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Best home equity loans for debt consolidation

Home equity loans can help consolidate your debt, often at a lower interest rate than some alternatives. Getty Images/iStockphoto

Home equity loans let you borrow against the equity you've built in your home. For example, if your house is worth $500,000 and you owe $300,000 on it, you'd have $200,000 in potentially tappable equity. 

"By obtaining a home equity loan, homeowners can access a lump sum of money upfront, typically at a fixed interest rate, and make regular payments over a predetermined term," says Dino DiNenna, real estate broker at Southern Lifestyle Properties.

Homeowners often use the funds from home equity loans to buy second homes, invest in home renovations or consolidate debt. In current times, amidst high costs and interest rates, they can help to make high-interest debt like outstanding credit card balances more affordable. 

However, all home equity loans aren't the same. Lenders vary in terms of the loan amounts, eligibility requirements, interest rates, funding times, fees and customer service quality they offer. If you want to find the best lender for your situation, you'll need to shop around. 

Start by exploring your home equity loan options here now.

Best home equity loans for debt consolidation

To help you get started, we've listed some best home equity loans for debt consolidation, broken down into five categories.

Best for low fees: Discover

While best known for its credit card offerings, Discover also offers a competitive lineup of financial products, including home equity loans with no fees. 

Like most lenders, Discover offers large home equity loan amounts — up to $300,000 — and long repayment terms up to 30 years. However, unlike most, it covers the fees for your application, appraisal, origination and other closing costs. That said, if you pay off your loan within 36 months, you may have to reimburse Discover up to $500. 

The lender also has flexible eligibility requirements, accepting credit scores as low as 620 and debt-to-income ratios up to 43%. Further, Discover offers competitive annual percentage rates (APRs) starting at 6.99% (as of December 27, 2023). On the downside, approval and funding can take a bit longer — the company estimates six to eight weeks. 

Best for customer satisfaction: Rocket Mortgage

Rocket Mortgage, formerly Quicken Loans, is a company that specializes in using technology to simplify the mortgage process. Along with primary mortgages, it offers credit cards, personal loans, auto loans and home equity loans. 

When reviewing the company's home equity loan offering, the rates and terms are pretty standard. Available loan amounts go up to $350,000, origination fees range from 2% to 6% of the loan amount, and the loans are often funded within 30 days. 

Where Rocket Mortgage shines, however, is in its feedback from past borrowers. The lender has over 17,000 reviews on TrustPilot where it's earned an average rating of 4.7 stars. A recurring theme across the reviews is the mention of amazing customer service from representatives who are friendly, kind, efficient and knowledgeable. 

Best for no appraisal: Loan Depot

Loan Depot is a mortgage lender that can help you with home purchases, home refinancing, home equity loans and personal loans. 

The lender's home equity loans come in the form of a home equity line of credit (HELOC). You can borrow up to $250,000 and have the funds within as little as three weeks. The HELOCs come with a three-year draw period, a 10-year interest-only payment period and a 20-year repayment period. 

A standout perk from Loan Depot is that the company doesn't typically require an in-person appraisal. In most cases, it relies on an automated valuation model to assess your home's value. If you'd rather not hassle with an appraisal appointment, Loan Depot may be a good fit. On the downside, the APRs are variable and can go as high as 18%.

"A HELOC typically carries a floating rate. If interest rates go up (or down) the rate on your loan can change. HELOCs are great for smaller expenses that you plan on paying off quickly," says Matt Bruce, CFP(r), AIF(r), and president of Pointer Financial Group.

See what home equity loan and HELOC rates you qualify for here now.

Best for large loans: Spring EQ

Spring EQ is a mortgage lender that specializes in home equity loans and lines of credit. It stands out from the pack when it comes to loan size. While many lenders offer home equity loans that max out between $250,000 and $350,000, Spring EQ offers loans up to $500,000. 

The lender also offers a relatively fast funding time of 21 days, loan terms of five to 30 years and will let you borrow up to 95% of your home's equity. On the downside, the fees average around $800 for loans up to $175,000 and more for larger loans. 

Best for quick approvals: Figure

Figure is a financial technology company that streamlines HELOCs with the help of artificial intelligence and blockchain technology. Its focus on efficiency seems to be paying off as its HELOC approval turnaround time is weeks ahead of competitors. 

Figure offers online approval within minutes and funding in as few as five business days. Loan amounts go up to $400,000 and loan terms range from five to 30 years. Like a home equity loan, the full credit line given must be withdrawn when the loan is funded. However, unlike a home equity loan, you can withdraw from the credit line as you pay it down. 

Explore your all of your best home equity loan options online today!

Identify your needs to find the best home equity loan

Home equity loans aren't one size fits all. The right fit will depend on factors like your credit score, loan amount and desired funding time. Identify your needs first, and then shop around to find the best fit for your situation

"It's a good idea to compare offers from different lenders to ensure that you're getting the best possible terms and rates," says Samantha Odo, real estate sales representative and chief operating officer at Precondo. 

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