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Our top 5 lenders offer low rates, online applications, and a broad range of mortgage products. But there are some differences between them. To help you compare between the best online mortgage lenders, we created the following features-comparison chart. Take a look at the rates, terms, customer support, and the range of loans on offer to find the best lender for you.
Overall Rating
Editor’s Choice
Direct Lender or Marketplace
Direct lenders provide loans to borrowers. Marketplaces help borrowers compare direct lenders.
Marketplace
Direct
Direct
Direct
Direct
Terms
The duration of your loan, i.e. the number of years to repay it.
10-30
15-30
15-30
15-30
10-30
Minimum Credit Score
All
Fair +
Good +
All
Fair +
Minimum Down Payment
Lowest down payment across all mortgage products
0%
0%
0%
0%
20%
Pros & Cons
Advertises rates
Non-conventional loans
Government-backed loans such as FHA, VA, and USDA.
Market-beating rates
Top Pro
Free to use
Quick and effective approval process
Physical branches in 25 states
Quick application and closure
Promises to match best rate
Top Con
Not a direct lender
No rates without contact details
Not available in New York
No HELs or HELOCs
Only fixed-rate loans
Bottom Line
Compares lenders in seconds
Combining experience and digital
Wide selection of mortgage products
Nation’s largest mortgage lender
Strong on fixed-rate loans
Types of Loans
Fixed Rate
Conventional loan with fixed rate for duration of loan
Adjustable Rate
Conventional loan with adjustable rate for introductory period of 3-10 years
Cash Out Refinance
Alternative way of using home equity to borrow cash
HEL/HELOC
Loans and lines of credit that let homeowners tap into their equity to borrow large sums
Jumbo
Loan that exceeds FHA’s conforming limits, usually more than $424,100.
FHA
Government-backed loan for borrowers with low credit, with 3.5-10% down payment
VA
Government-backed loan for military personnel and veterans
USDA
Loans backed by Department of Agriculture for rural and suburban homes
Reverse Mortgage
Enables homeowners aged 62 and older to use their home equity to borrow
Operations
Year Founded
1996
1991
2003
1985
2013
Headquarters
North Carolina
Pennsylvania
California
Michigan
California
States
50
43
AL, AZ, AR, CA, CO, CT, DE, DC, FL, GA, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, NE, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, VT, VA, WA, WV, WI, WY
48
AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, ID, IL, IN, IA, KS, KY, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WV, WA, WI, WY, LA
50
12
CA, OR, WA, TX, CO, AZ, MI, IL, PA, VA, GA, FL
Online
Physical Branches
Customer Support
Phone
Email
Live Chat
FAQ
In Branch
What is a Home Equity Loan?
A home equity loan, or HEL, is a type of secured loan in which the borrower puts up a portion of their home’s value as collateral. It is also commonly referred to as a second mortgage, because the lender loans the borrower a lump sum and the borrower’s home equity decreases. As the borrower pays the lender back through their monthly payments, the borrower’s home equity begins to once again increase.
Another product that falls under the same category as HELs is a home equity line of credit, or HELOC. Just like HELs, HELOCs allow borrowers to tap into their home equity to borrow large sums. But 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 an as-needed. The borrower only needs to pay back principal and interest on the money they withdraw.
Home Equity Loan Eligibility
Anyone who owns a significant portion of the equity may apply for a home equity loan. Although there is no set rule, most lenders require the borrower to own at least a minimum of 80-90% of equity in their home to qualify for a HEL.
The process of applying for a HEL is similar to that of applying for a regular mortgage. Your chosen lender can advise you on the requirements and limitations. All applications include a credit check, although credit history has less of an impact on a lender’s decision for a HEL application than it does for other types of loans or mortgages. All applications include a home appraisal, followed by an examination of the borrower’s loan-to-value ratio (the amount of equity or ownership the borrower has in the home as a proportion of the property’s current value). Some lenders might offer a loan worth up to 125% of a home’s value, (i.e. a $375,000 loan for a home worth $300,000). The exact amount depends on how the lender views the borrower’s application, as well as the loan amount requested by the borrower.
Purpose of a Home Equity Loan
A home equity loan or home equity line of credit may be used for any type of major expense. This could include home renovation, repair, or refurbishment, a large medical expense, paying off or consolidating credit card debt or other types of debt, funding a child’s college tuition, or covering the cost of a vacation. Like any other loan, taking out and paying back a HEL can even be used to build up credit for future loan applications.
Home Equity Loan Benefits
HELs and other secured loans take a lot of the risk away from the lender and place it on the borrower. In return for taking on the bulk of the risk, lenders reward borrowers with a number of benefits. Lenders are more willing to overlook a poor credit rating for HEL applicants. Rates for HELs and HELOCs are typically lower than for other types of loans such as unsecured loans. The payment periods are generally longer, giving the borrower plenty of time to pay off the loan amount. And according to the latest IRS updates, if a 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.
Home Equity Loan Alternatives
For home owners aged 62 and older, some lenders offer the government-backed Home Equity Conversion Mortgage. This is almost the same as a standard HEL, except that the loan is partially insured by the government and that certain conditions are attached. For example, the borrower must use the property as their primary residence for the entire loan term and can’t rent it out to anyone else. Additionally, the borrower must meet all of the Federal Housing Administration’s borrower guidelines, such as paying all property taxes and insurance.
Other alternatives include unsecured personal loans and credit card advances. These offer home owners the benefits of not having to put up their home as collateral, but on the downside the interest rates are significantly higher and the maximum loan amounts are usually lower. These types of alternatives are best used by home owners who for one reason or another aren’t able to qualify or meet payments for a home equity loan or home equity line of credit.
Comparing the Best HEL Lenders
In addition to LendingTree, some of the nation’s best lenders offer home equity loans directly to borrowers. When comparing these lenders, make sure to compare them across a range of different factors, including interest rate and APR, closing fees, length of application process, maximum loan amounts, minimum credit scores, and penalties for prepayments or late payments.
Rates can vary significantly between lenders, so it’s definitely worth shopping around. HELs use fixed rates, meaning the interest rate stays the same over the entire term of the loan. HELOCs use adjustable rates, meaning the rate can go up and down once the fixed-rate introductory period ends.
Most lenders charge closing fees such as an application fee, origination fee, and underwriting fee, plus charges for third-party services such as home appraisal, surveying, taxes, and title search. As with a first mortgage, the borrower can negotiate with the lender to have some or all of the closing fees waived.
How to Find the Best Deal for You
Online loans marketplaces such as LendingTree have made it increasingly easy to compare and apply for a home equity loan that benefits you. Using LendingTree is free, easy, and takes only a couple of minutes. To compare your HEL options, select Home Equity under the list of loan products and then answer a few basic questions about yourself, your home ownership, loan amount, and loan purpose. LendingTree’s automated system will sort through its network of participating HEL lenders and offer you a range of pre-qualified deals. You’ll then have the option of locking in one of the deals and completing a formal application.