If you’re a homeowner looking to tap into your home’s equity for a large project, debt consolidation, or other major expense, a home equity loan from OneMain Financial is one option worth considering. As one of the nation’s largest personal loan lenders, OneMain has been providing home equity loans for decades.
In this comprehensive guide, we’ll cover what a home equity loan is, OneMain loan amounts and rates, qualification criteria, loan terms, the application process, pros and cons, and alternatives to consider Let’s dive in!
What is a Home Equity Loan?
A home equity loan is a type of second mortgage that allows you to borrow against the equity in your home. Equity is the current market value of your home minus what you owe on your mortgage.
For example, if your home is worth $300,000 and you have $200,000 left on your mortgage, you have $100,000 in home equity. With a home equity loan, you’re essentially using your equity as collateral to take out a fixed-rate, lump sum loan.
Unlike a HELOC (home equity line of credit), a home equity loan provides you with the full loan amount upfront in a single disbursement. You then repay the balance with fixed monthly payments over a set repayment term usually 10 to 20 years. The interest rate is also fixed for the life of the loan.
How Much Can You Borrow With A OneMain Home Equity Loan?
OneMain offers home equity loan amounts between $10,000 and $200,000. The amount you qualify to borrow depends on:
- How much equity you have available
- Your credit score and history
- Your debt-to-income ratio
- The value of your home
As a general rule, most lenders will allow you to borrow up to 85% of your home’s value minus what you owe on your mortgage. So if you have $100,000 in equity based on the example above, OneMain may approve you for around $85,000.
Having substantial equity can help you qualify for larger loan amounts to take care of bigger projects and expenses.
What Are Current OneMain Home Equity Loan Interest Rates?
As of January 2023, OneMain home equity loan rates range from about 7.99% to 35.99% APR. The higher your credit score, the lower the rate you’ll qualify for
Rates are also based on your debt-to-income ratio, credit history, and other eligibility factors. OneMain offers both fixed and variable rates depending on the loan program. Fixed rates are stable for the entire repayment period while variable rates can fluctuate.
Be sure to compare rates and fees from multiple lenders to find the best overall value based on your specific financial situation. Online lenders sometimes offer lower rates than brick-and-mortar establishments.
OneMain Home Equity Loan Qualification Criteria
To qualify for a OneMain home equity loan, here are some of the main requirements:
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Homeownership – You must own a single family home, condo, townhouse, or multifamily home. Mobile homes may also qualify.
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Substantial equity – You’ll need at least 15% to 20% equity in your home to qualify.
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Good credit – Minimum credit scores vary by program but tend to be 620 and higher.
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Sufficient income – Stable monthly income that covers your existing debts and new loan payment. Self-employed borrowers can qualify with sufficient income docs.
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Low debt-to-income ratio – Your total monthly debt payments, including the new loan, should not exceed 50% of your gross monthly income.
Meeting these criteria improves your chances of approval and securing the best rates OneMain offers. They also review factors like your job stability, income type, and home value when making lending decisions.
Those with past credit issues like bankruptcy may still be eligible with sufficient equity and income. OneMain considers applicants on a case-by-case basis.
OneMain Home Equity Loan Terms
OneMain offers flexible home equity loan terms. Here are some of the specifics:
Loan Amounts – $10,000 to $200,000
Loan Terms – 10, 15, 20, and 30 years
Interest Rates – Fixed and variable rates from 7.99% to 35.99% APR
Origination Fees – Varies by state, typically around $300
Prepayment Penalty – None
Late Fees – Late fees vary by state, typically 5% of the unpaid monthly installment or $15, whichever is greater (capped at $50 in some states)
Credit Requirements – Minimum credit scores of 620 but may vary
Collateral – Your home through a recorded lien
Payments – Monthly installments are principal and interest
Review the terms carefully so you understand all the costs, fees, and other legal obligations associated with a OneMain home equity loan.
How To Apply For A OneMain Home Equity Loan
OneMain offers a simple application process that can often lead to fast loan funding. Here are the basic steps:
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Check your eligibility – Use their online tools or speak to a loan officer to verify you meet the minimum requirements for loan approval before completing the full application.
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Gather documents – To speed up the underwriting process, collect financial documents like pay stubs, tax returns, mortgage statements, and bank account info.
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Complete the application – Apply online or at a local OneMain branch. Fill out all sections fully and accurately.
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Get pre-approved – If approved, OneMain will issue a pre-approval letter with preliminary loan terms lasting for 30 days.
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Home appraisal – An appraiser will visit your home to determine its fair market value. Your loan amount depends on the appraisal.
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Final approval – Underwriters issue final loan approval and closing documents once all conditions are satisfied.
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Loan closing & funding – Bring required documents to closing, sign the mortgage and promissory note, then receive your funds.
Start to finish typically takes 1 to 3 weeks. OneMain prides itself on providing fast access to home equity.
Pros Of OneMain Home Equity Loans
Let’s explore some of the key benefits that make OneMain a top contender for home equity loans:
Fast access to cash – OneMain issues loan funds promptly so you can take care of pressing needs right away.
Fixed rates and payments – Your interest rate and monthly payment remain the same over the full loan repayment period.
No home appraisal fees – OneMain covers the cost of the appraisal so you don’t have to pay this upfront fee, which can be $300 to $500.
No equity restrictions – Qualify with as little as 15% home equity, less than what most lenders require.
Credit boost – Responsible repayment can improve your credit score over time.
No prepayment penalties – Pay off your loan early with no extra fees.
Online account access – Manage your loan anytime via OneMain’s website or mobile app.
No application fees – It’s free to submit an application and check your rate online.
For quick and easy access to your home’s equity, OneMain is certainly an option worth considering.
Cons Of OneMain Home Equity Loans
However, there are also some drawbacks to think through before moving forward:
Rates may be higher – Compared to mortgages, home equity loans tend to have higher interest rates. Be sure to shop and compare rates.
Closing costs – You’ll pay closing costs such as origination fees, title fees, recording fees, and more. Ask for a fee estimate.
Lower home equity – Your available equity decreases when you borrow against your home’s value.
Risk of foreclosure – Failing to repay could result in foreclosure. Only borrow what you can realistically afford.
Missed savings potential – You lose the potential market gains you could earn if you instead invested your equity.
Long repayment terms – A 30-year home equity loan keeps you in debt for decades, delaying your ability to build equity.
Carefully weigh the advantages against the disadvantages before moving forward with a home equity loan.
5 Alternatives To OneMain Home Equity Loans
While tapping your home equity through OneMain is one option, here are a few others to consider:
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Cash-out refinance – Refinance your mortgage for more than you owe and receive the difference in cash.
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HELOC – A home equity line of credit offers flexible draw periods and variable rates.
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Home improvement loan – Specified for home remodeling projects; offered by retailers, banks, credit unions.
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401(k) loan – Allows you to borrow up to 50% of your vested 401(k) balance.
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Personal loan – Unsecured loans with fixed rates that don’t put your home at risk.
Compare all the pros and cons to determine the
How do you apply for a home equity loan?
Before you apply for a home equity loan, take the time to plan. Shop around with various lenders to find the one that offers the best interest rates, repayment terms, customer service, and origination fees. In some cases, an unsecured home improvement loan may make more sense. To check offers for unsecured home improvement loans, click here.
Before determining which type of loan is best, make sure you have a clear budget in place. Because a home equity loan involves a fixed lump sum distribution, its important that you know exactly how much you want to spend before you dive in. You wont be able to add or subtract more or less money later on. That said, even after obtaining estimates for your project, its smart to add 10 to 15% to the estimates to accommodate for potential increases in materials or labor.
Be sure to balance your current needs with the potential resale value of your home, if youre planning on selling (or even thinking about selling).
When youre ready to apply, contact the lender youve chosen for more specific application details. Each one varies slightly in terms of whats required and what the process looks like.
Normally, you will have to provide personal identification information like your Social Security Number and address. You will need to submit documents like paystubs, W2s, tax returns, and other paperwork to show that your income and credit history are in line with what the lender is looking for. Of course, your house will also need to be appraised – this is the most time-consuming part of the home equity loan application process, but its important, since the appraisal will be used to determine how much equity you have in your home.
It can take a few days for the loan to be approved, but once it is, you may have to sign some paperwork and see some funds in your account in just a couple of weeks after starting the whole process.
How much can you borrow with a home equity loan?
It varies by lender, but usually, you can borrow up to 80-85% of your homes value minus what you owe on your mortgage with a home equity loan. This final number can also be influenced by your financial situation (including your debt, income, and other factors).
HELOC Vs Home Equity Loan: Which is Better?
FAQ
What is the monthly payment on a $50,000 home equity loan?
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Loan amount
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Monthly payment
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$25,000
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$166.16
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$50,000
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$332.32
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$100,000
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$673.72
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$150,000
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$996.95
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What disqualifies you from getting a home equity loan?
What is the downside of a home equity loan?
Is it hard to get approved with OneMain Financial?
What is a home equity loan?
Like personal loans, home equity loans are also installment loans. Sometimes called “home improvement loans,” because homeowners often use them to finance household renovations, they use your home as collateral. (If you’re unfamiliar with the concept of collateral, check out this primer on what collateral is and how it works .)
How can I get a good home equity loan?
To get a good home equity loan, compare offers from at least three lenders. Home equity loan rates vary from day to day and from one lender to another. It might not be the simplest option, but getting a home equity loan from a lender other than your current mortgage lender could potentially get you a better deal.
Should you apply for home equity loans with multiple lenders?
Applying for home equity loans with multiple lenders could benefit you by helping you get a lower rate or lower fees. It could also expand the amount of equity you’re able to borrow. For every application you submit, the lender will provide you with an official loan estimate, which includes an interest rate and an itemized breakdown of costs.
What are the different types of home equity loans?
Home equity loans come in two varieties: Fixed-rate loans and revolving lines of credit. With both types of credit, you’re borrowing money based on a percentage of the appraised value of your home minus any outstanding mortgage debt. Typically, you may be able to borrow up to 80% of the home’s value, assuming there’s no first mortgage loan.