For homeowners

Home Equity Loan

Benefit from lower monthly payments and a steady interest rate. Ideal for buying or refinancing.

See if it’s perfect for me

Is a Home Equity Loan for you?

  • Keep your current mortgage intact
    This loan is a separate, second mortgage, allowing you to access equity without changing the terms or rate of your existing primary mortgage
  • You need funds for a major expense
    It provides a one-time lump sum, often used for significant costs like home renovations, education, or consolidating higher-interest debt.
  • You can manage another payment
    A home equity loan means a second mortgage payment. Ensure your budget comfortably accommodates this new fixed monthly outgoing.
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Understanding the guidelines

These are general pointers. If they sound like you, let’s talk—no pressure. We’ll explore if this loan is your best fit or find one that truly matches your goals.

Loan purpose

Use this loan to buy a home or refinance your current one. We guide you through both.

About refinancing

Credit profile

Lenders typically look for a score of 620+. Let’s review your credit picture together.

About credit score

DTI ratio

Your DTI (monthly debts vs. gross income) should ideally be under 50% to manage new payments.

About DTI ratios

Closing costs

Plan for closing costs. These are fees for loan services, separate from your down payment.

About closing costs

Estimate Your Possibilities

Use our calculators to explore numbers and understand what might work for you.

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Frequently asked questions

You asked about this loan. We listened. Here are answers based on research from fellow homebuyers, like you.

What lenders often fail to explain clearly is how an amortization schedule (the table detailing your loan payments) for a 30-year mortgage is structured. In the initial years, a significantly larger portion of your monthly payment goes towards paying interest, not reducing your principal (the actual amount borrowed). This means your loan balance will decrease very slowly at the beginning, which can be disheartening if you’re tracking your equity growth.

The blind spot here is the sheer volume of interest paid over three decades. While a 30-year fixed-rate mortgage offers an affordable monthly payment, the total interest you’ll pay can often be more than the original loan amount itself. Lenders prominently feature the lower payment but rarely provide a clear, upfront comparison of the cumulative interest cost versus shorter-term loans (like a 15-year mortgage), which would save you a substantial sum.

What lenders often downplay is that your total monthly housing payment includes more than just principal and interest (P&I). It typically also includes an escrow payment for property taxes and homeowners insurance (often abbreviated as PITI). While your P&I portion is fixed on a 30-year fixed-rate loan, property taxes can be reassessed annually by your local government and insurance premiums can rise due to market conditions, causing your overall monthly payment to increase unexpectedly.

The often-overlooked reality is that due to the slow principal paydown in the early years of a 30-year loan, you may have built very little equity (your actual ownership stake in the home). If you sell early, after factoring in selling costs (like real estate agent commissions, which can be 5-6% of the sale price, plus other closing costs), you might walk away with minimal profit or, in some cases, even owe money to sell your home, especially if property values haven’t significantly increased.

What lenders sometimes don’t make obvious is the specific procedure for applying extra payments directly to your principal balance. Simply sending extra money might result in the lender applying it to future interest payments or holding it in a separate “suspense account” unless you explicitly instruct them, often in writing or through their online payment portal, to apply the additional funds as a “principal-only” payment. Always verify how extra payments are being credited to avoid confusion and ensure you’re actually accelerating your loan payoff.

The confusing part lenders may not fully clarify is the true cost-benefit analysis of discount points in relation to your specific situation. One discount point typically costs 1% of your total loan amount and is paid upfront at closing to permanently reduce your mortgage interest rate. While this lowers your monthly payment, it’s not automatically a good deal; you must stay in the home long enough for the cumulative monthly savings to surpass the initial upfront cost of the points (this is called the “break-even point”), a calculation that isn’t always prominently displayed.