Taking out a home equity line of credit (HELOC) is a great way for homeowners to use the equity they’ve built in their home to fund renovations, finance major purchases, or consolidate debt. If you want to borrow money against your home, choosing the right HELOC lender is essential. Getting a line of credit from a reputable lender will give you the peace of mind and protection needed when making such a big financial decision.
In addition to offering some of the best rates, our top picks for HELOC lenders all offer superior customer service, have strong financial ratings, and make use of fair and easy-to-understand terms. If you already have a good understanding of home equity credit lines, skip below to read about our best HELOC lenders. If you want to learn more about how home equity lines of credit work, when they make sense, and how to pick the best one, continue reading.
Who are the Best HELOC Lenders?
Bank of America
|Chase||Wells Fargo|| |
|Best for||Best Overall||Best for Home Improvement||Best Interest Rates||Runner-Up|
|Financial Strength||Strong||Strong||Excellent||Above Average|
|Full Review||Read Review||Read Review||Read Review||Read Review|
Bank of America
|Best For:||Best Overall|
|Full Review:||Read Review|
|Best For:||Best for Home Improvement|
|Full Review:||Read Review|
|Best For:||Best Interest Rates|
|Full Review:||Read Review|
|Financial Strength:||Above Average|
|Full Review:||Read Review|
Bank of America (Best Overall)
We rank Bank of America as the top HELOC lender. Bank of America stands out as a quality option because of its best-in-class financial strength, strong customer reputation, fair interest rates, and incredible discounts. On top of this, Bank of America charges no upfront or ongoing fees. To learn more about Bank of America’s home equity line of credit rates and offerings, read the complete Bank of America HELOC review below.
Chase Bank (Best for Home Improvement)
Chase is another great HELOC lender. Chase is one of the United States’ oldest banks and boasts strong financial strength ratings from all of the major credit rating agencies. Chase’s interest rates are competitive, and they offer generous discounts to certain borrowers. Chase also offers some fantastic tools and information for borrowers looking to use their credit line for home improvements. For a full summary of their offers, read the full Chase Bank HELOC review below.
Wells Fargo (Best Interest Rates)
Wells Fargo is one of the best lenders for borrowers looking to get the lowest interest rate possible. Wells Fargo’s home equity line of credit can have interest rates below 5 percent for the most qualified borrowers. In addition to offering low rates, Wells Fargo has no fees to open the credit line. For more information about the Wells Fargo home equity line of credit, read the review below.
U.S. Bank (Runner-Up)
U.S. Bank is another strong HELOC option for borrowers, offering low interest rates. U.S. Bank, despite being only 50 years young, is one of the most financially stable banks in the United States and has a good reputation with millions of customers. To learn more, read the full U.S. Bank HELOC review.
For those who want to learn more about home equity lines of credit, this guide is designed to make you an expert. Use the outline below to see what content will be covered and to navigate through relevant sections:
- What is a home equity line of credit?
- How does a home equity line of credit work?
- Understanding HELOC rates
- Pros and cons of a home equity line of credit
- How to qualify for a HELOC
- Finding the best lenders to work with
- The best HELOC lenders
What is a Home Equity Line of Credit?
A home equity line of credit, or HELOC (pronounced ‘hee-lock’), is a credit line in which the collateral is the borrower’s equity in his or her home. It provides a revolving line of credit, which most borrowers use to pay for large expenses, such as property renovations or education costs.
HELOCs can be an attractive method of using credit because interest rates are usually much lower for a HELOC than for a standard credit line, like a credit card.
When a HELOC is used responsibly—for example, to invest in renovations or education—it creates additional value for the borrower by increasing the value of their property or by increasing the borrower’s value in the workplace. Used irresponsibly, a HELOC can put a borrower into deeper debt and put their property at risk. The U.S. Census estimates that about 3.2 million households in the U.S. have an outstanding line of credit. Of those, approximately 65 percent of borrowers put funds from their credit line toward home improvements, such as additions, repairs, and renovations.
How Does a Home Equity Line of Credit Work?
A home equity line of credit functions similarly to a standard line of credit, like a credit card, giving borrowers the ability to borrow, repay, and repeat as long as the credit line remains open. The credit line is backed by the borrower’s home, and the credit limit is determined by the amount of equity the borrower has in their home. The borrower’s house is used as collateral and could potentially become property of the lender if the borrower cannot pay off their debt.
Here, we evaluate how each aspect of a home equity line of credit works:
As with all loans and lines of credit, the lender charges the borrower an interest rate on the amount they borrow. However, the rates are typically much lower than what are common for credit cards or other credit lines.
But rates are not the same for every borrower and every credit line. Rates from most lenders will be based on the prime rate or LIBOR, but the exact rate will vary by factors like the amount being borrowed, the occupancy status of the home, and whether or not there are any existing liens on the property.
It is important to note that all home equity lines of credit use variable interest rates, which means that the borrower’s interest rate will vary with the prime rate, or other benchmark interest rates. However, many lenders have different options that let borrowers protect themselves against rising interest rates. For example, most lenders will offer a cap on the maximum interest rate and a cap on the annual rate increase.
Many state governments also have usury laws that prevent lenders from raising interest rates above a certain limit or more than a certain amount each year.
One of the key factors in determining a borrower’s credit limit for a HELOC is the “loan-to-value ratio” (LTV) that the lender supports. The LTV is the ratio of what the borrower plans to borrow (including the remaining mortgage balance) divided by the value of their house. Typically, lenders will allow a 75-80 percent LTV, but some lenders will go higher. In any case, the borrower must retain at least some equity in their property.
Example – How to Determine a HELOC Credit Limit
To better understand how the loan-to-value ratio is used, imagine a scenario in which an individual’s home is worth $400,000, and she still owes $200,000 on the property. Supposing her lender offers a loan-to-value of up to 80 percent, let’s calculate the potential credit limit.
First, the lender only allows borrowing up to 80 percent of the home’s value:
$400,000 x 80% = $320,000
So, only $320,000 of the home’s total equity can be borrowed against.
Second, the borrower cannot receive a credit line for property they do not own. So if the property still has a mortgage payment, the lender will subtract the amount still owed on the mortgage:
$320,000 – $200,000 = $120,000
This leaves the borrower with a maximum potential credit line of $120,000 in this scenario.
According to the U.S. Census Bureau, the median home equity line of credit limit in 2017 for U.S. households with a credit line was $60,000. The table below shows the percentage of these households with access to various credit limits. This will give you a good idea of how much money people typically have access to.
HELOC Credit Limits for U.S. Households
|Total HELOC Limit||Percentage of Borrowers|
|Less than $10,000||1.2%|
|$10,000 to $19,999||5.3%|
|$20,000 to $29,999||12.0%|
|$30,000 to $39,999||8.0%|
|$40,000 to $49,999||6.1%|
|$50,000 to $59,999||10.4%|
|$60,000 to $69,999||5.1%|
|$70,000 to $79,999||5.4%|
|$80,000 to $99,999||5.4%|
|$100,000 to $119,999||12.5%|
|$120,000 to $149,999||4.0%|
|$150,000 or more||13.0%|
Fees & Additional Costs
There are many potential fees associated with HELOCs. The fee structure can actually be similar to that of a mortgage. Here is a list of some of the potential fees lenders may charge:
- Home Appraisal: In order to lend against the value of a home, the lender will need a 3rd party appraiser to estimate the value of the property. The cost of a home appraisal for a single-family home is usually somewhere between $300 and $500.
- Application Fee: Some lenders will charge an application fee just to apply for the HELOC. Many do not.
- Title Search & Title Insurance: Many lenders will require a title search to verify that the borrower is indeed the owner and there are no existing or unknown property liens that would impact the credit line. This usually costs between $50-$150. Some borrowers may also require title insurance to add protection against a situation where the owner does not own the property. This cost varies widely by property, but is usually between $150-$1,500.
- Document Preparation & Attorney Fees: Many lenders will charge preparation fees for the legal documents necessary to issue the HELOC.
- Inactivity Fees: To ensure that the borrower uses the credit line (and so that the lender can profit from the interest payments), lenders may impose an inactivity fee on accounts with low or no activity.
- Transaction Charges: Some lenders will charge a fee for each use of the credit line. We recommend avoiding HELOCs that have such fees.
- Prepayment Penalties: Paying back the debt on a HELOC decreases the amount of money that the bank will make from the borrower in interest payments. Because of this, many lenders will charge a fee to borrowers who pay their balance off early.
- Annual Maintenance Fees: Some lenders will charge an annual fee associated with the line of credit. Usually this is between $50-$200, but it varies greatly across lenders. Some lenders either don’t have annual fees, or they wave the fees for existing customers.
Loan Terms & Monthly Payments
The term or duration of a home equity line of credit is actually broken into two distinct time periods: the draw period and the repayment period. Combined, these last about 20-30 years, depending on the specific terms of the HELOC.
The draw period is the time when the borrower can spend, or draw on, the credit line. This period often lasts between five and 10 years. Borrowers still make monthly payments during the draw period, but they first work toward paying off the interest before the principal.
Once the draw period ends, the repayment period begins. The borrower can no longer draw from the credit line and must pay down the balance they’ve accumulated. This period usually lasts between 10 and 20 years. Payments made in this period also first go toward paying off the interest balance before paying off the principal. It’s important to note that depending on what the borrowed funds are used for, the interest payments may be tax deductible.
In 2017, the median monthly payment that borrowers made toward their home equity line of credit was approximately $300. The table below summarizes the monthly payments made by U.S. borrowers toward their outstanding HELOC balance.
Monthly HELOC Payments for U.S. Households
|HELOC Monthly Payment||Percentage of Borrowers|
|Less than $100||12.7%|
|$100 to $199||19.8%|
|$200 to $249||8%|
|$250 to $299||5.7%|
|$300 to $349||8.8%|
|$350 to $399||4.7%|
|$400 to $449||6.2%|
|$450 to $499||2.2%|
|$500 to $599||8%|
|$600 to $699||3.2%|
|$700 to $799||2.8%|
|$800 to $999||3.5%|
|$1000 or more||8.1%|
When evaluating HELOC lenders, borrowers should also consider how their money will be made available to them. Typically, lenders provide access to the funds in one or more of the following ways:
- Via transfer to a checking or other bank account
- Via checks that draw directly from the line of credit
- Via a HELOC card that functions like a credit card
Home Equity Line of Credit Rates
As mentioned above, home equity lines of credit typically use a variable interest rate, which means the interest rate will change over the life of the credit line. Some lenders also offer options to convert part (or all) of the credit line to a fixed rate. This section explores how variable- and fixed-interest HELOCs work.
HELOCs With Variable Interest Rates
A variable interest rate means that the interest rate, which determines monthly payments, is subject to change over time. Lenders almost always base their HELOC interest rate on the Prime Rate. The Prime Rate is not the same as the Federal Funds Rate, but it is heavily influenced by it, and is usually about 3 percentage points higher. The Wall Street Journal defines the Prime Rate as the base rate on corporate loans used by at least 75 percent of the 30 largest U.S. banks.
Lenders like Bank of America, Wells Fargo, Chase, and U.S. Bank all use the U.S. Prime Rate as their base rate for home equity lines of credit. This Prime Rate changes with interest rates set by the Federal Reserve. Most banks reserve the right to change their rate monthly, which means they could adjust with movement in the U.S. Prime Rate.
On top of the Prime Rate, the lender will also charge a margin, which is usually one percentage point or more. This will remain constant through the life of the loan. Lenders will usually set a maximum interest rate, so that the variable interest does not become too great of a risk for the borrower. Similarly, they may cap the annual interest rate increase as well. To entice borrowers, many lenders will also offer introductory interest rates that are fixed at a low rate, usually below market, for a year or more.
HELOCs With Fixed Interest Rates
While most HELOCs are offered with variable interest rates, some lenders offer options to convert some, or all, of the amount borrowed into a fixed interest balance with predictable monthly payments that do not fluctuate with federal interest rates.
Borrowers should note that the fixed-interest HELOC options always have higher interest rates than the current variable interest rate options. However, it could be a wise option if current interest rates are low and expected to rise.
Lenders such as Chase, Bank of America, and Wells Fargo all allow borrowers to convert at least a portion of their balance to a fixed interest. This might be a good idea if interest rates are low, and a large portion of the credit line is being used for a specific large expense. Rather than carrying a high balance at a variable interest rate for a decade or more, which could be risky in a volatile economy, the borrower may want to secure a fixed interest rate on the balance, even if it’s a bit higher than the current variable rate.
Each bank’s program for converting variable-interest HELOC balances into fixed-interest debt varies slightly. The reviews below discuss the specifics of each bank’s program.
Current Interest Rates
As mentioned above, the Prime Rate, or U.S. Prime Rate, reported by the Wall Street Journal, is the primary baseline interest rate used by banks to set their interest rates for home equity lines of credit and other loan products. The Prime Rate does not change at regular intervals. It only moves up or down when banks adjust their interest rates in line with the federal reserve.
The table below shows the distribution of HELOC rates for U.S. borrowers in 2017—the most recent data available from the U.S. Census. It’s important to note that the below data reflects all HELOCs that borrowers had access to in 2017, not all HELOCs that were issued in 2017.
HELOC Interest Rates for U.S. Households
|Interest Rate||Percentage of Borrowers|
|Less than 3%||9.7%|
|3% to 3.9%||27.1%|
|4% to 4.9%||34.9%|
|5% to 5.9%||11.9%|
|6% to 6.9%||6.5%|
|7% to 7.9%||2%|
|8% or more||1.5%|
Historical U.S. Prime Interest Rate (1947-2020)
The graph above shows that the U.S. Prime Rate peaked at 21.5 percent in 1980 and the current rate is an extremely low 3.25 percent. The Federal Reserve also provides forecasts and updates about the future of interest rates. This information should be of note to anyone borrowing money at a variable interest rate because this will have a direct effect on their future interest rates. Borrowers can find more information about the Federal Reserve’s plans on the Federal Reserve’s website.
This information might be hard to use if a borrower can’t relate the interest rate to their monthly payment. To help borrowers with this, the table below shows the minimum monthly payment at the start of a 15-year repayment period on a $60,000 HELOC balance for various interest rates. We assumed a 2 percent margin by the lender, which is a conservative estimate.
Historical Rates and Estimated Monthly Payments on a $60,000 Balance
|Year||U.S. Prime Rate||Estimated HELOC Rate||Minimum Monthly Payment|
Pros & Cons of Home Equity Lines of Credit
Whether a home equity line of credit is right for you depends on your financial circumstances and outlook. If a borrower has any concern about their own ability to repay, they should probably avoid a HELOC.
In general, HELOCs are best suited for those looking to boost an already positive financial picture. This is why it is very popular to use HELOCs to invest in property renovations or education. Using a HELOC to pay for vacations or cars is more risky, because these expenses won’t improve the borrower’s ability to pay back the loan. With that in mind, consider these pros and cons of a home equity credit line:
Pros: Benefits of a Home Equity Line of Credit
A home equity line of credit provides several advantages as a method of financing upcoming expenses, including:
- Low Interest Rates: Home equity lines of credit offer much lower interest rates than standard credit lines, like credit cards. Usually, the rate is only 1-2 percentage points above the U.S. Prime Rate, which is significantly lower than the benchmarks used for credit card interest rates. For example, in 2018, the average home equity credit line interest rate was about 5 percent, while the average credit card interest rate was above 15 percent.
- Tax Deductible Interest Payments: According to the IRS, when a home equity line of credit is used to finance improvements to one’s home, the interest payments toward the line of credit are tax deductible. Unfortunately, interest on borrowed money used to finance other expenses will not be tax deductible.
- Low Interest Burden: With any loan, the borrower pays interest on the entire amount of money borrowed through the loan. However, in a home equity line of credit, the borrower will only pay interest on the money that is spent with the credit line, even though the credit limit could be much higher.
- Easy Funding for Renovations & Remodels: Banks like to lend to borrowers who will use the money wisely. So, a bank is usually more likely to extend a home equity line of credit to someone who plans to use the money on renovations or home improvements that increase the value of the property (e.g. installing more efficient replacement windows, updating the HVAC system, putting on a new roof, etc.).
Cons: Disadvantages of a Home Equity Line of Credit
A home equity line of credit is a great option for many, but borrowers should be familiar with the disadvantages and risks of a HELOC before using one, including:
- Risk of Foreclosure: The downside risks associated with HELOCs are quite high because the line of credit is backed by the borrower’s home. If the borrower cannot pay back what they borrowed, their home may become property of the lender, resulting in a foreclosure.
- Variable Interest: While the interest rates are lower than normal credit, the rate is subject to change. Luckily, most lenders cap the interest rate, but borrowers should track the interest rate to be sure they aren’t getting in over their head.
- Upfront Costs & Fees: Getting started with a home equity line of credit can be a bit pricey because of the initial expenses and fees. Choosing a lender wisely can limit the costs of the HELOC.
In addition to a home equity line of credit, several other options allow homeowners to access the equity they’ve built in their homes, including home equity loans and cash-out mortgage refinancing.
HELOCs vs. Home Equity Loans (Second Mortgage)
A home equity loan differs from a home equity line of credit in how the value of the home equity is distributed to the borrower. In the case of a HELOC, the borrower gets a line of credit, allowing them to borrow, repay, and repeat as needed. With a HELOC, the borrower is not given a lump sum of money up front. With a home equity loan, on the other hand, the borrower receives the borrowed money in a single payment, and monthly repayments begin immediately.
Additionally, a HELOC is always a variable interest loan, while a home equity loan uses a fixed interest rate. Variable interest rates used by HELOCs tend to be lower than fixed interest rates of home equity loans by a few percentage points. However, variable interest HELOCs have the potential to increase, while the rates on a home equity loan will not change. Which method is better for the borrower depends on their financial situation and what they plan to do with the funds.
Because of its structure, a home equity loan is typically a better option for individuals looking to pay for a major one-time expense without the need for additional funds. On the other hand, borrowers who may also want to have funds available for the future, or who aren’t certain about the exact amount they’ll need, might be better off considering a HELOC.
For example, a homeowner who plans to make a specific, one-time upgrade to their property—such as upgrading their roof or repaving their driveway—may find a home equity loan more suitable. But an owner who plans to make a number of ongoing repairs to their property over a longer period of time may enjoy the flexibility of a home equity line of credit.
HELOCs vs. Cash-Out Refinancing
A mortgage refinance involves restructuring an existing mortgage loan to a new interest rate or term. A cash-out mortgage refinance is the same, but includes converting some of the owned equity to cash, which then increases what the owner owes on the home. In other words, a cash-out refinance involves refinancing an existing mortgage for more than the borrower owes, and taking out the difference in cash.
Unlike a cash-out refinance, a home equity line of credit does not impact the borrower’s existing mortgage—it is only a line of credit that uses the owner’s home equity as collateral.
A cash-out refinance is typically a more suitable option for borrowers who not only need access to funds, but who could also benefit from refinancing their current mortgage (to get a better interest rate, shorten the loan term, or switch from a variable to a fixed interest rate).
The cash-out refinance option provides the cash in one payment, rather than offering a line of credit. So, borrowers should consider whether they’ll need ongoing access to cash or if they can accomplish their goals with a one-time payment.
How to Get a Home Equity Line of Credit
To actually get approved for a HELOC, interested borrowers must contact the lenders of their choice and submit key financial documentation. Usually, borrowers must field a number of questions pertaining to their financial records and meet various requirements before the lender will ultimately offer a term sheet.
Home Equity Line of Credit Requirements
- Equity & Borrowing Requirement: Lenders will only let an individual borrow against a certain amount of their home’s value. Each lender will have different maximum borrowing guidelines, but many use 85 percent as the benchmark. Many lenders will also set a minimum borrowing requirement, which for most large lenders is $25,000.
- Debt-to-Income Ratio: Borrowers must also prove that they will be able to repay what they borrow by showing that their debt payments will be significantly less than their normal income. Lenders measure this with the “debt-to-income” ratio, which measures the borrower’s total monthly debt payments against their total monthly income. Lenders typically like to see this number below 40 percent.
- Credit History & Score: Lenders always look at the credit history of the borrower to confirm that there are no major blemishes. Most importantly, most lenders want to lend to borrowers with credit scores above 620.
- Employment History: The stability of the borrower’s employment may play a role in whether they are eligible for a HELOC. Most lenders like to see steady employment and income statements dating back two years or more.
How to Get the Best HELOC Rates
While it may be fairly easy for a homeowner to qualify for a home equity credit line, getting a great interest rate on the borrowed money is far more difficult. Lenders look for “excellence” in the items mentioned above, as well as in a few other areas to assess a borrower’s likelihood of making their payments.
Here’s a short checklist to guarantee the best interest rate on a HELOC:
- Borrow more than $100,000
- Keep other debts as low as possible leading up to the application
- Show a steady track record of high income (ratio of monthly debt-to-income should be less than 40 percent)
- Maintain an excellent credit score, above 760
- Take advantage of promotions and discounts offered by the lender
- Keep LTV (loan-to-value) low, below 70 percent
Borrowers who meet these criteria can expect the best interest rates that lenders offer, which can be anywhere between 0-3 percent above the U.S. Prime Rate.
When trying to get the best interest rate from a lender, wise borrowers will also consider all of the fees associated with the HELOC as well. Some lenders will offer phenomenal rates, sometimes even matching the U.S. Prime Rate. However, the fees on the credit line may outweigh the savings associated with the low interest rate.
How Long Does it Take to Get Approved?
Assuming the applicant meets all of the lender’s requirements, the approval and closing process can take anywhere from 14 to 45 days. Because the lender must confirm the property’s value through an appraisal, borrowers cannot be approved through a simple online application.
That said, many lenders offer basic online forms and calculators to help borrowers determine if they will qualify and what their potential credit limit could be. These allow applicants to quickly test whether they might qualify.
Finding the Best Home Equity Line of Credit
Before starting down the path of sending financial documents to lenders, we recommend considering several factors about the lenders you are considering. There are many businesses and banks out there willing to provide interested borrowers with home equity lines of credit. But there are several factors that borrowers should consider about each lender they look at.
Customer Service & Company Reputation
A company’s reputation is one of the more important factors to consider. When working to set up the terms and details of your credit line, you will probably be speaking with a representative of the lender frequently. You’ll want a positive experience, and the best way to ensure that is by going with a company who has a great reputation. Companies like the Better Business Bureau help buyers learn about a company and their reputation before getting involved with them.
The interest rate may be the most important factor for many borrowers. As we discussed above, this will almost always be a variable interest rate slightly above the U.S. Prime Rate. However, just how high above the Prime Rate will vary a bit by lender.
Some lenders will also shave off some interest when borrowers meet certain criteria or do additional business with the lender. Lenders like BofA and Chase allow borrowers to reduce their interest rate by about half a percentage point if they take advantage of the promotions available.
Several lenders also offer introductory, reduced interest rates (often around one percentage point below the borrower’s qualified interest rate), which apply only for the first year of payments.
Interest Rate Caps
Borrowers should take special note of the maximum interest rate, which is the cap that the lender puts on the loan’s interest rate. If interest rates rise significantly, this protects borrowers. So, make sure that the lender has a reasonable interest rate cap. Usually, this will be around 18-20 percent, near the peak all-time U.S. Prime Rate of 21.5 percent, reached in 1980.
Fees & Closing Costs
If interest rate is an important consideration for you, then so should the closing costs and fees. While a home appraisal and title search are usually required by every lender, some will charge no additional fees for the HELOC. Be on the lookout for “transaction fees” and “inactivity fees,” which we recommend avoiding. The best way to find out about the additional loan costs is to ask the lenders that you are seriously considering.
Fixed Interest Option
Some lenders will let borrowers convert part of their credit line to a fixed interest balance, which can be beneficial. If this is of interest to you, make sure that the lenders you consider offer this option at fair terms.
The Best HELOC Lenders
Below is a list of the top home equity line of credit lenders. All of our top picks are reliable banks that offer best-in-class customer service, competitive rates, and fair terms.
1. Bank of America HELOC (Best Overall)
Bank of America is one of the United States’ longest standing and largest banks. The bank was founded in 1904 and manages over $2 trillion in assets. They also have a stellar reputation with their customers and should be a consideration for most individuals interested in a home equity line of credit.
Bank of America has an A+ rating with the Better Business Bureau, which means they do an outstanding job of addressing their customers’ complaints and have a strong reputation with their clients.
Bank of America’s financial strength is also quite impressive. They’ve been rated financially strong or excellent with all of the major credit rating agencies, including Moody’s (A3), Standard & Poor’s (A-), and Fitch (A+). Their strong credit ratings and a 100+ year track record of business demonstrate BofA’s trustworthiness and stability.
The application process for the Bank of America home equity line of credit is simple and complete. Those applying simply submit their key information online. The application is free, non-binding, and takes less than 20 minutes to complete.
The standard interest rate for a HELOC with BofA is currently 4.4 percent (assuming a credit line of at least $100,000 and strong credit background). They also occasionally offer low introductory rates for the first year, which can be below the prime rate.
Bank of America charges has no application fees, no closing costs, no annual fee, and no fee for converting part of the HELOC balance into a fixed-rate home equity loan.
Discounts & Perks
BofA has a few different interest rate reduction incentives that they offer to customers, including:
- 0.25 percent reduction in interest for borrowers who set up automatic monthly payments
- 0.1 percent reduction in interest for every $10,000 in initial withdrawals (up to 1.5 percent)
- Up to 0.375 percent reduction in interest for preferred clients (customers with a high balance of assets with BofA or Merrill Lynch)
How to Access Credit
Bank of America offers several ways that borrowers can access their credit including online banking, over the phone, at BofA locations, and via checks.
Other Financing Options
For borrowers who would prefer a fixed rate loan, Bank of America offers several options. Borrowers can even use the equity in their home to back multiple separate loans with BofA. This can be useful if some of the borrower’s upcoming expenses are eligible for financing through a fixed-rate loan, while others are not.
We rated Bank of America as Best Overall on our list of Best HELOC Lenders.
2. Chase HELOC (Best for Home Improvement)
Chase is one of the largest banks in the world and has been doing business for centuries. They offer a broad range of financial products and services including mortgages, refinancing, home equity loans, and, of course, home equity lines of credit. In 2018, over 17 million households had at least one Chase customer.
Chase does not maintain a primary reputation with the Better Business Bureau; however, most of the local Chase branches that have been rated score very strongly with their customers. In addition, their many years of doing business also validate their ability to satisfy customers.
Chase Bank dates back to 1799, when it was originally founded as the Bank of the Manhattan Company. This makes it one of the longest standing banks in the world. Chase has stellar financial strength and long-term credit issuer ratings with the top financial rating services: A+ with S&P, Aa2 with Moody’s, and AA with Fitch.
Chase offers many helpful calculators, guides, and tools to help prospective borrowers determine whether a HELOC and Chase are a good fit for their needs. If you know the terms you’re looking for, we recommend checking out their HELOC calculator to see if Chase can meet your needs before going deeper with Chase.
The interest rates for Chase’s HELOC typically range between 5.75 percent and 8.14 percent. These rates depend on the credit line amount, lien position, occupancy status, location, and credit history of the borrower.
Chase does have a $50 origination fee and a $50 annual fee with their HELOC; however, they have no other closing costs or fees, which is actually very impressive compared to other lenders.
Discounts & Perks
Chase, like other lenders, offers several rate-reduction options, including:
- 0.25 percent reduction in interest for borrowers with qualifying Chase checking or savings accounts
- 0.12 percent reduction in interest for setting up automatic payments through a Chase account
- 0.25 percent reduction in interest if $30,000 or more is withdrawn at closing
How to Access Credit
Chase allows borrowers to access their credit line through online transfer, phone call, or checks.
Other Financing Options
With their home equity line of credit, Chase does allow borrowers to switch from a variable to fixed interest rate on all or part of their balance.
Chase offers some really fantastic tools and guides for estimating the impact of a HELOC on your financial situation. Most helpful, in our opinion, is their renovation estimation calculator. This is one of the reasons we rated Chase as the Best HELOC Lender for Home Improvement.
3. Wells Fargo HELOC (Best Interest Rates)
Wells Fargo is another one of the United States’ largest banks. In 2018, Well Fargo managed nearly $2 trillion in assets and boasted a market cap of over $250 billion.
Although Wells Fargo does not have a rating with the Better Business Bureau, the company was founded in 1852 and has well over 100 years of successful business.
Wells Fargo Bank is a model of financial strength, receiving long-term credit issuer financial strength ratings of A+, Aa2, and AA- from S&P, Moody’s, and Fitch respectively.
Like most of the large lenders, Wells Fargo has a straightforward application process that borrowers can start online or by phone. They also offer an app called “yourLoanTracker” to help applicants track the status of their application.
Interest rates for a Wells Fargo HELOC range between 5 percent and 10.25 percent, and vary based on the amount borrowed and credit history of the borrower. Wells Fargo caps their interest rate increases at 2 percent per year and a maximum possible interest rate of 7 percent above the interest rate at the beginning of the draw period.
Wells Fargo doesn’t have any annual or prepayment fees, which is great for borrowers. They also pay any account opening fees to keep startup costs low.
Discounts & Perks
Wells Fargo allows their HELOC customers to convert some or all of their credit line into a fixed interest rate balance. Borrowers can do this at any time during the draw.
How to Access Credit
Wells Fargo allows borrowers to access their credit line in several ways, including online transfer, phone transfer, checks, or a HELOC credit card that draws directly from the credit line.
Other Financing Options
One fantastic benefit, exclusive to Wells Fargo, is that they offer principal-reducing payments during the draw period. As we discussed above, most lenders allocate payments during the draw period first toward the interest. This means that more interest is being accrued on the remaining principal. With Wells Fargo, borrowers can pay down the principal, which ultimately reduces their interest payments over the course of the credit line.
Because of their great interest rates and low rate caps, we rated Wells Fargo as the HELOC lender with the Best Interest Rates.
4. U.S. Bank HELOC (Runner-Up)
U.S. Bank is another one of the most reputable and stable lenders in the U.S., and they offer great rates on their home equity lines of credit. U.S. Bancorp, the holding company of U.S. Bank, was founded in 1968, which makes it quite a bit “younger” than the other lenders we’ve discussed, but still tenured by most standards.
U.S. Bank has a B+ rating with the Better Business Bureau, which represents a solid relationship between U.S. Bank and their customers. They make it extremely easy to get in touch with a knowledgeable agent by phone, email, or chat.
Even though U.S. Bank is a younger company than the other lenders we discussed, they stand tall in terms of financial strength. Their financial strength ratings of A+ (Standard & Poor), A1 (Moody’s), and AA (Fitch) put them near the very top of the rankings.
U.S. Bank lets borrowers apply online, at a branch, or over the phone. They also offer some great custom calculators and tools to help borrowers see where they stand before getting into the application process.
U.S. Bank offers some of the lowest interest rates of any lender on the list. Rates can be as low as 4.05 percent for the most qualified borrowers. U.S. Bank offers their best interest rates to borrowers with borrowing limits above $100,000, credit scores above 730, and an LTV below 70 percent.
A U.S. Bank HELOC comes with a $90 annual fee that is waived for the first year and waived completely if the borrower has, or signed up for, a U.S. Bank Platinum Checking Package account. They do not charge any closing costs.
How to Access Credit
U.S. Bank gives its HELOC customers access to their funds through four methods: 1) visiting a branch or ATM, 2) writing a check, 3) using a Visa Gold Access Card, or 4) banking online.
Other Financing Options
As most major lenders do, U.S. Bank allows its customers to switch part of their initial balance to a fixed interest rate payment structure. They also offer a number of other financing options, including home equity loans and mortgage refinance options.
U.S. Bank is a Runner-Up on our list of the Top Home Equity Line of Credit Providers.
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