yes, the interest you pay on a cash-out refinance is tax deductible, and you may even be able to lower your monthly payments depending on your new loan rate and terms.

But by extending the term of your mortgage you may end up paying more in interest over the life of the loan.

However, if you also reduce the term of your loan while reducing interest, you can save on interest both in your monthly payments and in the long run over the life of the loan.

Since a cash-out refinance loan becomes your primary mortgage, you can find government-subsidized loans such as FHA and VA options. These loans can offer better rates or relaxed underwriting criteria in many cases. (Only veterans and active duty military members can use the VA loan program.)

Understanding All the Costs

Regardless of which option you eventually choose, make sure you understand all the costs associated with the loan or line of credit. If it’s an adjustable rate loan, be sure to understand that your monthly payments will change with current interest rates.

While mortgage rates remain low your monthly payments will be low. However, at some point those interest rates will start to go up, which means your monthly payments will also go up. You need to be able to afford those higher payments.

Find out about your loan’s rate increase caps before signing on.

If you’re unsure about how to proceed or which option is best for you, seek out an expert opinion.

“Don’t go where you feel like you’re being sold,” says Molitor. “Look for someone that’s going to educate you, give you options, and then you get to make a decision based on the information.”

Molitor said you should know the effects taking out equity in your home will have — not only now, but five or 10 years down the line.

As you compare loans, make sure you’re comparing the same types of loans with the same rate discounts and application fees. For example, some banks offer rate discounts when you have a savings account.

COVID-19 and the Home Equity Market

While lower interest rates led to a rush to refinance mortgages during early March and April, lenders have started to tighten their lending requirements. In recent weeks many of the major banks have stopped accepting new applications for cash-out refinance loans.

This credit tightening is due to a number of factors. The unemployment rate climbed to the highest rate in history, reaching 14.7% for the month of April, with over 23 million people out of work. With unemployment numbers changing weekly, lenders are having to request multiple employment verifications, some as late as the same day of closing, to ensure a borrower’s creditworthiness.

Other changes banks have been making include increasing the required minimum credit score, requiring a higher down payment, and placing caps on the amount of money the bank is willing to refinance.

HELOCs have also been affected by these stricter loan requirements. Not only are banks increasing credit score requirements, they’re also limiting the amount of money they will lend for a home equity loan as well as lowering the percentage of the home’s equity they are willing to lend.

Despite the difficulty in getting these types of loans, you can still find lenders who are accepting applications for both cash-out refinances and HELOCs although, according to both Molitor and Wilson it may be easier to access a HELOC at the moment. Before applying with any lender make sure what their requirements are to see if you qualify, and make sure the loan you’re applying is the right choice for your needs.

Important Points To Know About Home Equity Loans

Before applying for a home equity loan or a HELOC, make sure you understand the pros and cons of these financial products and the differences between them:

  • A home equity loan is a lump-sum payment, while a HELOC is a pool of money that can be drawn down incrementally as needed. HELOCs can have a variable interest rate, while home equity loans typically have a fixed interest rate.
  • Lenders may allow you to borrow 85 to 90% of your equity. Every lender is different, and the amount you’re allowed to borrow will depend on the lender’s policies and your own financial habits, credit score, home value, payment history, and more.
  • You need to own at least 20% of your home outright to be considered for most home equity loans. So, for example, if you bought a house with just 5% down and it hasn’t appreciated much in value since then, you probably won’t qualify.
  • You might wind up owing more than your home is worth. This could happen if property values decline after you take out your home equity loan or HELOC, and it’s a risk you need to consider.
  • Your home is used as collateral when you get a home equity loan or a HELOC. If you aren’t able to make your loan payments, it’s possible that your home could be put in foreclosure.
  • A home equity loan is debt, and using a HELOC is debt. Even though you’re accessing money you’ve earned or acquired through your home’s appreciation, it’s still debt and an added monthly payment you need to make. (Another term for a home equity loan is a “second mortgage.”) It’s best to fully consider the pros and cons before deciding to take on this obligation.
  • There could be tax benefits to a home equity loan if you use it to improve your home. Make sure to double-check with a knowledgeable accountant before taking one out.
  • Home equity loans and HELOCs usually have competitive interest rates. You might be able to get a lower rate on one of these products than on a personal loan or credit card, mostly because you’re using your house as collateral.
  • You can use funds from a home equity loan or a HELOC for anything. There are generally no restrictions on how you use the funds from your home equity loan or HELOC.

Summary: Best Home Equity Loans

Getting a home equity loan or a HELOC is a major financial decision. This is because you use your home as collateral, and if you fail to pay these loans back, it’s possible that the bank will foreclose on your home.

There’s also the risk of a market downturn, which can cause your home to drop in value. Having two mortgages out on a home that drops in value brings the risk of owing more on the home than it’s worth.

Even so, many homeowners use home equity loans every year in order to free up cash flow or boost their home’s value through renovations. In those instances, using a home equity loan could be a decision that helps your finances long term.

Ultimately, whether or not a home equity loan is right for you will come down to your personal financial situation, how much equity you have in your home, and what you’d like to use it for.

“Understand the use of the money, what it’s intended for,” Says Wilson. “Many times people just get it because it’s available and that may not be the best choice.” If you decide to move forward with the process, consider the companies below.

The Best Home Equity Loan Companies

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