Tapping Into Your Home’s Equity with a Quicken Loans Equity Loan

Owning a home is one of the biggest financial decisions most people make And making that investment can really pay off down the road As you pay down your mortgage, you start building equity in your home. Equity is the difference between what your home is worth and what you still owe on your mortgage. Once you’ve built up a good amount of equity, you have some options for accessing it through a home equity loan or line of credit. In this guide, we’ll focus specifically on equity loans from Quicken Loans and how they can help you leverage your equity for major expenses.

What is a Quicken Loans Equity Loan?

A Quicken Loans equity loan, also called a home equity loan, allows you to borrow against the equity you’ve built up in your home. It’s a lump sum loan that gets paid back over a fixed number of years

With a Quicken Loans equity loan, you’ll receive the loan amount upfront in a single payment. Then you’ll make fixed monthly payments over a set repayment term, usually between 5 and 30 years. The interest rate is also fixed so your monthly payments don’t fluctuate.

Equity loans are secured by your home, meaning your home acts as collateral. This does come with some risk as failure to repay the loan could result in foreclosure. However it also means equity loans come with lower interest rates than unsecured options like personal loans or credit cards.

What Can You Use a Quicken Loans Equity Loan For?

There are many possible uses for a Quicken Loans equity loan. Some of the most common are:

• Home improvements: Remodeling projects, renovations, upgrades
• Debt consolidation: Pay off higher interest debts like credit cards
• Major purchases: Things like a wedding, car, boat, or vacation
• College tuition: Pay for a child or grandchild’s education
• Medical expenses: Pay medical bills not covered by insurance
• Starting a business: Fund a small business launch or expansion

The flexibility of receiving a lump sum of cash makes equity loans helpful for covering big, one-time costs.

Quicken Loans Equity Loan Requirements

To qualify for a Quicken Loans equity loan, there are a few basic criteria you’ll need to meet:

• Credit score: Generally at least 620
• Loan-to-value (LTV) ratio: Up to 90% of your home’s value
• Debt-to-income (DTI) ratio: Preferably under 45%
• Equity: At least 15-20% equity built up

The exact requirements can vary a bit by lender. Quicken Loans will look at factors like your income, assets, credit history, property value, and current mortgage balance when determining your eligibility.

Meeting these requirements shows the lender you can likely afford the new monthly mortgage payment and demonstrates you have enough equity available to borrow against.

How Much Cash Can You Access?

The amount of your equity loan will depend on:

• How much equity you have: The more equity, the more you can potentially borrow.
• Your lender’s requirements: Each lender sets maximum LTVs. Quicken Loans goes up to 90% LTV.
• Loan limits: Most lenders cap equity loans around $200k – $500k.
• Your financial situation: Income, debts, credit score also factor in.

You’ll work with your Quicken Loans loan officer to determine the loan amount that you qualify for based on your specific financial profile and equity position.

The Quicken Loans Equity Loan Process

If you decide a Quicken Loans equity loan fits your needs, here is a quick run-down of what to expect:

1. Check your equity: Make sure you have enough equity to borrow against. Calculate this by taking your home value minus remaining mortgage balance.

2. Check your credit: Get a free copy of your credit report so you know where your credit stands. Work on improving any issues.

3. Compare lenders: Shop around with a few lenders to find the best rates and fees for your situation.

4. Complete your application: Provide all required financial, income, and employment documentation to Quicken Loans.

5. Home appraisal: Quicken Loans will order a home appraisal to verify property value and equity.

6. Loan approval: Underwriting will review your full application and issue an approval decision.

7. Closing: Schedule a closing date to sign documents and receive your loan funds.

The entire process usually takes around 2 to 6 weeks from start to funded loan.

Pros and Cons of a Quicken Loans Equity Loan

Let’s look at some of the key advantages and drawbacks of tapping into your home equity with Quicken Loans:

Pros

• Lower interest rates than unsecured loans
• Fixed rates mean consistent monthly payments
• Allows you to access your equity without having to sell
• Can provide large lump sums for big expenses
• May be tax deductible (consult a tax pro)

Cons

• Closing costs of 2-6% of loan amount
• Risk of foreclosure if payments aren’t made
• Second lien means second monthly mortgage payment
• Rates still higher than first mortgage rates
• Home value decline could limit equity access

As with any financial products, there are tradeoffs to weigh based on your specific situation.

Alternatives to a Quicken Loans Equity Loan

If you’ve decided a home equity loan isn’t the right fit, here are a few alternatives to consider:

• Cash-out refinance: Refinance your current mortgage into a larger loan to access cash. You get funds upfront similar to an equity loan, but fold it into your existing first mortgage. This avoids taking on a second lien.

• HELOC: A home equity line of credit works like a credit card tied to your equity. You have an open line to draw from as needed instead of one lump sum. Typically come with variable rates.

• Personal loan: An unsecured loan not tied to home equity. No collateral needed so rates are higher but your home isn’t at risk if you default.

• Selling: You may opt to downsize, rent for a while, or otherwise tap equity by selling your home rather than borrowing against it.

• Savings: If possible, build up emergency savings funds to cover unexpected costs rather than tapping home equity.

The Bottom Line

A Quicken Loans equity loan allows you to leverage the hard-earned equity in your home for large expenses or to consolidate higher interest debts. If used responsibly, it can provide financial flexibility. But make sure you carefully consider the risks and benefits for your situation before moving forward. Talk to one of Quicken’s knowledgeable home loan experts to get personalized advice and mortgage options tailored to your needs.