Quicken Loans Home Equity Loan Review
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Want to renovate your 1970s-era kitchen? Or maybe you need to add an extra bathroom as your family grows. Maybe you’re ready to pay off high-interest-rate credit card debt or looking for a way to help pay for at least part of your child’s college tuition.
A home equity loan can help. These loans allow you to borrow against your home’s equity. You can then use the funds to pay for whatever you’d like. As a first-time homebuyer, it is essential to be aware of all the types of loan products available in the market.
Many mortgage lenders offer these loans, including national lender Quicken Loans, owned by Rocket Mortgage. Is a home equity loan from Quicken Loans the right choice for you?
Read our guide to learn about the pros and cons of working with Quicken Loan.
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What is a Quicken Loans home equity loan?
A home equity loan allows you to borrow against the equity you’ve built in your home. Equity is the difference between your home's worth and your current mortgage debt. Say your home is worth $350,000, and you owe $200,000 on your mortgage. You have $150,000 of equity.
Lenders, such as Quicken Loans, will allow you to borrow up to a certain % of your equity amount, often up to 80%. Say you have $150,000 of equity. You might qualify for a home equity loan of $120,000. You’ll receive that money as a lump sum payment, which you can spend however you’d like.
Your home equity loan is a second mortgage, one that you pay back in monthly repayments, much like you do with your primary home loan. Your lender will charge you interest on your home equity loan, which you also pay off with each monthly payment.
You can apply for a home equity loan regardless of your primary mortgage type, including FHA, VA, or USDA loans. Home equity loans from Quicken Loans come with fixed interest rates, meaning that they remain the same throughout the life of the loan.
Home equity loans are not the only way to tap your home’s equity. Homeowners can also apply for a home equity line of credit or HELOC – though Quicken Loans does not offer these equity loans – that acts a bit like a credit card with your home’s equity as your credit limit. You can also apply for a cash-out refinance, which lets you both refinance your current mortgage to one with a lower interest rate and take out extra cash that you can spend on whatever you’d like.
Homeowners like home equity loans because they typically have lower interest rates than a personal loan or use credit cards to pay for home renovations, improvements, or other expenses. Because of these low equity loan rates, they typically rank as one of the more affordable ways to borrow money.
Home equity loans also come with tax benefits, depending on how you use the money. If you use your loan funds to pay for renovations or improvements that increase the home’s value, you can deduct the interest you pay from your income taxes each year. However, you can’t deduct the interest you pay if you use your home equity loan in other ways, such as paying off credit card debt or covering a child’s college tuition.
On the negative side, you can lose your home if you stop making home equity loan payments. A home equity loan is a secured form of debt, one in which your home acts as collateral. If you stop paying on a home equity loan, your lender can foreclose upon your house and take over ownership of it.
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How does a Quicken Loans home equity loan work?
You'll need to meet certain requirements to qualify for a home equity loan from Quicken Loans. First, Quicken Loans requires a FICO credit score of at least 680. Your three-digit credit score measures how well you’ve paid your bills and managed your credit. If your credit score is too low, you can steadily improve it by paying your bills on time each month and paying off as much of your credit card debt as possible.
Quicken Loans also requires that your total monthly recurring debts—which include the payments you make on your primary mortgage, new home equity loan, personal loans, car loans, student loans, and minimum monthly credit card payments—equal no more than 50% of your gross monthly income.
You also need enough equity in your home to take out a home equity loan of at least $45,000. Quicken Loans lets you take out home equity loans for up to $350,000.
Once you apply for a home equity loan, Quicken Loans will review your application, check your credit score and credit reports, and verify your income. You might need to provide copies of documents such as your most recent paycheck stubs, bank account statements, income-tax returns, and W2 forms.
When you are ready to apply for a home equity loan from Quicken Loans, click on the “Connect With an Expert” button on this page. That will send you to the start of Quicken Loans’s home equity loan application page, which looks like this:
Once here, click on your home type and choose the “Next” button. That brings up this page:
Choose whether you want to tap the equity of a primary residence or a secondary home. A secondary home could be a vacation home or investment property. Then click “Next.” On the next page, Quicken Loans will ask you to estimate your home’s current value:
Enter an amount and click “Next.” Quicken Loans will then ask for the balance on your mortgage. Provide this information and click “Next.” You’ll then have the option to tell Quicken Loans how much additional cash you’d like to borrow. Enter that amount and click “Next.”
Quicken Loans will then ask you a series of questions, such as whether you’ve served in the U.S. military, the credit score you think you have, whether you already have a second mortgage, your employment status, whether you’ve filed for bankruptcy status in the last three years and your full name, address, phone number, and email.
Once you provide this information, a Quicken Loans mortgage officer will contact you to start the application process and officially explain the loan terms.
How much will a Quicken Loans home equity loan cost?
The cost of a home equity loan from Quicken Loans will vary based on the amount of money you are borrowing. Quicken Loans charges closing costs, the fees it levies to originate your loan, which vary depending on your home equity loan size.
On its website, Quicken Loanssays it will charge closing costs ranging from 2% to 6% of the home equity loan amount. For example, if you take out a home equity loan of $80,000, you can expect to pay closing costs ranging from $1,600 to $4,800.
You can roll those costs into your home equity loan. If you borrow $80,000 and your closing costs come out to $2,000, you’d borrow $82,000 and pay that amount back in regular monthly payments with interest. You can also pay your closing costs upfront when you close on your Quicken Loans home equity loan.
Quicken Loans home equity loan features
You can spend the money however you’d like. A home equity loan from Quicken Loans comes with plenty of flexibility. You can pay for home renovations, an upcoming wedding, or your child’s college tuition. You can also use the funds to pay off credit card debt that might come with a far higher interest rate than the one attached to your home equity loan.
You can take out a home equity loan in any state. Quicken Loans offers home equity loans in all 50 states, including Washington, D.C. Quicken Loans will order a home appraisal for you. An appraiser will visit your home to determine the amount of equity in your home and its current market value. To do this, appraisers will tour your property and study similar home sales in your neighborhood.
You’ll receive your money in a lump-sum payment. Once approved for a home equity loan, Quicken Loans will send you your money in a single payment, either by a check or as a deposit to your bank account.
You can start the application process online. You won’t have to speak to a mortgage lender to start your Quicken Loans application. You can apply for a home equity loan online. After you provide your personal and financial information, a representative of Quicken Loans will contact you to complete your application.
Use Quicken Loans to Check Top Lender Rates
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Who is a Quicken Loans home equity loan best for?
Homeowners with plenty of equity. The more equity you have in your home, the more you can borrow with a home equity loan. Quicken Loans requires that you have enough equity to borrow at least $45,000.
Homeowners with solid credit scores. You’ll need a FICO credit score of at least 680 to qualify for a home equity loan with Quicken Loans. If your score is lower than this, you might have to wait to improve it before applying with Quicken Loans.
Homeowners planning major home renovations. The best use of a Quicken Loans home equity loan is to use the funds to pay for home improvements or renovations. When you use your money in this way, you can deduct the interest you pay on your home equity loan when filing your income taxes.
Homeowners who can afford a second mortgage payment. Draft a household budget before applying for a Quicken Loans home equity loan. Remember, once you take out a home equity loan, you’ll make two monthly mortgage payments. Make sure that you have enough extra income to cover that second mortgage payment.
Who should not apply for a Quicken Loans home loan?
Homeowners with lower credit scores. One of the benefits of home equity loans is that they don’t come with the higher interest rates that you get with credit cards or personal loans. If your FICO credit score is too low, you might not qualify for the lowest rates, which removes one of the prime advantages of a home equity loan. Most lenders consider FICO scores of 740 or higher very good and those of 800 or higher excellent. The closer your scores are to these levels, the higher your chances of qualifying for a home equity loan with a low interest rate.
Newer homeowners without much equity. It can take time to build equity in your home. As a new homeowner, you might not have made enough monthly mortgage payments to build your home equity. Quicken Loans requires that you have enough equity to apply for a home equity loan of at least $45,000. If you haven’t built enough? You’ll have to wait.
Homeowners with too much debt. Quicken Loans requires spending no more than 50% of your gross monthly income on recurring monthly debts. If you have too much debt, you might struggle to pay the second monthly mortgage payment that comes with a home equity loan.
Pros and cons of a Quicken Loans home equity loan
Pros
- You can use the money from a home equity loan however you’d like. Home equity loans tend to come with lower interest rates, making them more affordable forms of debt.
- Homeowners in all 50 states and Washington, D.C. can apply for Quicken Loans home equity loans.
Cons
- Home equity loans aren’t free. You’ll pay from 2% to 6% of your loan amount in closing costs.
- You’ll need a FICO credit score of 680 or higher to qualify for a Quicken Loans home equity loan.
- If you don’t have enough equity, you can’t apply for a home equity loan with Quicken Loans.
Quicken Loans home equity loans versus the competitors
Lender | Where available? | Home equity loan limits | Home equity loan requirements |
Quicken Loans | All 50 states and Washington, D.C. | Minimum loan amount of $45,000; maximum loan amount of $350,000 | Minimum credit score of 680. Monthly recurring debts should equal no more than 50% of gross monthly income |
U.S. Bank | All 50 states and Washington, D.C. | U.S. Bank will typically allow homeowners to borrow up to 80% of the equity in their home, up to a maximum of $750,000 in most areas of the country. | Minimum credit score of 660. U.S. Bank will also look at your debt-to-income ratio and |
Navy Federal Credit Union | Available in all 50 states and Washington, D.C. You must be a servicemember, veteran of any branch of the U.S. Armed Forces or employee of the Department of Defense to join this credit union. | Depending on your credit, you can borrow up to 100% of your home’s equity. | Navy Federal Credit Union does not charge any closing costs. You might, though, have to pay fees from third-party providers such as those providing title insurance and credit reports. |
U.S. Bank
U.S. Bank is a national lender that provides home equity loans in all 50 states and Washington, D.C. Unlike Quicken Loans, U.S. Bank does not put a dollar limit on the size of its home equity loans. Instead, the bank typically allows homeowners to borrow up to 80% of their home’s equity. If you have $150,000 in equity, you could borrow up to $120,000 in a home equity loan. There is a limit, though: In most parts of the country, U.S. Bank allows you to borrow a maximum of $750,000 in a home equity loan.
U.S. Bank says homeowners must have a minimum FICO credit score of 660 to qualify for a home equity loan. Unlike Quicken Loans, the bank does not charge closing costs on its home equity loans.
Navy Federal Credit Union
Navy Federal Credit Union is a good choice if you want to borrow a lot: If your credit is strong enough, this credit union will let you borrow up to 100% of the equity you’ve built in your home. One catch: Navy Federal Credit Union isn’t open to everyone. To join the credit union, you must be a servicemember, a veteran of any branch of the U.S. Armed Forces, or an employee of the Department of Defense.
Navy Federal Credit Union does not charge origination fees for home equity loans. However, you might still have to pay some fees, including those of third-party providers that provide title insurance, credit reports, inspections, and other services.
Use Quicken Loans to Check Top Lender Rates
- Powerful home equity solutions
- Get transparent rates from providers
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience
The bottom line
If you need a chunk of change to pay for home renovations or improvements – or anything else– a home equity loan might make sense, thanks to their lower interest rates. Just make sure you can afford the payments on a second mortgage on your home. If you fall behind on these payments, your lender could foreclose on your home.
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Writer
Dan Rafter is a freelance writer who has more than 20 years experience covering personal finance. He's written for the Chicago Tribune, Washington Post, Bankrate, CreditCards.com, Rocket Mortgage, NortonLifeLock and several others.
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