Does Rocket Mortgage Do Home Equity Loans? Here’s What You Need To Know

Home equity loans allow homeowners to leverage the equity they’ve built up in their home to access funds. Rocket Mortgage is one of the top lenders that offers home equity loans. In this article I’ll provide an in-depth look at Rocket Mortgage’s home equity loan options to help you determine if it’s the right choice for your financial needs.

A home equity loan is a type of second mortgage that allows you to borrow against the equity in your home The equity is the difference between what your home is worth and what you owe on your mortgage

With a home equity loan, you receive the money you borrow in a lump-sum payment. The loan has a fixed interest rate and a set repayment term, usually 10, 15, or 20 years. You pay back the loan in monthly installments that include both principal and interest

Home equity loans typically have lower interest rates than other financing options like personal loans or credit cards. The reason is that home equity loans are secured by your home, so they represent less risk to the lender.

The main benefits of home equity loans include:

• Access to lump-sum funds at a lower rate
• Fixed monthly payments
• Potential tax deductions for interest paid

The downsides are that they put your home at risk if you default and give you another monthly bill to pay.

Rocket Mortgage and Home Equity Loans

Rocket Mortgage, one of the largest mortgage lenders in America, offers home equity loans. Their home equity loan product is called the Rocket Mortgage® Home Equity Loan.

I checked their website, and here are some key details about their home equity loan offering:

• Loan amounts from $45,000 to $500,000
• 10 and 20 year fixed rate terms
• Ability to borrow up to 90% loan-to-value (LTV)
• Credit score requirements start at 680
• Debt-to-income ratio limit of 50%

Rocket Mortgage allows you to apply completely online. Their home equity loan is available in most states, but some locations have restrictions, so be sure to verify if it’s offered in your area.

Rocket Mortgage Home Equity Loan Requirements

To qualify for a Rocket Mortgage home equity loan, there are a few requirements you’ll need to meet:

Home Equity – Rocket Mortgage requires you to have sufficient equity available to tap in the form of a home equity loan. They allow loan-to-value ratios up to 90%.

Credit Score – Minimum credit scores start at 680, but you’ll get better terms with higher scores. For the max 90% LTV, you need a 740+ credit score.

Debt-to-Income Ratio – Your total monthly debt payments, including the new loan payment, must be 50% or less of your gross monthly income.

Home Value – Your home will need to be appraised to verify its value and determine the amount of equity available.

Loan Use – Rocket Mortgage home equity loans can be used for any purpose. You have flexibility in using the funds for debt consolidation, home improvements, major purchases, and more.

Documentation – Full income and asset documentation is required. Rocket Mortgage will want to review your pay stubs, tax returns, and bank statements.

As long as you meet these parameters, you should be able to qualify and get approved for a Rocket Mortgage home equity loan.

How to Apply for a Rocket Mortgage Home Equity Loan

Rocket Mortgage makes it simple to apply for a home equity loan online. Here are the steps:

1. Go to their home equity loan page – You can start here: https://www.rocketmortgage.com/home-loans/home-equity-loan

2. Enter your loan details – Include the amount you need, your estimated home value, and other key facts.

3. Provide your contact information – This includes your name, email, and phone number so they can reach you.

4. Fill out the full application – Answer questions about your income, assets, debts, credit, employment, and property.

5. Submit documents – Rocket Mortgage will request documentation to verify your information.

6. Get pre-approved – If you qualify based on your application, you’ll get a pre-approval letter.

7. Home appraisal – An appraiser will visit your home to determine the current market value.

8. Closing – Once approved, you’ll sign final loan documents and receive your funds.

The online process makes getting a Rocket Mortgage home equity loan straightforward. Their website also has plenty of resources if you need help deciding whether it’s the right option for you.

Pros of Getting a Home Equity Loan from Rocket Mortgage

Here are some of the biggest advantages of getting a home equity loan from Rocket Mortgage:

• Online process – Their digital application is simple and convenient

• Strong brand reputation – Rocket Mortgage is one of America’s top lenders

• Rate discounts – Qualified borrowers can get lower rates by enrolling in their RateShield program

• Prepayment flexibility – You can pay extra and pay off your loan early with no penalties

• High LTVs allowed – Can borrow up to 90% of your home’s value

• 1% origination fee – Reasonable upfront fee for setting up the loan

Rocket Mortgage makes it easy to turn the equity in your home into cash. Their home equity loans offer competitive rates and terms.

Cons to Consider

While Rocket Mortgage home equity loans provide many benefits, here are a few of the drawbacks to weigh:

• Closing costs – You will have to pay closing costs, which run 3-5% of the loan amount.

• Added monthly payment – It gives you another monthly bill to budget for.

• Risk of foreclosure – If you are unable to repay the loan, you could lose your home.

• Credit impact – A new inquiry will appear and your credit mix will change.

• Prepayment penalties – You’ll face fees if you refinance or sell your home in the first few years.

Make sure you consider both the pros and cons before moving forward with a Rocket Mortgage home equity loan.

Alternatives to Rocket Mortgage Home Equity Loans

Besides Rocket Mortgage, you may want to look at other lenders and options to access your home equity:

• Local banks and credit unions – Community lenders can offer more personalized service.

• National lenders – Wells Fargo, Bank of America, and Chase also provide home equity loans.

• Mortgage refinancing – A cash-out refinance converts equity into cash as part of your primary mortgage.

• Home equity line of credit (HELOC) – Provides access to a revolving credit line secured by your home.

• 401(k) or life insurance loans – You can borrow against your accounts without putting your house at risk.

Make sure to shop around and compare all your choices to find the best home equity loan for your situation.

The Bottom Line

At the end of the day, Rocket Mortgage does offer home equity loans that can provide homeowners with substantial funds at competitive rates. Their brand reputation, online application process, and loan terms make them one of the top lenders to consider for a home equity loan.

However, make sure you understand the requirements, weigh the pros and cons, and explore alternatives before choosing the option that aligns with your financial goals. Home equity loans allow you to tap into your home’s hard-earned equity, so do your homework before moving forward.

If you think a Rocket Mortgage home equity loan may be right for you, starting the application process is easy. Their website has plenty of information and tools to guide you through the process from start to finish.