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Discover: 2022 Home Equity Review

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Discover is one of the largest originators of closed-end second mortgages in the U.S. The company was created in 1985 as a subsidiary of Sears and became an independent company in 2007.

Discover’s headquarters are located in Riverwoods, Illinois, but the lender operates primarily online. In addition to home equity loans, Discover offers credit cards, student loans, personal loans, home loans and mortgage refinancing. Discover does not offer home equity lines of credit, or HELOCs.
With Discover you can apply online or over the phone and get details about your loan options within minutes, making the company a good choice for those looking for an expedited information process.

Discover snapshot

Loan types offered Home equity loan
APR range 4.65% to 9.99%
Loan amount range $35,000 to $300,000
Minimum credit score required 620
Repayment terms 10 to 30 years
Average time to approval About 1 to 2 weeks for initial eligibility, 2 to 3 weeks for final decision, 1 to 2 weeks for closing

Benefits

Here are some of Discover’s biggest benefits:

  • No fees: Discover doesn’t charge any application, appraisal or origination fees and doesn’t require any cash at closing. However, you’ll need to reimburse some closing expenses if you pay off the loan within the first 36 months. The repayment amount will not exceed $500.
  • Competitive interest rates: Discover’s starting APR is low compared with those of top home equity lenders. As of April 2021, the lender’s APR starts at 4.65 percent.
  • High loan-to-value maximum: The lender allows borrowers to have a combined loan-to-value ratio of up to 90 percent between their mortgage and home equity loan, making it easier to get the money you need. Among other lenders, 80 percent is a common maximum.

Drawbacks

Discover may not be the right choice for everyone. Here are some of its downsides:

  • No HELOC option: If you’d rather get a HELOC than a home equity loan, you’ll need to apply with another lender. Discover offers only fixed-rate home equity loans.
  • No in-person service: If you’re the type of person who likes to speak with a loan officer face to face, you won’t be able to get that type of service with Discover.
  • High minimum loan amount: Discover home equity loans start at $35,000, which may be too high for some borrowers. If you’re looking for a lower loan amount, shop around and compare options from other lenders.

Types of fees charged

Discover doesn’t charge any upfront fees — no application, origination or appraisal fees. There’s no cash required at closing at all. However, this lender may require expense reimbursement (with a $500 maximum) if you pay off the loan within the first 36 months. Expenses you may be required to repay include title fees, recording fees and mortgage and transfer taxes. Those who live in Connecticut, Minnesota, New York, North Carolina, Oklahoma or Texas are not required to repay closing fees.

Discover may also charge interest and a fee if your payment is late or you do not have sufficient funds to cover payments.

Loan products offered

The only mortgage-related products Discover offers are mortgage refinance and its home equity loan. With the home equity loan, you can borrow between $35,000 and $300,000, and repayment terms are 10, 15, 20 and 30 years. How much you can borrow, though, depends on your credit score and how much equity you have in your home.

How to qualify for a home equity loan with Discover

Discover requires borrowers to have a FICO credit score of at least 620 to qualify for a loan as well as a history of responsible credit use and verifiable employment and income. There’s also a maximum debt-to-income ratio — your monthly debt payments divided by your monthly gross income — of 43 percent.

Between your first mortgage and a Discover home equity loan, you can have a combined loan-to-value ratio of up to 90 percent. There are no minimum assets needed to close on the loan.

How to get started

You can apply for a Discover home equity loan online or by calling 855-361-3435. To get started, you’ll need to provide information about yourself and your property. You’ll also share how much you want to borrow and the purpose of the loan.

You’ll need to provide your date of birth and Social Security number to verify your identity. Once you submit your application, you may get prequalified for multiple loan options within a few minutes. After that, you can upload documents, provide additional information and electronically sign documents online.

If you’re applying online and have questions, you can call and speak with a personal banker, who can help.

Before you accept a loan with Discover, however, shop around and compare loan terms with other lenders to ensure that you get the best deal available.

How Bankrate rates Discover

Bankrate Score 4.3 Scoring factors
Availability 3.6 Options provided within minutes with loan amounts from $35,000 to $300,000.
Affordability 4.4 Very few fees and a low minimum APR
Customer experience 5.0 Online access, 7-day customer support, autopayments and highly-rated mobile apps

Editorial disclosure: All reviews are prepared by Bankrate.com staff. Opinions expressed therein are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in the review is accurate as of the date of the review. Check the data at the top of this page and the lender’s website for the most current information.

Written by
Raija Haughn
Raija Haughn is an associate writer for Bankrate.com specializing in personal and home equity loans. She is passionate about helping people make financial decisions that will benefit them long term.