Rate: 2024 Home Equity Review

Benefits

• You can apply for a HELOC with Rate online and link to your bank accounts to expedite the process.
• With a remote closing (if permitted in your state), you could receive your HELOC funds in as little as five days.

Drawbacks

• Rate’s HELOC is a fixed-rate product, so if prevailing market rates decline, you won’t see a corresponding decrease in your monthly payments.
• The lender’s HELOC draw period ranges from two years to five years. The draw period for a variable-rate HELOC is typically 10 years.

Home equity loan products offered

Rate offers lines of credit; it doesn’t offer home equity loans. Its HELOC is a fixed-rate product, which is different from the variable-rate HELOCs many other lenders offer. Rather than accessing funds from a line of credit and paying only interest (at a variable rate) over a 10-year draw period, you’ll be given a lump sum at a fixed rate, with the option to make additional draws during a two- to five-year period. The fixed rate for any additional draw is set on the date you make it, and might be higher than the fixed rate for the initial draw. You’ll be responsible for repaying both interest and principal upon receipt of the lump sum, in a repayment period of up to 30 years.

Types of fees charged

Rate charges a 1.99 percent origination fee for a HELOC. This is deducted from the line of credit, however; you don’t need to bring any money to closing.

How to qualify for a HELOC with Rate

To qualify for a HELOC from Rate, you’ll need a minimum credit score of 620, a combined loan-to-value (CLTV) ratio of no more than 85 percent and a debt-to-income (DTI) ratio of no more than 50 percent. The product is only available for single-family homes, condos and townhomes. To get the most competitive rate, you’ll also need to sign up for automatic payments and pay an origination fee.

How to apply with Rate

You can apply for Rate’s HELOC through the lender’s digital application. Be prepared to verify your identity and provide information about your annual income and financial life. You can also pose questions to the lender’s virtual assistant or call 866-934-7283 or email customercare@rate.com. The lender’s business hours are Monday through Friday, 8:30 a.m. to 5:30 p.m. CT.

How Bankrate scored Rate

• Methodology

  To determine a home equity lender's Bankrate Score, Bankrate rates lenders on a scale of one (1) to five (5) stars — with five (5) the highest rating — based on a variety of factors relating to the lender's products and services. To assign our ratings, we assessed each mortgage lender across three core areas:

  • Affordability: Annual percentage rate (APR) - 80%; introductory APR - 20%
  • Availability: Licensing - 50%; credit score - 20%; loan minimum - 10%; draw requirement - 10%; loan products - 10% 
  • Borrower experience: Rate transparency - 45%; convenience - 35%; customer service - 10%; fixed-rate options - 10%

  Learn more about our methodology.