Where to Find Affordable Home Equity Loans

The most valuable asset most people have is their homes. Pulling equity out and using it to improve the structure or for other projects allows you to tap in to the earnings you’ve been sitting on. You can use this money for renovations, debt consolidation, education or other significant expenses.

Home equity loan interest rates are much lower than putting expenses on a credit card or taking out a personal loan. Getting the best deal possible and keeping money in your pocket increases your financial security.

Where Can I Find Affordable Home Equity Loans in My Area?

The most affordable lenders have excellent reviews, offer a variety of options and deny loans to those who would find them unaffordable. Be sure to compare interest rates, variety of loans, introductory terms, loan length and prepayment penalties. Here are the most affordable options.

1. PSECU

Pennsylvania-based PSECU is a credit union offering home equity loans to its members. The financial institution has three types of equity loans:

• Real estate equity loan: Get a fixed lump sum at once, with a fixed interest rate for the life of the loan. Monthly payments are the same, with five-, 10-, 15- or 20-year terms.
• Home equity line of credit (HELOC) plus: Borrow money as you need it up to a set amount, with up to three fixed-rate advances. This option comes with a 10-year advance period and a 20-year repayment period. It could be good for a rental property, and there are variable interest rates.
• HELOC flex: Borrow money as needed without set amounts. You can make interest-only payments during the 10-year advance period. Pay variable interest rates based on the prime rate.

Within each equity loan type, PSECU offers either fixed or variable rate options. There is no application fee, and you’ll gain potential tax benefits using your home’s equity to pay for big expenses.

PSECU charges no application fees for equity loans and lines of credit. You may have third-party fees, such as a notary. Because the credit union is a digital-first institution, you just log into your account and transfer the funds you need when you need them.

2. Discover

Discover is best known for its credit cards, but it also offers a line of home equity loans for those already comfortable with the name. Borrow based on the equity in your home with no origination fees and no cash due at closing. Some of the perks it offers with its equity loans are:

• No appraisal fees
• Low fixed rates
• First and second liens

Take out loans of up to $200,000, with repayment terms ranging from 10 years to 30 years. Discover offers a digital-first approach, which is attractive to tech-savvy homeowners. You can apply online to get started and provide documentation later.

3. U.S. Bank

U.S. Bank is a well-known option if you’re looking for a financial institution offering nationwide home equity loans. Whether you want an equity loan or a HELOC, the company provides both. You can borrow up to $750,000 and choose from fixed and variable rates.

• Existing customers get a rate discount
• Numerous local branches for those who want to do business in person
• Digital access for those who prefer to complete transactions online

The site has a home equity calculator so you can see how much you might qualify for and the ballpark of the monthly payment. Apply online. Funds are typically available within three business days after closing, with zero closing costs.

4. Bank of America

Bank of America is another nationwide bank with a variety of home equity loan options. It’s known for its flexible HELOCs and provides a discount if you set up your payments on automatic or are an existing customer. Its online and mobile banking tools let you manage your HELOC from anywhere.

Bank of America equity loans feature:

• No application fees
• Zero closing costs
• No annual fee

It offers fixed or variable rates, depending on your needs. Be sure to read the fine print as some rates are a promotional, introductory percentage.

5. Unison

If you’re looking for a unique approach to accessing your home’s equity, check out Unison’s equity sharing plan. A shared equity agreement is different from a traditional loan. You can receive cash in trade for future equity via appreciation of your home’s value. Some of the features of this option include:

• No monthly payment or interest amount
• Agreements for up to 30 years
• Can buy back Unison’s share or sell the home and pay out
• Must have a FICO score of 680 or more and other financial health markers

If you’re trying to avoid going into more debt, Unison may be a good option to consider for immediate cash flow.

The financial institutions on this list will work with people across the country. Most are readily accessible online. However, you may already have a relationship with a local bank. Knowing what to look for in an equity loan can ensure you get the best deal possible.

What to Look for in an Affordable Home Equity Loan

Affordability may be defined differently by various borrowers. For example, suppose your funds are tight and you are taking out a home equity loan to consolidate higher-interest credit cards into a lower-interest rate equity loan. In that case, you’ll care most about the annual percentage rate or perhaps the amount of the monthly payment. If you are undertaking a renovation project, a more flexible HELOC may be your style. Pay attention to:

• Interest rates: Your rate impacts the amount you pay back. Compare fixed and variable options to see what best suits your needs.
• Loan-to-value ratios: Consider how much equity you have, what you want to borrow and how much you can use on your home. Most lenders let you take out a loan for up to 80% of your home’s value, but things like other mortgages impact the amount.
• Fees: Pay attention to closing fees, origination costs and whether the lender charges for an application. The ones listed above offer zero application fees and no closing costs, but terms can change.
• Repayment: Pay careful attention to how long you have to repay the loan, when interest begins and what your monthly payment might be.

You should also pay attention to whether you can pay the loan off early without penalties and if you can apply extra money toward the principal rather than a future payment.

Get Value by Choosing the Best Lender for Your Situation

Your home’s value offers a way to access funds for big purchases and life moments without paying higher interest fees. It’s crucial when taking out money on your house that you look at all the factors involved and choose the lender that best suits you.

Take the time to compare what each offers and read the fine print. A home equity loan or line of credit gives you the flexibility to navigate your future.