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Can you get a home equity loan completely online?

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If you're going to borrow money from your home equity, some lenders allow you to complete the loan process fully digitally. Getty Images

Home equity borrowing has become an increasingly popular option in recent years, and there are a few good reasons for it. For starters, the current rate environment has caused rates on personal loans and credit cards to be elevated, but because borrowing against your home equity means using your home as collateral, home equity loan interest rates are typically much lower comparatively. And, home values have continued to soar in most markets. While the average homeowner had about $182,000 on average at the start of the pandemic, homeowners have an average of about $299,000 in home equity today

To access their home equity, homeowners in today's market generally opt for either a home equity loan or a home equity line of credit (HELOC). A home equity loan provides a lump sum amount upfront, while a HELOC acts more like a revolving line of credit that can be drawn upon as needed. But because interest rates on HELOCs fluctuate based on the prime rate, the fixed rates on home equity loans are often the more appealing choice, especially for those looking to secure a predictable, stable payment.

Interested homeowners have a wide range of home equity lenders to choose from — including online lenders who specialize in this type of borrowing. But if you work with an online home equity lender, can the entire home equity loan process be completed fully online? 

Explore your home equity loan options and compare the rates available to you today.

Can you get a home equity loan completely online?

The short answer is yes, it's possible to get a home equity loan fully online. While it used to be standard to have to go into a physical bank branch to apply for a home equity loan and go through underwriting and closing in person, more and more lenders are now enabling borrowers to complete the entire process online. For example, digital mortgage platforms and loan portals have been growing rapidly, allowing homeowners to submit applications, upload documents, go through verification steps and even close on the loan digitally from start to finish.

There are some unique factors to note about the online home equity loan process, though. One is that a physical home appraisal is usually still required when you're borrowing from your home equity, whether you're taking out a home equity loan online or through a traditional lender. In turn, homeowners will need to schedule and allow for an appraiser to visit the property as part of the process. That said, some lenders do offer no-appraisal home equity loans, and tech-enabled lenders are starting to explore alternative home valuation methods that could remove this step in the future. However, on-site appraisals currently remain the standard.

And, while much of the document submission and verification can be done digitally, home equity lenders may still require certain documents to be reviewed in person with a notary at a final closing appointment. So while the convenience of an online process can avoid multiple in-person branch visits, some face-to-face components may still be required when borrowing from your home equity online, depending on the lender.

Explore today's top home equity loans now.

How to get a home equity loan online

If you're a homeowner interested in pursuing a fully online home equity loan, here are some of the typical steps you can expect to take during the process:

  • Find the right lender: Research and compare online home equity loan lenders to understand their requirements, rates and loan amounts offered based on your estimated home equity. Look for lenders that offer competitive rates, transparent fees and flexible loan terms. And, it may also help to check if they have a strong online presence, user-friendly platforms and robust customer support to ensure that they're the best lender for your needs.
  • Get pre-qualified or pre-approved: You should also take steps to pre-qualify on the lender's website or platform, which can be done by submitting basic information about your home, income and existing mortgage. This step helps you understand how much you might be able to borrow and at what interest rate, without impacting your credit score.
  • Apply for the home equity loan: Once you've found the right lender, complete a full application, including uploading required documentation like tax returns, pay stubs, etc. Be prepared to provide detailed information about your financial situation, employment history and the purpose of the loan.
  • Get an appraisal: Schedule and facilitate a home appraisal, as the appraiser will need to visit your property for an on-site valuation. This step determines the current market value of your home, which is crucial in determining how much you can borrow with your home equity loan.
  • Review the loan documents: Review and electronically sign your home equity loan documents, including the loan estimate, closing disclosure and other paperwork after final approval. Make sure you understand all the terms and conditions, including the interest rate, fees and repayment schedule.
  • Work with a remote notary: You may then need to complete any remaining ID verification steps or meet with a remote notary (as required by your state). This step ensures the legal validity of the loan documents.
  • Have the funds distributed: Depending on the lender, you may be able to have funds disbursed partially or fully via electronic deposit at closing. Clarify the disbursement process and timeline with your lender.

The bottom line

With home equity at high levels, taking advantage of online home equity loan financing can make it even more convenient for you to put your home's value to use. But while getting a home equity loan entirely online is becoming a viable option, be sure to compare rates, fees and customer satisfaction ratings carefully across different lenders before you borrow. After all, a fully online process can save time, but you'll want to ensure you're still getting competitive loan terms and that you're working with the best lender possible. 

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