LendingTree is a marketplace for connecting consumers with multiple loan offers. LendingTree's lenders work towards providing the best rates and terms for home equity loans, new mortgage, mortgage refinancing, and home equity line of credit (HELOC). Borrowers fill out one application and will have five qualified lenders sending quotes based on the borrower's credit information.

A home equity loan is also referred to as a second mortgage because it's registered against your property just below your first mortgage. A home equity loan provides a fixed amount of money in one lump sum. The loan term is negotiated over a set period usually ranging from 5 to 25 years and secured with your home's equity.

A home equity loan is an excellent option for more significant purchases like home renovations and additions, educational funds, business loans and debt consolidation to clear off high-interest debt. The interest on a home equity loan or home equity line of credit may be used as a tax deduction if you buy, build or substantially improve the home that secures the loan. Make sure to speak to your accountant for up to date IRS information on this home equity loan interest tax deduction. 

When you apply for a home equity loan, the process is the same as requesting a new mortgage, and the closing costs will be the same as when you applied for your original mortgage. A home equity line of credit is also very popular because the closing costs are low in comparison to a home equity loan.  

Closing Costs

Closing Costs are fees charged by lenders for processing and issuing a home equity loan. 

Fees in the closing cost 

• Application Fee - This fee covers the cost the lender incurs while processing your application. The application fees could include the cost of a credit check, an appraisal, and miscellaneous items. This can often be waived so talk to your lender
• Appraisal - The appraisal may not be part of the application fee, you will need to pay the appraisal company to confirm the fair market value of the home. This fee ranges from $300 - $400
• Home Inspection Fee - Most lenders require a home inspection to insure that the house is structurally sound and in good shape. If the inspection shows that there are issues such as mold, electrical or structural damages you have the option to back out of the deal. 
• Attorney Fee - this pays the attorney to review the closing documents. All states do not require an attorney. Depending on how much time the lawyer works on your behalf the fees will vary dramatically.
• Closing or Escrow Fee - this is paid to the title company, escrow company or attorney for conducting the closing. The title/escrow company oversees the closing as an independent party in your home purchase.
• Loan Origination Fee - (Underwriting Fee, administrative fee or processing fee). This is a charge by the lender for evaluating and preparing your mortgage loan. This can cover document preparation, notary fees, and the lender's attorney fees. Expect to pay about 1% of the amount you are borrowing.
• Prepaid Interest - lenders require buyers to pay the interest that accrues on the mortgage between the date of settlement and the first monthly payment due date
• Assumption fee - If you take over the remaining balance of the seller's mortgage, you may be charged a variable fee based on the outstanding balance

When to use Home Equity Line of Credit vs. Home Equity Loan

Deciding which loan is right for you depends on the loan's purpose and your spending habits. For longer-term transactions and fixed costs, we recommend home equity loans over home equity line of credit (HELOC's) simply because the debt is being paid down and there are no surprises in 10-20 years when the HELOC payment principal amount starts. Interest is charged on the HELOC for many years when it could have been paid off with the home equity loan.

Home equity loans are normally up to 85% Loan-to-value ratio (LTV) of the home's value, less the balance of the existing mortgage. Here is an example:

• 85% of $300,000 home value is $255,000
• The balance of the existing mortgage is $100,000
• $255,000 - $100,000 = $155,000
• You can request a home equity loan up to $155,000

Why Apply for Home Equity Loan

There are Pros and Cons with taking out a home equity line of credit vs. a home equity loan. If you require more information on HELOC and home equity loan, we have provided a line of credit review page to help explain the difference. 

Pros include:

Cons include: 

When you receive your offers, the terms may vary by lender and the interest expense 

• Default - If you default on the loan, the bank will foreclose on your home.
• Debt – The primary disadvantage of any loan is your piling on debt.  Think of all the time you've just spent building up this equity and now your about to risk it all. Whatever you are using this money for, your endangering the security of your future, make sure its worth it!
• Costs and Fees – Closing costs can be very high. Make sure you are taking out a large enough loan to offset the closing costs. a personal loan or line of credit may be a better option  
• Minimums – Does the lender require a minimum loan amount? If so, search for a lender with lots of flexibility or apply for unsecured personal loans up to $100,000 or home equity loan instead.

Loan Amounts	Based on Equity Available up to 80% or more depending on individual lender. Home Value minus balance of current mortgage equals maximum amount loaned. Minimum loan amounts are determined by individual lenders.
Required Credit Score	Any Credit Score Can Apply - must be creditworthy and have sufficient income
Minimum Annual Income	$30000
Types of Income	Sufficient income to support loan (must have proof of income)
Variable Rate Option	Not offered
APR Range	Fixed Rates only - vary by lender
Loan Term	Terms can vary from 5 years - 30 years depending on the individual lender.
Repayment Schedule	Monthly Payments
Credit Inquiry	Initial Inquiry - Soft, Loan Acceptance - Hard Inquiry
Fees and Closing Costs	Application, title search, appraisal, attorneys' fees and closing costs
Secured Loans	Yes
Co-Signer	If joint home-owner
Direct Deposit	Yes
Loan Purpose	Home Renovation, Cash Withdrawal, Debt Consolidation
Qualifications	Property Appraisal, Proof of Employment, Primary Residence
Allows Military	Yes
Insurance	Mortgage Insurance - varies by lender
Legal Documents Required	U.S. Citizen and 18+ years old
Number of Offers	At least 5
Customer Service	By phone, email

In Our View

The LendingTree marketplace is well positioned to connect consumers with the best options for home equity loans, mortgage refinancing, mortgages and home equity lines of credit. 

We researched the reviews (see references below) on Trust Pilot and Consumer Affairs and found over 7,000 reviews. The two main issues from borrowers were:

1. Continued phone calls from lenders after you have completed the process. LendingTree responded to these complaints with the following: 
   
   Thank you for bringing this to our attention. If you are still receiving unwanted calls please email us at LendingTreeSocial@LendingTree.com and we can add you to our DNC list. Also, if you are able to tell us names or company names of those who were rude that would be helpful.

1. The lenders complete a hard inquiry on your credit score.  We have researched the damage hard inquiries have on your credit score when you are searching for the best deal for items like mortgage products or auto loans. 
   
   We found this information on hard inquiries with the Fair Isaac Corporation MyFICO: Credit Education:
   
   

Does the Credit Score formula treat all credit inquiries the same?

MyFICO response: No. Research has indicated that FICO Scores are more predictive when they treat loans that commonly involve rate-shopping, such as mortgage, auto, and student loans, in a different way. For these types of loans, FICO Scores ignore inquiries made in the 30 days before scoring. So, if you find a loan within 30 days, the inquiries won't affect your scores while you're rate shopping. Also, FICO Scores look on your credit report for rate-shopping inquiries older than 30 days. If your FICO Scores find some, your scores will consider inquiries that fall in a typical shopping period as just one inquiry. For FICO Scores calculated from older versions of the scoring formula, this shopping period is any 14-day span. For FICO Scores calculated from the newest versions of the scoring formula, this shopping period is any 45-day span.  

The full article from MyFICO is attached in references below.

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11115 Rushmore Drive

Charlotte, NC

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