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Andrew Wan has over 10 years of experience in the mortgage industry, having held roles as a…
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From Houston to Dallas, Texas homeowners have seen a boost in home values and equity.
Mortgaged Texas homeowners saw an average equity gain of $54,000 year-over-year, according to CoreLogic’s Homeowner Equity Insights report for Q1 of 2022. Some Texas metro areas, such as the Austin-Round Rock and Sherman-Denison metro areas, saw annual price increases as high as 25.8% in late 2021.
Most home equity lenders determine how much of a loan they can extend based on the equity you have in your home, putting homeowners in a great position to tap into home equity for cash with either a home equity loan or home equity line of credit (HELOC). Borrowed home equity funds can be used for almost any purpose, such as debt consolidation, home improvements, or college tuition.
With that said, not all home equity loan and HELOC lenders are created equal, and you’ll need to know what to look for when trying to find the best HELOC or home equity lender for you. Whether it’s finding the lender with the best customer service, lowest fees, or the most flexible terms of repayment, we’ve done the legwork and highlighted our picks for the best HELOC and home equity lenders in “The Lone Star State.”
As with all of our home equity loan and home equity line of credit (HELOC) lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.
Headquartered in San Antonio, Texas, Frost Bank’s products are only available to Texas residents. Among the products offered are home equity loans, HELOCs, and interest-only HELOCs. If you’re not sure which one of these products is best for you, the Frost Bank website provides a loan product selection tool to help you consider your options. Home equity loans come with loan amounts of $2,000 and up, while HELOCs come with line amounts of $8,000 and up.
Frost Bank does not require an application fee or an annual fee. Additionally, there are no closing costs for the borrower. If you have automatic payments set up from a Frost Bank checking or savings account, you’ll be eligible for a 0.25% rate discount.
You can apply for a home equity loan or HELOC on the Frost Bank website, but first you’ll need to create an account. According to the website, the application will only take you about 15 minutes. If you’re not located in Texas, you won’t be able to apply.
Though Frost Bank’s nationwide availability is very limited, the bank has a helpful product selection tool, easy application process, and good price transparency. Frost Bank’s customer service is very accessible – another reason for its high rating.
Based in Cleveland, Ohio, KeyBank has been around for nearly 190 years. KeyBank offers home equity loans to customers in 15 states and HELOCs to customers in 44 states. Aside from a standard HELOC, KeyBank also offers interest-only and rate-lock options. Home equity loan amounts of $25,000 and up are available, while HELOCs have line amounts of $10,000 and up.
KeyBank HELOCs come with an annual fee of $50, but no closing costs unless your closing is performed by a closing agent. In that case, your closing fee could be up to $400. KeyBank offers a 0.25% rate discount for clients who have eligible checking and savings accounts with KeyBank. Additionally, home equity loans have an origination fee of $295.
The KeyBank application allows you to apply for multiple products at one time. If you’re not sure whether KeyBank loans are available in your area, the application will tell you once you input your zip code. If you’re an existing KeyBank customer, you’ll have the option to skim through the application and import your personal information from your account.
We like KeyBank because of its extensive product offerings. The streamlined application process for existing customers is helpful, but both existing and new customers will likely be pleased with the online user experience and availability of customer service that KeyBank offers.
PNC Bank is the sixth-largest bank in the U.S. by consolidated assets, according to the Federal Reserve. Headquartered in Pittsburgh, PA, PNC serves 44 states. Though the bank does not offer home equity loans, it offers both variable-rate HELOCs and fixed-rate HELOCs. You can even switch between variable and fixed-rate interest over the course of your draw period. Another benefit of a PNC HELOC is that the repayment period is 30 years, unlike most other lenders who have 20 year terms. A longer payment period generally means lower monthly payments (but more interest paid in the long run), which can be beneficial to those who want to borrow large amounts. Line amounts from $10,000 to $1,000,000 are available on a PNC HELOC.
PNC offers a 0.25% interest rate discount to borrowers who set up and maintain automatic payments from a qualifying PNC checking account. There is a $50 annual fee for HELOC borrowers, except in Texas.
The PNC website is user-friendly, giving customers the ability to estimate their home equity with an easy-to-use calculator. It also provides several useful graphics and videos to help borrowers better understand how their HELOCs work. PNC allows potential borrowers to see their rate and term options early on in the application process, indicating good price transparency. PNC also gives customers the option to choose a custom loan term.
We like PNC Bank because its application is straightforward and the bank is very transparent about its rates, fees, and terms without requiring a credit check. Though PNC doesn’t don’t offer home equity loans at all, its wide nationwide availability for HELOCs is noteworthy.
As one of the nation’s largest banking, mortgage, and wealth management service providers, Regions Bank serves customers across the South, Midwest, and Texas. Regions offers home equity loans and HELOCs in 15 states. Its HELOC offerings also come with a rate-lock option for customers who want it. Home equity loans have loan amounts of $10,000 to $250,000 and HELOCs have line amounts ranging from $10,000 to $500,000.
For home equity loans and HELOCs, Regions offers rate discounts between 0.25% and 0.5% to those who elect to have their monthly payments automatically debited from a Regions checking account. For home equity loans, there are no closing costs. HELOCs, however, can have closing costs between $150 and $2,000, but Regions will pay these costs if the HELOC amount is $250,000 or less.
You can apply for a Regions home equity loan or HELOC online, in-person, or over the phone. You’ll have to create an account with Regions to apply. Before you create an account, though, you can use the bank’s own rate calculator to estimate your rate and monthly payment amount.
We like Regions because of the variety of application options it offers and the ease of applying online. Regions provides several ways to contact customer service, ensuring that customers can get questions answered quickly. Though Regions only offers its products in 15 states, it gives customers in these states the flexibility to choose between home equity loans, HELOCs, and rate-lock HELOCs.
Headquartered in Charlotte, NC, Truist offers standard, interest-only, and rate-lock HELOCs to borrowers in 15, primarily Southeastern, states. HELOC line amounts range from $10,000 upward. Truist does not offer home equity loans at all.
Truist does not specify any rate discounts. When closing, the borrower will have the option to pay closing costs themselves or have Truist advance them. If you choose the latter, you won’t have to reimburse Truist-paid closing costs if you keep your account open for at least three years. There is a $50 annual fee in some states.
You can apply for a HELOC with Truist on Truist’s website. Before you get started applying, the Truist website tells you which documents you’ll need. You won’t be required to sign up for an account, but if you already have an account set up with Truist, you’ll be able to quickly auto-fill your application. Truist advertises that the turnaround time between application to closing averages 30 to 35 days, which is one of the fastest times among its bank peers (not including newer, non-traditional start-up companies like Figure).
Unfortunately, Truist ranked low on price transparency, meaning it may be difficult to get personalized rates. The rate advertised on the website is based on one particular scenario. You’ll have to submit an application and undergo a credit check to get personalized rates.
A financial services company known primarily for its credit cards, Discover also offers home equity loans as part of its suite of banking products. Home equity loans are available in 48 states, but the lender does not offer home equity lines of credit (HELOCs) at all. For Discover’s home equity loans, possible loan amounts range from $35,000 to $300,000. The lender charges no origination fees, application fees, appraisal fees, and mortgage taxes.
You can apply for a home equity loan from Discover online or over the phone. The application process takes approximately six to eight weeks in total, according to Discover’s website.
Discover offers wide nationwide availability for its home equity loans and good price transparency, but its lack of HELOC offerings may be a limiting factor for consumers looking for additional product options. In addition, Discover offers limited customer service options — your only option to get help is by phone, with no in-person service or online options like email or live chat.
Established in 1935, Pentagon Federal Credit Union (widely known as PenFed) offers HELOCs in all 50 states as well as Guam, Puerto Rico, and Okinawa. PenFed is a credit union so its products are only available to members, but you can easily become a member by opening a PenFed savings account and funding it with at least $5. With PenFed, you’ll have the flexibility to choose between a standard, interest only, or rate lock HELOC with line amounts ranging from $25,000 to $1,000,000. But, the lender does not offer home equity loans at all.
HELOCs with PenFed will have an annual fee of $99 unless you have paid $99 in interest during the preceding year. PenFed will pay most closing costs, but for credit lines greater than $500,000, the borrower will likely be responsible for closing costs. No rate discounts are specified.
If you’re interested in applying for a HELOC with PenFed, you’ll have to request a callback over the phone or online. This feature may be a major drawback for customers who prefer online services and applications.
While PenFed may be a good option for borrowers in U.S. territories who don’t have many other alternatives when it comes to home equity lenders, the lender’s lack of an online application and lack of price transparency earned it a low score in our ratings. If you prefer communication via telephone, however, PenFed may be a good option for you.
Working with a local lender means that they’re more likely to be familiar with your neighborhood. As a result, they’ll be in a better position to offer streamlined services to get your loan processed and funded more quickly.
Here are two lenders that operate solely in Texas.
Membership with the Credit Union of Texas is open to those who qualify based on certain criteria, such as residing in a qualifying county within the state. As not-for-profit organizations, credit unions typically try to pass any savings on to you as a member in the form of lower rates and fees. They also offer many of the same services that you might get from a major bank such as checking and savings accounts, credit cards, mortgage loans, and home equity products.
The Credit Union of Texas offers both home equity lines of credit (HELOCs) as well as home equity loans. Applications can be submitted online, but if you prefer, you can also call or visit a branch to get more information. The Credit Union of Texas’ HELOC product offers the flexibility of having a fixed rate for the life of the credit line. Membership with the organization also entitles you to other benefits, such as discounts on health expenses, automatic payments, tax preparation software, and more.
Founded in 1875, the American National Bank of Texas (ANBTX) offers many products and services, including deposit accounts such as checking and savings, IRAs, CDs, credit cards, and loans. As part of their loan products, ANBTX offers traditional mortgage products and various home equity products, including both home equity loans and HELOCs.
Applications for either home equity products can be submitted online. If you’re not sure which product is best for you, you can call and speak with a representative to walk you through the process. To help you choose the best product, ANBTX also provides an online comparison between their two home equity products to highlight some of the differences such as repayment terms available and minimum draw amounts.
To find the best rate on a HELOC or home equity loan in the state of Texas, it’s important to get quotes from multiple lenders of different types, credit unions, banks, digital, local and national. Occasionally, a lender may offer incentives such as a temporary promotional rate. To make it easier to compare lenders, you should provide each one with the same information, including the loan amount, loan type, and the property that will be used as collateral for the home equity loan.
When shopping rates among different lenders, make a note of how much information the lender provides online. The most transparent and user-friendly lenders will provide their rates and fees online without requiring any type of hard credit check that would negatively impact your credit score. Also be aware that the lender offering the lowest rate may not be the cheapest option if they are charging an excessive amount of fees. A loan calculator can help you determine the total cost of the loan.
In addition to considering both the rate and fees being charged for a home equity product, also take into consideration other terms such as prepayment penalties, minimum draw amounts, and length of time you can access the funds. A product with terms that do not align with your intended use may end up costing you more in the long run.
Not all home equity products are created equal, and there is a difference between a home equity line of credit (HELOC) and a home equity loan. With a home equity loan, you receive all of the cash proceeds at once in a single lump sum, often with a fixed interest rate. A HELOC, on the other hand, typically has a variable interest rate that is subject to change over time but allows you the flexibility to draw funds whenever you need over a specified period of time.
For example, if you obtain a HELOC with a $100,000 line of credit, you could decide to draw $20,000 from it this year, and another $20,000 next year depending on when you decide you need the funds. You would make payments only on what you’ve drawn from the HELOC. With a home equity loan, you would receive the $100,000 in funds all at once and would be required to make payments on the entire amount.
Not all lenders offer both a HELOC and a home equity loan. Since choosing the right product can save you money, consider which one best fits your needs so that you can narrow your lender list to which ones offer what you need.
Getting quotes from multiple lenders is a crucial step to make sure that you’re getting a loan with a competitive rate. Certain lenders may even offer more competitive rates if they cater to a particular professional group or organization. They could also offer limited-time incentives that can save you money on a lower rate or reduced closing costs.
Shopping with different lenders also helps ensure you’re getting a product with the most beneficial terms. Since many lending institutions retain the servicing of their home equity products, they have more flexibility in the terms offered. For instance, some lenders offer HELOCs that have characteristics of a home equity loan, allowing borrowers to lock in a fixed rate for a portion of the credit limit. There are also many variations on terms such as early closure fees, minimum draw amounts, prepayment penalties, and more.
Before borrowing any sum of money, make sure it fits comfortably within your budget. A lender may approve a loan amount based on if they think you can afford the payments, but a loan approval does not necessarily mean it’s affordable for you.
This is because lenders use different criteria for making their own determination, and may not factor in all of your actual monthly expenses. This can include items that do not appear on a credit report, such as utility bills or childcare expenses. Just because you were approved for a certain number doesn’t mean you have to take it. Before signing on the dotted line for a loan, go through your budget to make sure it’s right for you.
A higher credit score usually translates to a more favorable rate on a loan, and many lenders will use a tiered pricing structure. This means that there is a standardized rate offered for a particular credit score range. If you’re looking to see what you can do to improve your score, Fair Isaac has published information on what scores consist of and what you can do to improve it over time.
While there are some credit items that cannot be fixed immediately, there are some tactics you can use to quickly improve your credit score by a few points, just enough that it could push you into the next credit score tier for a better rate. For example, about one to two months prior to applying for a loan, pay down as much as you can on any credit card accounts to show a low credit utilization rate. By maintaining a small or no balance on your credit cards in relation to its maximum credit limit you could give a boost to your credit score.
While some lenders may have additional steps or nuances to their application process, the steps involved in applying for a home equity loan or HELOC are fairly standardized. If you live in Texas and are interested in applying for a home equity loan, here are the basic steps you can expect to take:
NextAdvisor developed a framework to evaluate home equity lenders using a weighted average score between 1 and 5 based on the following criteria. A higher weight was given to the criteria we determined to be most important:
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