Best HELOC Lenders in 2024

Since the popularity of the home equity line of credit has soared finding the best HELOC lender has become vital. Different HELOC lenders offer different types of home equity lines. For example, if you are unable to document your income, you may need a a no doc HELOC lender, or if you have low credit scores, you may need a bad credit HELOC lender.

The RefiGuide can help you get matched with the best HELOC lenders online with no cost or obligation to shop for top credit lines, home equity loans and more. Getting quotes from top rated HELOC lenders will provide you with a clear understanding of which company offers the best HELOC rates and lowest fees for your desired draw period and repayment term. You may also be eligible for low introductory interest rates and discounted closing costs.

How to Find the Best HELOC Lenders for Low Rate Home Equity Credit Lines

Typically, they are banks, mortgage brokers, credit unions, online lenders, or other financial institutions. Each entity has different HELOC rates on which they offer a home equity line of credit to the borrowers.

To find the best HELOC lender that suits your requirements, you should research and compare offers from multiple lenders. Here’s a detailed guide to know about HELOC and choose from the best home equity lenders that suit your requirements.

HELOC lenders charge different kinds of fees including application fees, closing costs, yearly maintenance, etc. A borrower should research extensively about top rated HELOC mortgage lenders by comparing their second mortgage offers and eligibility to find the best rates, monthly payments and loan amount that suit his or her financial circumstances, goals and eligibility.

How do you know if a Top HELOC Lender is the right choice?

Before choosing a HELOC lender, it is extremely important to know your borrowing needs, the lender’s eligibility criteria, terms and conditions, and their repayment terms. A few considerations that a borrower should evaluate before finalizing the top HELOC lender are listed below.

• Flexibility: The flexibility and the frequency of withdrawing amount should be considered. This flexibility helps you manage unexpected expenses.
• HELOC Interest Rates: Choose the lender that provides the best HELOC rates, as these variable interest rates fluctuate based on the market conditions. This could potentially lead to an increase in the monthly payments.
• Costs and Fees: There are certain fees associated with home equity lenders like application fees, annual fees, yearly maintenance fees, or HELOC closing costs. Ensure you consider them before you apply.
• Repayment Terms: For the draw period, you will only make monthly payments for the amount borrowed. But once the draw period has ended, you enter the repayment period where you need to return the entire amount with interest which might increase your monthly payment.
• Risk:  The associated risk is that you have received HELOC on your home equity and in case you are unable to repay the second mortgage you will face serious consequences as your home is at risk. So it is advisable to only go for HELOC if you can manage it responsibly.

How to find the Best HELOC Lender Online?

To find the best HELOC lender, you should be ready to research and evaluate the offers of lenders. This research is about the interest rates, terms, and credit limits that they are offering. You can start by following the steps defined below.

Research Local Banks and Credit Unions

The first thing is to research the local banks, credit unions, and mortgage lenders that offer the best HELOCs in your area. Visit their websites, inquire by calling or visiting them, and also look for people who have first-hand experience with a similar lender and ask for their feedback. Gather all the information you can, about their eligibility criteria, interest rates, repayment terms, and other fees, etc.

Explore Online HELOC Lenders

Now, search for online lenders that provide a home equity line of credit. As compared to banks and credit unions, online lenders usually provide more convenience and better interest rates. Look for a well-known online HELOC lender, look at the testimonials and reviews, contact those people in person, and ask for their feedback. The Refi Guide can match with top HELOC lenders like, Loan Depot, Flagstar, Citibank and more.

Consult with Mortgage Brokers

There are mortgage brokers in every area that connects you to lenders that provide HELOC. Look for them, schedule a consultation, and let them know your needs and limitations honestly so they are in a better position to help you. Always try and negotiate home equity closing costs and get annual fees waived when compare a home equity loan or line of credit.

Check with Your Current Mortgage Lender

If you have an existing loan, contact your local lender as there are options of availing discounts for already being a customer. There could be other promotions or loyalty programs as well. Moreover, if you have been paying your monthly installments on time, you can benefit from this personal relationship as well. It is not uncommon to achieve lower closing costs and lending fees from your existing mortgage company.

Compare Top HELOC Offers

At this point, your research is done and you have plenty of information. List it down, compare the offers side by side, and make the right decision. Compare the offerings on interest rates, eligibility criteria, draw period, repayment terms, closing costs, or maybe a combination of them. You can either make your decision yourself or ask a second mortgage banker for help. If you are looking for a fixed rate conversion, compare the best fixed home equity loan rates today.

Consider Recommendations and Reviews

As mentioned above, ask as many people as you can for their feedback about a lender or a bank providing a home equity line of credit. Ask friends and family, reach out to colleagues, and acquaintances, go online, and read reviews and testimonials. It is always beneficial to seek advice from people who have already gone through the same, they would give honest advice and you can save yourself from the unseen.

Evaluate Customer Service and Support

Always choose a lender who has transparent policies and is responsive in answering your queries. Good customer support is needed when you are going to file for any such home equity loan process that requires extensive paperwork. Ensure lender’s contact information is available and they are actively using them to answer their customers and resolve their queries.

Seek Pre-Approval for HELOC

The benefit of pre-approval for HELOC is to understand terms and conditions, HELOC interest rates, and borrowing capacity in advance. Some documentation is required before seeking pre-approval for HELOC like credit history and score, employment and income verification, property appraisal, and personal identification. Make sure you provide them and seek pre-approval before submitting a formal application for a HELOC or home equity loan. Find out if you can get a HELOC without an appraisal.

Documents Required by HELOC Companies

To fill out an application for home equity line of credit, you need to attach certain documents. A list of the necessary documents is given as follows:

• Driver’s license or any other valid ID
• Proof of income like bank statements etc.
• Any already existing loan information
• Property Documents
• Insurance coverage of the property
• Appraisal Report
• Credit report
• Tax returns
• Written verification of employment

Note: The document requirement of each HELOC lender is different, but these are a few documents that are required by every lender. 

High DTI HELOC Lenders

Many borrowers are turned down from cash out refinances, home equity loans and credit lines because their debt to income ratio is too high. Most banks and credit unions expect borrowers to have debt to income ratios below 43%. The RefiGuide will help you shop and compare high DTI HELOC lenders without pressure or application fees.

Advantages of Top HELOC Lenders

The RefiGuide will help you shop and compare top rated HELOC lenders so you can get competitive rates and terms and also uncover unique niches like a HELOC for buying an investment property or a bank statement HELOC for a self-employed borrower.

There are numerous advantages of HELOCs over traditional loans, here are a few listed below:

• Access to Home Equity: The best thing is that HELOC leverages homeowners to secure a line of credit on the equity they’ve built in their homes which can help them with unexpected expenses or loan consolidation.
• Flexibility in Borrowing: Another great benefit is that the borrower can access the funds when and how much it is needed. And there is no interest rate to be paid when it is not being consumed.
• Lower Interest Rates: HELOCs are the most cost-effective line of credit in comparison to credit cards and personal loans as the borrower’s home is secured, lenders offer lower rates for this type of loan. Many HELOCs have lower closing costs as well.
• Revolving Line of Credit: HELOCs work similarly to credit cards i.e. you borrow some amount, return it with an interest rate, receive a good score, and are eligible for borrowing again. This type of  home equity line of credit are also revolving, once you repay you can access more funds again without reapplying again and again.
• Variety of HELOC Loan Companies: There are plenty of lenders offering HELOCs like banks, credit unions, online lenders, mortgage brokers, etc. The borrower can choose and pick the lenders that suit his financial needs well.

FAQs

What is a HELOC, and how does it work?

A HELOC is a revolving line of credit that is taken against the equity of the home. It is a predefined credit limit, awarded to the borrower which can be accessible as per need. It works similarly to a credit card, the amount can be used as per need and repaid later with a certain amount of interest. In contrast to a traditional mortgage, where the amount is given to the homeowner in one go, HELOC lets the homeowner borrow the money as needed, to a predefined credit limit, and the interest is given only on the amount used. If you are looking for a fixed rate option, then consider home equity loans.

How do I qualify for a HELOC?

There are no set criteria for HELOC, different lenders have different eligibility criteria but mainly the borrower’s equity in the home is considered. Moreover, the borrower’s employment and payment history, any existing loan, and good credit score are also considered.

What is the monthly payment on HELOC line of credit for $100,000?

Loan amount      Monthly payment
$25,000                    $168.43
$50,000                    $328.46
$100,000                  $656.93
$150,000                  $985.39

HELOC loan rates are determined based on conditional offers for both home equity lines of credit and fixed equity loans with 30-year repayment periods, provided to consumers by RefiGuide lenders over the past 30 days for each loan amount. These HELOC rates and other loan terms are subject to lender approval and are not guaranteed. Not all consumers may qualify.

What is a HELOC Lender?

Before knowing what a HELOC Lender is, let’s first discuss what a HELOC is. HELOC stands for Home Equity Line of Credit and it enables homeowners to tap into the equity of their homes for multiple reasons like home renovation, unexpected expenses, education, or debt consolidation.

These niche mortgage lenders offer a revolving line of credit, which is awarded to the homeowner but it is used as per need with variable interest rates.

Now, when shopping HELOC mortgage lenders, these are typically entities like banks, credit unions, and mortgage brokers. These mortgage lenders provide a home equity line on different criteria but typically they check the borrower’s credibility, worth, amount of home equity, and a few other factors before establishing the terms with them. The terms typically include the pre-defined credit limit and variable interest rate over the period i.e. 5, 10, or 20 years of repayment.

HELOC vs Home Equity Loan

A home equity loan provides a lump sum distribution that you’ll repay over a period of ten to thirty years. Consider fixed rate home equity loans if you don’t need to make multiple withdrawals and prefer a fixed interest rate and consistent monthly payment throughout the repayment term. We recommend the HELOC if you are doing home improvement projects or just need access to money in case of an emergency.

What documents are required to apply for a HELOC?

Similarly, there is no set documentation for HELOC, rather different lenders have different requirements for the document. But typically, they all ask for proof of identity, proof of income, employment verification, property information, credit history, and score.

Where is the best place to get a HELOC loan?

Most banks, credit unions, and mortgage lenders offer HELOCs. However, to secure the lowest rate and the best option for your borrowing needs, experts advise researching and comparing loan offers from various lenders before making a decision.

After consulting with lending experts and reviewing numerous banks, online home equity lenders, and credit unions, we have compiled RefiGuide’s top choices for the best banks and best HELOC lenders in 2024.

Can you use a HELOC to buy a house?

Yes. Many homeowners take out a HELOC or home equity loan to buy a second home or investment property.

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