Discover: 2023 Home Equity Review
The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation for .
At a glance
- Customer Experience
$35,000 - $300,000
Min. credit score
620 (700 or higher for $150,000 or more)
10 years to 30 years
Funds available in
About 1 to 2 weeks for initial eligibility, 2 to 3 weeks for final decision, 1 to 2 weeks for closing
Here's a breakdown of some of the benefits and drawbacks of Discover home equity loans.
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.
|Home equity loan types||Home equity loan|
|Credit score minimum||620 (700 or higher for $150,000 or more)|
|Repayment terms||10 years 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|
How Bankrate rates Discover
To create our Bankrate Scores, we evaluated lenders based on availability, affordability and customer experience. Availability was assessed based on the minimum loan amount required, time to approval, days to close, minimum draw requirements, minimum credit score requirements and loan types offered. Affordability was assessed based on minimum APR, discounts and promotions offered and associated fees. Customer experience was assessed based on online application and account availability, customer support, auto payment availability and mobile app availability and ratings.
- 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.
- The lender allows borrowers to have a combined loan-to-value (CLTV) 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.
- 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.
- Discover home equity loans start at $35,000, which might 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 might require expense reimbursement (with a $500 maximum) if you pay off the loan within the first 36 months. Expenses you might 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 might 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 (DTI) 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 CLTV ratio of up to 90 percent (although the loan amount with that ratio is capped at $200,000). 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, Monday through Friday from 8 a.m. to midnight ET or Saturday or Sunday, 10 a.m. to 6 p.m. ET. Once you submit your application, you might get prequalified for multiple loan options within a few minutes. After that, you can upload documents, provide additional information and electronically sign documents online.