US Bank: 2020 Home Equity Review

Founded in 1863 as the First National Bank of Cincinnati, today U.S. Bank is the fifth-largest bank in the country. Based in Minnesota, they have over 3,000 branch locations and 4,800 ATMs. According to their 2018 annual report, they have over 74,000 employees and $467 billion is assets.

Earlier this year, U.S. Bank launched a new mobile app that includes several features including mobile check deposit, bill pay and the ability to transfer money to friends and families with Zelle, a digital payments network. The bank also allows you to apply for mortgages and loans through your phone.

Lender snapshot

If you’re considering tapping into your home equity, but still deciding between a home equity line of credit (HELOC), loan or refinance, you might want to check out U.S. Bank. They offer a variety of products so you can compare terms and interest rates and then make a choice based on your needs.

• Home equity loan products include a variable-rate HELOC with fixed-rate options, a home equity loan and a mortgage refinance
• No closing costs on HELOC or home equity loans
• Annual fee on HELOC is $90 after first year; this fee is waived for U.S. Bank Platinum Checking Package account holders
• Early termination fee of up to $500 if home equity loan is paid off and closed within three years (this fee is waived if borrowers have a debt-to-income ratio (DTI) above 43 percent or choose to pay 1 percent origination fee at closing)
• Minimum loan amount on all home equity products is $15,000
• Borrowers pay 1 percent or 2 percent of the balance, applied to interest and principal, during HELOC draw period; qualified borrowers may choose to pay interest only

Pros and cons

Pros

• No closing costs: U.S. Bank covers all closing costs.
• Fixed-rate options: You can convert all or any part of your HELOC to a fixed-rate loan and have up to three fixed-rate loans at any time.
• Decent range for borrowing amounts: Depending on your credit history, available equity and current DTI, you may be eligible to borrow anywhere from $15,000 to $750,000 (or up to $1 million for California properties).
• Discount just for having a checking account: If you have a U.S. Bank checking account, you will automatically receive a 0.5 percent discount on your APR.

Cons

• Fees: If you pay off your home equity loan within three years, you will pay up to a $500 fee. There is a $90 annual fee after the first year on HELOCs.
• Pay more than just interest during HELOC draw period: With most HELOCs, you pay interest only during the draw period. With U.S. Bank you will pay 1 percent or 2 percent of the balance amount with each payment. You may be able to pay only the interest depending on whether or not you have a qualifying credit score.
• HELOCs not available in all states: Currently U.S. Bank does not offer their HELOC in Delaware, South Carolina or Texas.

Mortgage products

U.S. Bank offers three home equity products: a line of credit, a loan and a no-cost mortgage refinancing.

Home equity line of credit (HELOC)

U.S. Bank’s HELOC has a 10-year draw period and a 20-year repayment period. Like most HELOCs, it has a variable-rate, but U.S. Bank also offers a fixed-rate option so you can also convert any or all of your line into a loan that comes with a fixed-rate and fixed monthly payments. You can have up to three fixed-rate plans in place at any given time.

There are no closing costs, but there is an annual fee of $90 after the first year; this fee is waived if you have a U.S. Bank Platinum checking account. A personal checking account with U.S. Bank is not required, but you’ll get a 0.5 percent discount just for having a U.S. Bank checking account.

The current advertised introductory APR is 3.99 percent for 12 months. This is based on a loan-to-value ratio (LTV) of 80 percent or less and a credit score of 730. APRs range from 4.3 percent to 8.6 percent and depend on the Wall Street Journal Prime Rate, your credit score and history, LTV and the amount borrowed. The floor rate is 3.25 percent and the ceiling is 18 percent.

With a U.S. Bank HELOC, you can pay 1 percent or 2 percent of the balance, applied to interest and principal, during the draw period. This may work to your advantage as a borrower, however, since monthly payments significantly increase on all HELOCs during the repayment period. You may be able to secure interest-only payments, but that will depend on your credit score.

Home equity loan

If you’re looking to borrow one lump sum and want predictable monthly payments, you might want to consider U.S. Bank’s fixed-rate home equity loan. You can borrow between $15,000 and $750,000 (or up to $1 million in California) depending on your credit history, available equity and current DTI. Loan terms can go up to 30 years.

The current rates are 4.89 percent for a 10-year term and 5.24 percent for a 15-year term. These rates assume a loan amount ranging from $50,000 to $250,000, an LTV of 70 percent or less and a very good to excellent credit score of 730 or higher. This APR also includes a 0.50 percent discount for automatic payments from a U.S. Bank checking account.

Like the HELOC, there are no closing costs. If you pay off the loan within three years, however, there is an early termination fee of 1 percent of the loan amount, but this won’t exceed $500. You can also opt to pay a loan origination fee of 1 percent (again, the maximum amount is $500) to waive the early termination fee.

Smart refinance

U.S. Bank’s Smart Refinance is a fixed-rate loan with a term of up to 20 years. It’s a good option if you want to change your current mortgage term or lower your APR and borrow some equity at the same time. With this option, you can also consolidate an existing home equity loan or line of credit with your Smart Refinance. Loans are available for up to 90 percent LTV.

U.S. Bank also offers a traditional mortgage refinance. Interest rates vary from traditional mortgage refinance products, so depending on the length of the term and amount of the loan, along with your goals, one product may make more sense than the other.

Lender fees

There are no closing costs on home equity products. There is an early termination fee of 1 percent (up to $500) on home equity loans if the account is closed within three years. This fee can be waived if you opt to pay a loan origination fee. Customers with a DTI above 43 percent will not pay the early termination fee.

After the first year, there is an annual fee of $90 on all HELOCs.

If you have a U.S. Bank checking account, you will receive a discount of 0.5 percent.

Borrowing requirements

All loans are subject to approval and your APR will depend on credit history, loan amount, property value and property location. U.S. Bank does not disclose credit score requirements, but according to the 2018 Annual Report, 99.4 percent of all home equity borrowers were considered prime borrowers; by industry standards, this usually means a credit score of at least 620.

At U.S. Bank, the maximum LTV varies by state and will range from 80 percent to 90 percent. According to the 2018 Annual Report, 79.9 percent of all home equity borrowers had an LTV of 80 percent or less; 15 percent of borrowers had an LTV ranging between 80 and 90 percent.

How to apply

You can apply for any of the U.S. Bank home equity products online, by phone or at a branch. You can also apply through their mobile app. After an initial review, a U.S. Bank branch officer will contact you for any additional documentation necessary to underwrite your loan.

Next, you will have your property appraised and then your application will go through a final approval. Funding will be available three days after the closing.

Get started

For more information about U.S. Bank’s HELOC, visit their website or call 855.488.4496. You can also schedule a phone call or chat online with a personal banker.

Still not sure what products makes the most sense for you? Take a quick quiz with U.S. Bank’s Home Equity Recommender to get recommendations. They also have their own home equity loan rate and HELOC calculator to determine your APR and monthly payments.

How Bankrate Rates US Bank

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.