Everything You Need To Know About Quicken Loans Home Equity Lines

Home equity lines of credit, also known as HELOCs, allow homeowners to tap into their home’s equity to access funds for large expenses, renovations, or other needs Quicken Loans is one of the top lenders that offers HELOCs with competitive rates and terms This comprehensive guide will cover everything you need to know about getting a Quicken Loans home equity line.

What is a Home Equity Line of Credit?

A home equity line of credit or HELOC is a type of loan that allows homeowners to borrow against the equity they have built up in their home. Equity is the difference between what you owe on your mortgage and what your home is currently worth.

For example, if your home is worth $500,000 and you owe $300,000 on your mortgage, you have $200,000 in equity. A HELOC allows you to access a portion of that equity as a line of credit that you can draw from as needed.

HELOCs function similarly to credit cards in that you are approved for a set credit limit but only pay interest on what you actually borrow. The interest rates are usually variable, meaning they can fluctuate over the life of the loan.

The major benefit of a HELOC is the flexibility it provides. You can tap into the funds as needed for large expenses rather than taking the full amount out upfront like you would with a home equity loan.

How Do Quicken Loans HELOCs Work?

Quicken Loans offers both variable and fixed rate HELOC options with competitive rates. Here are some key features of their HELOCs:

• Credit limits – Quicken will approve you for a credit limit based on your equity, typically up to 85% of your available equity.

• Draw period – You have an initial draw period, usually 10 years, where you can access the funds.

• Repayment period – After the draw period you enter the repayment phase where you can no longer draw and must pay back what you borrowed.

• Interest-only payments – During the draw period you make interest-only payments on what you have borrowed.

• Principal and interest payments – During the repayment period you pay down the principal plus interest.

• Loan terms – Terms range from 10 to 30 years. Longer terms have lower monthly payments.

• Fixed or variable rates – Quicken offers both fixed and variable rate options. Variable rates are tied to an index like Prime or LIBOR and can fluctuate.

• Closing costs – Closing costs range from 2-6% of your credit limit.

What Can You Use A Quicken Loans HELOC For?

HELOCs are very versatile and the funds can be used for almost any purpose including:

• Home improvements and renovations
• Consolidating high-interest rate debts
• Paying for college tuition
• Making investments in rental properties
• Funding a small business
• Paying medical bills
• Building an emergency fund

Some of the most common uses for HELOCs are major home improvements and consolidating debts. The flexibility of being able to access funds as needed makes HELOCs helpful for covering large unpredictable expenses.

What Are The Benefits Of A Quicken Loans HELOC?

There are many benefits that make a Quicken Loans HELOC an attractive option:

• Lower interest rates – HELOCs tend to have lower interest rates compared to credit cards, personal loans, and other higher interest debts. This makes them one of the most affordable ways to borrow against your home’s equity.

• Pay only on what you use – You only make interest payments on the amount you draw from your HELOC, not the full credit limit. This helps preserve your monthly cash flow.

• Access funds when needed – The flexibility to draw funds as needed is the major perk of a HELOC over other types of loans. You can access money over many years rather than taking a lump sum.

• Potential tax deductions – If you use the HELOC for home improvements, you may be able to deduct the interest from your taxes. Always consult a tax advisor.

• Typically easier to qualify – HELOCs usually have lower credit score requirements than other types of loans. This makes them more accessible for some borrowers.

• No home appraisal required – For existing Quicken Loans customers, a new home appraisal may not be required to qualify for a HELOC depending on specific circumstances.

How Much Does A Quicken Loans HELOC Cost?

When getting a HELOC, there are a few key costs to factor in:

• Interest rate – The interest rate on your HELOC determines your monthly payments. Quicken offers both fixed and variable rates. Variable rates are lower but carry some risk.

• Origination fee – This upfront fee ranges from 0 to 2% of your credit limit. It covers processing your application.

• Closing costs – These costs cover appraisals, title fees, and more. They range from 2-6% of your limit.

• Annual fee – Some lenders charge annual fees but Quicken Loans does not.

• Prepayment penalties – HELOCs from Quicken Loans do not have prepayment penalties. You can pay off your HELOC early with no extra fees.

Always compare total costs from multiple lenders. Quicken Loans offers very competitive rates and lower overall costs on their HELOCs than many competitors.

What Are The Requirements To Qualify For A HELOC?

While requirements vary across lenders, here are some typical standards to qualify for a HELOC with Quicken Loans:

• Credit score – A minimum credit score of 620 is recommended but not required. Higher scores get better rates.

• Debt-to-income ratio – Your total monthly debt payments, including the HELOC, should be less than 45% of your gross monthly income.

• Loan-to-value ratio – The amount you want to borrow compared to your home value should be 80% or less.

• Home equity – You need sufficient equity in your home. Usually at least 15-20% is required.

• Employment – Steady income from stable employment helps demonstrate you can repay the HELOC.

Always check your specific qualifications before formally applying. The Quicken Loans website provides an eligibility tool to see if you may qualify.

How Do You Apply For A Quicken Loans HELOC?

Applying for a HELOC with Quicken Loans is straightforward. You can get pre-approved and even complete the entire application online in many cases. Here is an overview of the process:

1. Determine your budget and the credit limit you need. Make sure you have enough equity to qualify.

2. Go online and fill out Quicken’s HELOC pre-approval form to get an initial eligibility decision.

3. Once pre-approved, you can complete the full HELOC application online by providing information about income, assets, expenses, and more.

4. Quicken will order an appraisal of your home if required to confirm value and equity.

5. You’ll need to provide documentation to verify your income, assets, and identity.

6. Quicken will underwrite your application and provide loan approval terms if you qualify.

7. Review your loan offer, eSign documents online, and accept the offer.

8. Once approved, you will have access to your new HELOC account and can start drawing funds.

Getting pre-approved early in the process helps ensure you will likely qualify. The online application makes getting a HELOC with Quicken Loans fast and convenient.

Alternatives To Consider Before Getting A HELOC

While HELOCs provide a flexible way to access your equity, there are a few other options to consider first:

• Cash-out refinance – You can tap equity by refinancing to a higher loan amount and taking the extra cash. This replaces your entire mortgage with one new loan.

• Home equity loan – With this option you receive funds in a lump sum up front and repay it over time with fixed payments. Less flexible than a HELOC.

• Personal loan – Unsecured loans involve no collateral. Higher rates but your home is not at risk if you default.

• Using savings – Avoid debt by tapping your savings if possible. Downsize expenses to help build your savings over time.

• Credit cards – This high-interest debt should only be a very last resort. Compare rates on all options.

Think carefully before tapping into your home equity. Make sure you can comfortably handle the additional monthly payments.

The Bottom Line On Quicken Loans HELOCs

For homeowners with sufficient equity looking to fund large expenses, Quicken Loans HELOCs provide an affordable and flexible option. The ability to access funds on an as-needed basis over many years offers advantages over many other loan products.

Just be sure to only borrow what you need, make payments on time, and have a plan for repayment. Used responsibly, a HELOC from a reputable lender like Quicken Loans can provide the financing you need to cover big costs while taking advantage of your equity.