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Our verdict

No application fee and $0 closing cost home equity loans, but HELOCs aren’t available.

Discover’s home equity loans are best for borrowers who need $200,000 or less in funding and prefer a predictable rate. Though it’s an online bank, you’ll need to hop on the phone with a banker to complete your application.

If you need $35,000 to $300,000 in funding, Discover offers no-fee, $0 closing cost home equity loans with a range of repayment terms. However, its home equity loans aren’t available in Iowa or Maryland.

Details

Features

Loan products offered	Home equity loan
Minimum credit score	620
APR range	4.99% to 9.99% APR (first liens) 6.49% - 12.99% APR (second liens)
Repayment terms	10, 15, 20 or 30 years
Loan limits	$35,000 to $300,000
State availability	Not available in: IA, MD

Our take on Discover

Discover’s home equity loan is best for borrowers looking to tap into their home’s equity with a lump sum loan offering even monthly payments at a fixed interest rate. With Discover, you can apply online or over the phone for a home equity loan ranging from $35,000 to $300,000 starting at a fixed 6.49% APR — but there are no in-person branches.

Like many home equity lenders, Discover’s home equity loan has no application or closing fees, which means you pay $0 out of pocket at closing. And while its rates appear to be competitive with other lenders offering home equity loans, the lowest APR on its home equity loan product isn’t as low as other lenders’ rates with discounts. Discover doesn’t offer any relationship discounts on its home equity loans.

Discover only offers home equity loans on primary residences and doesn’t offer HELOCs if you’re looking for a revolving line of credit to access your home’s equity. If Discover doesn’t have what you’re after, compare more home equity loans or HELOC lenders to find the right equity product for your needs.

Pros

$0 due at closing. With a Discover home equity loan, you don’t pay any closing costs or origination fees regardless of the loan amount.
Fully digital lending option. For those who prefer a fully digital home equity loan, you’ll complete your application digitally and upload all your documents online.
Over the phone support. Discover loan officers are available to help weekdays from 8 a.m. to midnight and weekends from 10 a.m. to 6 p.m.

Cons

No home equity lines of credit (HELOCs). Discover doesn’t offer HELOCS for borrowers looking for a revolving line of credit to tap into their home’s equity.
No in-person support. Discover doesn’t have physical branches you can visit. You must apply online or over the phone.
High minimum. You must borrow at least $35,000 with a Discover home equity loan, which may be more than you need. Other lenders go as low as $10,000.
No relationship discounts. Unlike many other home equity lenders, Discover doesn’t offer any relationship discounts on its home equity loans.

What types of home equity products does Discover offer?

Discover only offers home equity loans — not HELOCs.

Home equity loans. Discover offers fixed-rate home equity loans with limits from $35,000 to $300,000 and term options of 10, 15, 20 and 30 years. The term length you choose and your interest rate will determine your monthly payment.

Discover’s requirements are similar to other lenders

To find out if you’re eligible for a Discover home loan, visit the company’s website. Basic eligibility for a mortgage with the company includes:

Residency in any state except Iowa or Maryland.
Two years’ employment history.
FICO credit score of at least 620.
No history of bankruptcy in the past two years.
Maximum debt-to-income ratio of 43%.
Maximum 90% combined loan-to-value ratio (CLTV).

Discover’s fees are on par to other lenders

Discover doesn’t charge fees on its home equity loans and you pay $0 for closing costs. Closing costs generally run between 2% and 5% of a loan’s amount.

Fee type	Charged?	Cost
Application fees	No	$0
Origination fees	No	$0
Appraisal fees	No	$0
Prepayment penalty	Yes	Up to $500 if you pay off your home equity loan balance within 36 months. Doesn’t apply to residents of CT, MN, NC, NY, OK or TX.

Discover reviews lean negative

BBB rating	A+
Trustpilot rating	Poor
Customer reviews verified as of	11 May 2022

Discover Financial Services has been accredited with the Better Business Bureau (BBB) since 1989, and has an A+ business rating. But customers give the company a poor rating on the BBB site, with hundreds of complaints registered on the BBB site over the past three years.

Most complaints are related to billing, collections and problems with the bank as a whole — not specifically about its home equity loans division. However, customers on other sites have complained about poor service from the home loans department, reporting a lack of communication, delayed processing and interest rates inexplicably rising after closing.

How to get a home equity loan with Discover

To start an application for a home equity loan at Discover:

Go to the Discover website, choose Home Equity Loans then Get started .
Enter the loan information, property information, your personal information, income, date of birth, Social Security number, government information and consent to a credit check. After the credit check, you should receive a confirmation ID.
Wait for a banker to contact you about the next steps.

Or, call Discover home loans at 866-219-0257 to contact a loan officer directly and apply over the phone. You also have the option of mailing, faxing, emailing or uploading your documents using Discover’s secure portal.

Documentation

Be prepared to provide the following information with your application:

Government-issued ID
Social Security number
Most recent W-2 forms
Last 30 days’ pay stubs
Most recent federal tax returns

Retirement award letter if applicable
Your property’s estimated value
Current mortgage billing statement
Homeowner’s insurance policy declarations page
Flood insurance policy declarations page if applicable

Other mortgage products from Discover

Aside from its home equity loan product, Discover offers mortgage refinancing for those looking to reduce their interest rate and monthly payments.

Mortgage refinance. Allows you to replace your current mortgage with a new one that has a better rate and terms. Mortgage refinancing can be used to reduce your interest rate, lower your monthly payment and remove private mortgage insurance (PMI) when the equity in your home reaches 20%.
Cash out refinance. When you have sufficient equity in your home, a cash out refinance allows you to replace your old mortgage with a new mortgage that has a higher amount than what you owe on your home. The difference is the cash out amount.

Compare interest rates for home equity loans, HELOCs and cash-out refinancing

Use our tool to get personalized estimated rates from top lenders based on your location and financial details. Select whether you’re looking for a Home Equity Loan, HELOC or Cash-Out Refinance.

If you selected a home equity loan or HELOC, enter your ZIP code, credit score and information about your current home to see your personalized rates.

In the Cash-Out Refinance tab, select Refinance and enter your ZIP code, credit score and other property details to see what you might qualify for.

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Katia Iervasi is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in insurance. Her writing and analysis on life, disability and health insurance has been featured in The Washington Post, Forbes, Yahoo, Entrepreneur, Best Company and FT Advisor. She holds a BA in communication from Australia's Griffith University. See full profile

Discover Home Equity review