A home equity line of credit helps you finance large and unexpected expenses, and most lenders don’t restrict how you can use the funds.
While looking for the best HELOC for your needs, shopping around to secure an option with the best terms is essential. Overall, Bank of America offers the best HELOC in Texas due to its friendly rates and discounts. However, your best lender will depend on various factors, including your credit score.
Home Equity Line of Credit (HELOC) Rates for 2023
Comparing rates and terms across lenders can help secure the best HELOC option for your financial goals.
The following table provides an overview of home equity line of credit rates and other lender information based on MoneyGeek’s analysis as of May 2022. As lender rates fluctuate, we will keep you informed with regular updates to this table.
Lender | APR | Loan Amount | Min. Credit Score Requirement | Repayment Terms | Annual Fees | Pre-Approval Time |
|---|---|---|---|---|---|---|
3.75% to 18% | $25,000 to $1,000,000 | 660 | 10-year draw period | None | N/A | |
Not specified | Not specified | Not specified | Not specified | Not specified | Not specified | |
1.99% special | $25,000 to $1,000,000 | Not specified | 10-year draw period, | Not specified | Not specified | |
3.65% to 8.80% | $15,000 to $750,000 | 730 | 10-year draw period, | $90 | Not specified | |
Starting at 3.99% | $10,000 to $500,000 | Not specified | 10-year draw period | $75 | Not specified | |
Starting at 4.64% | $10,000 to $500,000 | Not specified | 10-year draw period | None | 24 hours | |
Starting at 3.50% | $15,000 to $400,000 | 620 | 5 to 30 years | 3% to 4.99% | 24 hours | |
Starting at Prime - 0.50% | Starting at $17,500 | Not specified | 10-year draw period, | $50 | Not specified | |
Starting at 3.34% | Starting at $25,000 | 740 | Not specified | $50 | Not specified | |
3.49% for 6 months | Starting at $5,000 | Not specified | 15-year draw period | None | 24 hours | |
3.75% to 10.63% variable | $10,000 to $500,000 | Not specified | 10-year draw period, | None | Not specified |
MoneyGeek’s Picks for Best HELOC Lenders in Texas
MoneyGeek determined the best HELOC lenders in Texas to help consumers quickly find the perfect option for their needs.
Typically, not many lenders provide HELOCs, and most of the companies that do are often national banks. To qualify, borrowers need to have good credit scores.
If you submit your HELOC application to one of the national lenders and it gets rejected, find out why you were not approved and seek to remedy that issue before applying again. Additionally, check whether your local credit unions offer HELOCs.
Best Overall HELOC Lender in Texas: Bank of America
- Bank of America
Bank of America has an introductory APR of 1.99% for the first six months.
- 7.49% (introductory rate) then 9.90%APR Range
- UndisclosedMinimum Credit Score
- Generally $25,000 to $1,000,000Loan Amount Range
- 10-year draw period; 20-year repayment periodRepayment Terms
- NoneAnnual Fees
- UndisclosedPre-Approval Time
Best HELOC Lender for Good Credit in Texas: U.S. Bank
- U.S. Bank
U.S. Bank customers receive a $750,000 maximum limit.
- 8.95% to 12.70%APR Range
- 660Minimum Credit Score
- $15,000 to $750,000 ($1 million in California)Loan Amount Range
- 10-year draw period; up to 30 years repayment periodsRepayment Terms
- Up to $75Annual Fees
- UndisclosedPre-Approval Time
Best HELOC Lender for Bad Credit in Texas: Figure
- Figure
Offers comprehensive online customer support and 24-hour pre-approval.
- 6.10% to 14.74%APR Range
- 640 (680 for investment properties or second homes)Minimum Credit Score
- $20,000 to $400,000Loan Amount Range
- 5 to 30 yearsRepayment Terms
- NoneAnnual Fees
- 24 hoursPre-Approval Time
Best HELOC Lender for Competitive Rates in Texas: PenFed
- PenFed Credit Union
PenFed Credit Union provides an attractive introductory APR of 0.99%.
- Starting at 8.625%APR Range
- 680Minimum Credit Score
- $25,000 to $500,000Loan Amount Range
- 10-year draw period; 20-year repayment periodRepayment Terms
- $99Annual Fees
- UndisclosedPre-Approval Time
HELOC vs. Home Equity Loans
Home equity loans and HELOCs offer easy ways to finance major or unexpected expenses using the value of your home as collateral. Before determining which of the two suits your needs, you should understand their differences.
Home equity loans or HELOANs offer borrowers a lump sum. HELOANs feature fixed interest rates and repayment amounts for the duration of the loan. They may be ideal for borrowers who need a loan with predictable repayment terms.
Meanwhile, HELOCs offer revolving credit the same way credit cards do. They feature variable interest rates and repayment periods. Borrowers can withdraw funds as often as required, provided they do not exceed the lender’s limits. A home equity line of credit loan is ideal for homeowners who need more flexibility around the repayment terms.
HELOC | Home Equity Loan | |
|---|---|---|
Interest Rate | Adjustable interest rate, | Fixed interest rate |
Monthly Payment | Changes depending on | Fixed monthly payments |
Repayment Terms | During the draw period, borrowers pay | Repayment starts as soon as |
Fund Disbursements | Line of credit | Lump sum delivery |
How to Apply for a HELOC
Applying for a home equity line of credit is easy. Most lenders allow you to submit your application online and await approval. MoneyGeek recommends taking the following steps when applying for a HELOC.
Determine how much you need
Before submitting your HELOC application, you must understand how much you need and have a plan for how you will use the funds. Most homeowners use the funds to finance home renovations, education, medical bills and debt consolidation.
Assess your financial standing
Review your financial situation and determine whether you can meet your preferred lender’s minimum requirements. For instance, you may need to check your income, loan-to-value ratio and credit score, as these will determine your rates.
Shop around and compare lenders
Once you are sure of the credit line amount you need, compare HELOC lenders to find the best option. Check the rates, repayment terms, discounts and requirements.
Apply
Most HELOC lenders allow you to apply online. However, some may ask you to call or apply in person. You will need to provide details like your personal information, proof of income and assets owned.
Use funds wisely
Once you receive the funds, use them for their intended purpose. Always keep in mind that if you fail to make repayments, you may lose your home.
When it comes to taking out a loan that uses your home as collateral, such as a home equity loan or HELOC, you can't go wrong using the borrowed funds on repairs or renovations designed to increase the value of your home and your standard of living. — Timothy Manni, Mortgage and Real Estate Consultant
Frequently Asked Questions About HELOCs
What is a home equity line of credit? Understanding how HELOCs work may be challenging for new borrowers. MoneyGeek responded to frequently asked questions to ensure you choose the best HELOC for your financial goals.
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sources
- Bank of America. "Home Equity Line of Credit (HELOC)." Accessed June 22, 2022.
- Figure. "Get a Home Equity Line of Credit Fast." Accessed June 22, 2022.
- PenFed Credit Union. "PenFed Home Equity Line of Credit (HELOC)." Accessed June 22, 2022.
- U.S. Bank. "Home Equity Line of Credit (HELOC)." Accessed June 22, 2022.
- Internal Revenue Service. "Publication 936 (2021), Home Mortgage Interest Deduction." Accessed June 22, 2022.