What is a Home Equity Loan? 

Find the Best Home Equity Loan Lenders

Search for the best rates right here that offer popular home equity loan programs for cash in hand, house repairs, debt consolidation and much more. For almost two decades we have been connecting homeowners with lenders that offer a smooth path to cheap money with affordable home equity mortgages and credit lines for financing home remodeling and consolidating debt.

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We believe the “home equity loan” is an excellent vehicle for homeowners to raise capital, refinance debt and fund home improvement projects.

We are proud to be able to match people with home equity loan programs that best meet their needs and qualifications. Have you been searching for lenders that provide a wide selection of fixed equity loan programs and second mortgages?

BD Nationwide will help you find lenders offering all types of equity home loans in 1st or 2nd position with home equity plans for fixed rate installment loans or revolving credit lines. With the market conditions improving, now is an excellent time to start the home equity loan process and get a professional quote from top home equity lenders with no lender fees. If you want to borrow money and want to get a home equity loan with a lump sum payment and fixed monthly payment our team of lending professional can help you make a wise financial decision.

What is a Home Equity Loan?

A home equity loan is a unique type of real estate loan that enables homeowners to borrow against the equity they’ve built in their property. Home equity loans provide a lump sum of money, which is repaid over time with fixed monthly payments, including interest. These equity loans usually have fixed interest rates, making them ideal for borrowers seeking predictable monthly payments. Since this installment equity loan is secured by the property, interest rates are generally lower than those of unsecured personal loans. Most borrowers take out home equity loans to renovate their house, consolidate credit card debt, or meet the down payment requirements for a second home or investment property. 

Compare Home Equity Loan Rates and Terms

Talk to industry leading lenders that remain some of the last premiere home equity bankers who still offer financing for people with no equity. We offer prime equity mortgages and lines for people with good credit and subprime, non QM and private money home equity loan plans for borrowers with bad credit.

BD Nationwide is focused on remaining an industry leader for high LTV home equity loans and refinancing transactions. In a recent article, IHE Account Executive Dan Ambrose said, “No broker has a better understanding of home equity loans.” We will help you shop lenders so you can get the best home equity loan rates available online. Get help weighing the pros and cons of the home equity loan vs line of credit.

How much would be a home equity loan of $25,000​ at $7.625% and 7.99 APR on a 15-year term?

For a $25,000 home equity loan with a fixed interest rate and an APR of 7.99% on a 15-year term, the estimated monthly payment would be approximately $238.77.

What would the payment be for a fixed home equity loan of $50,000​ at $7.875% and 8.125 APR on a 15-year term?

For a $50,000 equity loan with an APR of 8.125% on a 15-year term, the fixed monthly payment would be approximately $481.44.

How much would be a fixed rate home equity loan of $100,000 at $7.5% and 7.875 APR on a 20-year term?

For a $100,000 equity loan with a fixed interest rate and an APR of 7.875% on a 20-year term, the monthly payment would be approximately $828.68.

Is a Home Equity Loan a Second Mortgage?

The definition of a “home equity loan” is a second mortgage that is offered as a onetime lump-sum of cash secured and borrowed against the equity in your home. Online home equity loans are available to borrowers who complete a residential loan application and can document their income sources.

Home equity loans are considered a 2nd mortgage as they include a fixed interest rate that is secured as a lien in second position on the deed to your property’s title. In most cases, home equity loan rates are low with affordable interest rates like traditional mortgages.

Fixed home equity installment loans provide fixed monthly payments and a fixed amortization schedule. Cash is allocated to borrower at time of closing escrow (or at the time your loan funds) Home equity loans are tax-deductible in most cases. These fixed home equity loans are very popular loans for debt consolidation, home improvement and real estate investments. There are no annual fees with fixed equity mortgage loans.

There is an interest only home equity loan available which is called a home-equity line of credit and borrowers only pay interest on the portion of the funds that are accessed. Home equity refinancing locking in a fixed interest rate is recommended once your credit line funds have been used. If you have a credit below 600, request info on a HELOC with bad credit scores.

Choose between Fixed Rate Equity Loans & Variable Rate Credit Lines from Competitive Lenders and Brokers Online

Compare a fixed rate equity mortgage loan to a revolving line of credit. In the past, both fixed home equity loans and variable equity credit lines were tax deductible, but as of January 1, 2018, the interest on home equity loans and credit lines is no longer considered a “write-off.”

We typically recommend the home equity loan because it has the security of a fixed interest rate and the credit line rate will fluctuate with market conditions.

Consider the “stated income” loans that allow first time homebuyers to qualify for loans without having to document their income. You will need to find a stated income mortgage lender that offers home equity loan products. Remember, an equity loan that requires less documentation usually requires a lot more equity. Getting an equity line or a loan approved without income documentation will typically require higher credit scores. (FYI- Most stated programs have been placed on hold).

What Are the Home Equity Loan Closing Costs?

Like any mortgage, taking out a home equity loan or HELOC comes with a range of closing costs. Anticipate paying closing costs that typically amount to 1.5% to 5% of your total loan value.

Credit Report Fee
Of course banks and lenders will pull a current credit report so they can analyze your credit history. Depending on the home equity lender, Credit fees will range between, but $20 and $50. 

Appraisal Fee
A crucial component of the home equity loan application process is the home appraisal. In order to assess the value of your property before granting approval for the loan, your lender will initiate a home appraisal. This involves engaging a state-licensed third-party appraiser who will physically visit your residence and evaluate it by comparing it to similar properties in the vicinity that have recently been sold.

The appraisal fees range from $100 to $950 depending upon which type of appraisal the mortgage lender is requiring to close the proposed equity home loan. Also the region of the country also determines the appraisal cost on the home equity loan. For example, the cost of an equity loan appraisal in California or New Jersey is much higher than Oklahoma or Texas.

Origination Fee
Most mortgage brokers and home equity lender will charge a origination fee to cover the costs the home equity loan. The origination fee is commonly referred to as “points” and the origination fee may be tax deductible as well. This fee often pays the loan officer who manages the process of home equity loans a lot like a server at a restaurant would manage your meal. This origination fee will range from 0.35% to 1% of your total loan amount.

Underwriting Fee
Underwriters play a crucial role in confirming your income, loan to value and debt to income ratio to ensure that you have the financial capacity to meet the obligations of your new monthly mortgage payment. 

Notary Fee
If you require documents to be notarized as part of the loan-closing procedure, you will incur a cost for a real estate notary. While notary fees can vary, the typical charge for notary services is approximately $50 to $100.

Processing Fee
Many 2nd mortgage lenders will charge a processing fee as there is a lot of work involved in managing the paperwork to fund an equity loan in a timely manner. Home equity loan processing fees range from $195 to $500. Some local banks an credit unions will waive the processing fees,

Document Preparation Fees
Most mortgage lenders will charge you a fee for an attorney to review these documents and to make sure that the documents you sign reflect the accurate costs of closing your loan. These documentation and attorney fees will range from $250 to 1% of your home equity loan amount.

Lock into a Fixed Rate Home Equity Loan while the Interest Rates Are Affordable with No Equity Required.

If you would rather not refinance your 1st mortgage but need cash out for consolidating debt or financing home improvements, then our home equity lenders are here to help you maximize your home’s equity will minimizing the cost of refinancing.

Cash out equity loan and home refinancing volumes have increased significantly this year, and the consumer demand is sure to drive expanded guidelines for larger loan amounts. There are many low cost home equity loan programs being rolled out this year.

Today’s equity mortgage loan programs have created new opportunities for homeowners to get quick access to money that is tax deductible in most instances. (Discuss current requirements for loan to value with a home equity loan lender as LTV guidelines change frequently.)

What Are the Credit Score Requirements for Home Equity Loans?

Credit Requirements: Lately, the trend for 2nd-mortgages is approved for applicants with good credit. Borrowers that need a home loan for people with bad credit are typically directed towards non QM, private and hard money. (Please be aware that most lenders have a minimum fico score for equity loan products. If you meet the LTV requirements, some private money lenders may waive minimum home equity loan credit score requirements on some hard money programs.) Credit standards change frequently, so it is prudent to check to see if there are any new programs for poor-credit home equity loans.

We listed below the minimum credit scores required according to our recent surveys. 

• Most Local Banks and Credit Unions: 680 credit score
• Traditional Mortgage Lenders: 640 credit score
• Non QM Lenders: 620 credit score
• Private Home Equity Lenders: 580 credit score
• Hard Money Lenders: 500 credit score

Please note that the loan to value requirements on home equity loans will vary significantly based on the credit score. If you are considering a revolving line of credit, please see the credit requirements for a HELOC. 

How Much of a Home Equity Loan Amount Can I Get?

Typically, a traditional lender will offer home-equity loans up to 80% or 85% of your home’s appraised value. The loan amount you get approved for will be calculated after deducting your outstanding mortgage balance. However, BD Nationwide can help you find lenders that extend more aggressive terms, enabling borrowers to get approved for home equity loans up100% of their home’s value if you meet their lending criteria.

How Long Does It Take to Get a Home Equity Loan?

Closing an equity loan typically spans from two to six weeks, contingent on factors such as document preparation (including W2s, 1099 tax forms, and income verification), individual financial circumstances, and state regulations. How long the equity loan process takes depends largely on how organized you are submitting paperwork and how qualified you are by meeting the home equity loan guidelines. The terms of the home equity loan process varies among lenders.

Of course, the time it takes to get a home equity loan can vary, but it typically takes two to six weeks from the time you apply to loan approval and funding. There are several factors influencing the approval process, including the underwriting process, your financial situation, and any required home equity loan documentation.

Home Equity Loan Application and Documentation (1-2 Weeks)
First, you’ll need to submit an application along with necessary documents, such as pay stubs, tax returns, and a recent mortgage statement. Lenders will also check your credit score and debt-to-income (DTI) ratio to determine eligibility. Providing complete and accurate documentation upfront can help expedite the process.

Appraisal (1-2 Weeks)
Most lenders require a home appraisal to verify the property’s market value and ensure sufficient equity. Depending on the availability of appraisers in your area, this step can take a few days to two weeks. Some lenders may offer automated or exterior-only appraisals, which can speed things up.

Bank Underwriting and Approval (1-2 Weeks)
Once the appraisal and documentation are complete, the loan enters the underwriting stage. The home equity loan lender will review all the information to ensure everything meets their requirements. The underwriter is reviewing your current mortgage payment history, outstanding debt obligations while calculating your debt to income ratio. This phase typically takes a few days to a week, though it may extend longer if additional documentation is needed. If you are self employed they may request bank account statements and tax returns and this could extend the home equity loan process as well.

Closing and Funding (3-5 Days)
If the loan is approved, a closing date will be scheduled, where you’ll sign the final documents. After closing, the funds are typically disbursed within 3 to 5 business days.

In total, the home equity loan process usually takes 2-6 weeks, but applying with an organized approach and working with a responsive lender can help streamline the process.

What You Need to Apply for a Home Equity Loan

When you are ready to apply for a home equity loan or HELOC, it is important that you organize your documentation that will be requested by the underwriter. 

• Complete the loan application form.
• Month worth of Pay-stubs
• Last 2 years of W2’s or 1099’s
• Current Mortgage Statement
• Copy of the Promissory Note (for your 1st mortgage)
• Declaration Page of Your Home Owners Insurance Policy
• Letters of Explanation for any Late Payments on Your Credit Report

Get More Equity Loan Info and Learn What It Takes to Qualify for Extra Cash to Complete a House Remodel or Refinancing High Rate Credit Card Debt!

In many instances, home equity loans offer quick cash to homeowners who want an affordable monthly payment that is tax deductible like their first mortgage.

Borrowers like the home equity lending partners at BD Nationwide because they offer second mortgages, HELOCs and unique home equity loans that meet their needs without requiring them to refinance their first mortgage loan if it does not benefit them.

We’ll help you find online equity loans that continue to open the doors of opportunities for homeowners looking to leverage their equity with tax-free cash.

Discuss tax deductibility with a tax attorney or certified public accountant that is up to speed on the IRS and rules for equity loan deductions. Learn more from the FTC about home equity lines.

Maximize Home Equity with a Cash Out Refinance or Home Equity Loan for Debt Consolidation if Your Credit Scores are Good!

• 100% Fixed Home Equity Mortgage Rates
• Self-Employed Installment Loans• Home Equity Loans for Less than Perfect Credit
• Flexible Home Equity Loan Credit Guidelines
• Refinance Credit Lines with a Fixed Equity Loan
• Home Mortgage with Cash Back
• Fixed Rate 30 Year Mortgage Loans
• Rate & Term Refinancing to 96.5% Loan to Value
• Competitive Low Rate Equity Home Loans
• Compare Home Equity Mortgage Brokers
• HELOC on a Investment Property 

Useful Financing Tips from the Home Equity Loan Lenders:

Can I get a home equity loan on a condo?

Yes, many lenders offer equity loans and HELOCs on condominiums and town houses. Our team will help you determine, how much equity you need to qualify.

What is the difference between home equity loan and HELOC?

There is always a debate when comparing the HELOC vs, home equity loan, and it comes down to the purpose of the loan and your personal goals. The home equity line of credit provides access to a set amount of money during the draw period, with interest only payments required based on the amount you borrow. Home equity lines typically feature a variable interest rate, which fluctuates over time. In contrast, a home equity loan that offers a lump sum at closing, with interest starting immediately on the entire home equity loan amount, regardless of whether you use it all at once. The home equity loan has a fixed interest rate amortized over the full loan amount, while HELOCs charge adjustable interest only on the borrowed portion. This makes the HELOC the preferred choice for house renovation and home improvement projects. Whereas with debt consolidation the equity loan is recommended because it maximizes savings with a fixed monthly payment a less risk of interest rate volatility.

What Are 125 Home Equity Loans?

The 125 equity loans were very popular a few years back and allowed homeowners to borrow more than their home’s value, mainly used for refinancing credit card debt without equity. The uniqueness of this high LTV home equity loan lies in its combination of real estate and personal credit security. The underwriting guidelines prioritized credit scores and residual income over equity, leaving lenders with no recourse if the borrower defaulted. Due to market conditions, the 125% program has been suspended.

In recent years, legislators imposed stricter regulations on home equity lenders. Emphasizing the tax advantages of home equity loan plans, second mortgage companies often communicated these benefits. Dodd-Frank expanded Regulation Z, preventing lending organizations from advertising potentially misleading tax benefits on a home equity loan and an equity line of credit. Interest on the portion of credit exceeding the home’s fair market value is not deductible from federal income taxes. Borrowers are advised to consult a tax advisor regarding interest and charges deductibility.

While there are numerous benefits for consumers considering a home equity loan, there are associated risks:

1. Using home equity and needing to sell may result in being “short to close” with no proceeds from the home sale available for another purchase.

2. Some individuals face an increased risk of losing their homes if unforeseen circumstances prevent them from making mortgage payments.

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More Popular Home Equity Loan Programs in 2024

Many financing experts consider equity home loans a valuable vehicle for homeowners to access cash. Our equity home loan specialists will try their best you find you a solution that meets your needs while yielding savings.

100% Second Mortgage – Apply now for a low-interest equity loan that maximizes homeownership. Refinance or take out an equity loan up to 100% with a fixed rate (FICO score of 720 required).

100% HELOC – Utilize the flexibility offered by an equity line. With equity lines, pay interest only on the accessed amount. While credit lines are variable, fixed rate conversions may be available (FICO score of 720 required). Lock into a home equity line with an interest only payment option to maximize your real estate investment.

Home Improvement Loan – No Equity Required! First-time homebuyers are encouraged to apply. FHA 203k loans allow qualified borrowers to access cash for home improvements and remodeling without requiring equity. Leverage your home equity and make home improvements that raise your property’s value and make your living space more enjoyable.

Home Equity Loan Alternatives

Did you know that home equity loans are more difficult to qualify for these days because of the dramatic rise defaults? For people with fair or less than perfect credit, we suggest getting cash out with a refinance loan insured by the FHA because they require very little equity. FHA does not offer home equity financing, but they do allow consumers to take out equity loans to subordinate to FHA first liens. Borrowers can get cash back in a home loan from 85% loan to value.

The other alternative to an equity line of credit or 2nd mortgage is a personal loan. The personal loan is an installment loan like a traditional home equity loan, but it is unsecured so it is not secured by real estate. The downside of these unsecure loans is the loan amount are much smaller and typically the interest rates are higher because there is no collateral.

Linda’s Guidance for Selecting the Best Home Equity Loan – Ask Linda?

Ensure to calculate your combined loan-to-value, taking into account the proposed home equity loan. If you neglect to add the potential loan amount to the existing mortgage totals, you might be surprised by the higher rate offered when the actual equity in your home is considered. CLTV, or combined loan-to-value, is crucial in determining eligibility for a home equity loan.

CLTV Formula: (Existing Mortgage plus the New Second Mortgage, then the Sum is Divided by the Value of Your Home = Combined Loan-to-Value)

* Home equity loan rates are subject to submitting an application to home equity lenders. The standard conditions for underwriting qualifications: verification of income, employment, assets and other info like obtaining an acceptable property.