Compare Home Equity Lenders

Welcome to the Quicken Loans marketplace, your one-stop shop for comparing home equity lending experts. We’ll equip you with the knowledge and tools you need to choose the right loan for your finances.

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How A Home Equity Loan Works

Homeowners who have equity built up in their property can take out a home equity loan. The funds from a home equity loan are distributed as a lump-sum payment, meaning you get the full amount borrowed at one time. If you know how much you need to borrow, a home equity loan can be a great option.

Most home equity loans have fixed interest rates. A home equity loan works like a primary mortgage in the sense that you will have a monthly payment until the end of the loan term. But you’ll have two separate mortgage payments.

Home Equity Loans Vs. Home Equity Lines Of Credit (HELOCs)

When considering a second mortgage, homeowners actually have two options: a home equity loan and a home equity line of credit (HELOC). From a funding perspective, a home equity loan works like a cash-out refinance. You receive a check for the amount of equity you take out.

But HELOCs function differently. A HELOC has two distinct phases: a draw period and a repayment period. During the draw period, you can withdraw as much or as little of your equity as you want (up to your limits) through a revolving line of credit that works like a credit card.

During the draw period, you only make interest payments on any amount you withdraw. You can also put money back into the HELOC during the draw period to access it later.

Once the draw period ends, the repayment period begins. The balance freezes, and you can’t borrow against the line of credit anymore. For the remainder of the term, you make monthly payments toward the principal and interest until the HELOC is paid off.

Another difference is that while most home equity loans have fixed interest rates, HELOCs typically have variable interest rates like credit cards, meaning the rate can change month to month. If it’s not variable, it may also be adjustable, meaning the rate changes at some point.

Why Trust Quicken Loans

Quicken Loans is an online financial services marketplace that helps people compare and connect with different experts and providers. We’re committed to giving you helpful information you can trust, because we understand that the money choices you make now affect your future well-being.

Calculators

Use our toolbox of calculators to take the guesswork out of your home budget. We factor in all the variables so you don’t have to.

FAQ

Let’s look at some of the most frequently asked questions when it comes to buying a house.

Is a home equity loan or cash-out refinance a better choice?

If the blended rate is lower than the interest rate for a cash-out refinance, you’ll likely want to get a home equity loan. But if the blended rate is higher than the interest rate for a cash-out refinance, refinancing your existing mortgage instead of taking out a second mortgage is a smart move.

What can I do with the money I borrow using a home equity loan?

Home equity loans are a flexible financing solution. You can use a home equity loan to pay for expenses like home repairs and renovations, educational costs, medical bills and debt consolidation. While there are typically no restrictions on how homeowners can use these loan funds, because a home equity loan is secured by your home as collateral, you should only use loan funds for expenses that are likely to offer long-term return. It’s recommended that you avoid using loan funds for everyday expenses, vacation costs, or speculative investments.

Do home equity loans have closing costs?

Yes, home equity loans have closing costs. Home equity loan closing costs vary, but generally, you can expect them to be 2% – 5% of the total loan amount.