Discover: 2022 Home Equity Review

This major lender offers a variety of banking services, credit cards and home equity loans, but not HELOCs.

Discover is a financial services company headquartered outside of Chicago in Riverwoods, Illinois, that offers various types of loans, as well as banking services and credit cards.

You can apply for personal loans, student loans and home loans with Discover. It offers home equity loans and mortgage refinancing, but doesn't currently offer home equity lines of credit, or HELOCs.  

If you're looking for a home equity loan, the website has easy-to-use calculators that can help you determine what loan amount and interest rate you can qualify for in your personal financial situation. You can apply online or call a banker to apply for a home loan. Discover says it offers low, fixed APRs and has extended repayment terms up to 30 years.

Discover: At a glance

Types of home equity loan Home equity loan
APR range From 7.49% to 13.99%
Loan amounts $35,000 to $300,000
Credit score requirements Minimum of 620
Repayment terms 10-, 15-, 20- and 30-year options
Average time for approval Undisclosed

Homeowners with credit scores of 700 or higher will receive the best rates for a Discover home equity loan, though you can qualify with a score as low as 620. Although your credit score is the most significant factor lenders use to evaluate whether you'll pay back your loan, you must also have sufficient equity built up in your home (as a result of making consistent mortgage payments over the years) in order to qualify.

An average customer can usually borrow up to 80% of the combined loan-to-value ratio of their house, or CLTV ratio, but qualified borrowers can borrow up to 90% CLTV in some cases, according to Discover. Your CLTV is the ratio of all of your outstanding mortgage balances compared to the current appraised value of your property.

What we like

  • No fees: Discover keeps the process simple by taking care of all extra fees such as the origination fee, closing costs and home appraisal. That means you don't need to worry about coming up with any cash during your loan application process or having to roll the additional costs into your loan. However, if you pay off your loan in full within 36 months, you'll be required to reimburse Discover for your closing costs up to $500. 
  • Fixed-interest rate: In today's rising interest environment, a fixed-interest rate is appealing because your rate won't go up no matter what happens to the economy and financial markets.
  • Flexible repayment terms: Discover offers loan terms of up to 30 years, which benefits homeowners who need to stretch their financing over a long period of time. You can repay your home equity loan in 10-, 15-, 20- and 30-year terms.

What we don't like

  • Limited loan products: Discover only offers home equity loans and mortgage refinancing. It doesn't offer HELOCs, which are variable interest rate products, or purchase mortgages.
  • High minimum loan amount: You must withdraw at least $35,000 with a Discover home equity loan, which may be high for some homeowners, such as those who only need financing for a small project or to consolidate a moderate amount of debt. 
  • Low maximum loan amount: You can only take out a maximum loan amount of $300,000, which may be too small for homeowners who need to fund more expensive, long-term projects, and is especially limiting compared with other lenders who offer home equity loan limits as high as $3 million.

Home equity loan options

Discover currently offers home equity loans and mortgage refinancing, but it doesn't offer HELOCs or purchase mortgages. The lender also offers a wide variety of other kinds of loans such as personal loans and credit cards.

Fees

One of the benefits of a Discover home equity loan is that it takes care of all of the upfront fees that are typically associated with a home equity loan. Discover doesn't charge any application fees, and you won't be responsible for an origination fee, title fee, recording fee, mortgage taxes or closing costs (unless you pay off your loan in full within 36 months, in which case you must reimburse the closing costs up to $500).

Plus, as a borrower, no fees means that you don't have to come up with any money when you submit your application, saving you thousands of dollars right off the bat. 

How to qualify

You must have a minimum credit score of at least 620 to qualify for a Discover home equity loan (though the lender prefers to see a score of 700 or higher). In addition to your credit score -- which is typically the most important factor lenders consider when determining your interest rate -- your rate will also depend on multiple factors such as your verifiable income, debt-to-income ratio, or DTI ratio, as well as how much equity you have built up in your home.

Getting started

Once you've spoken with a banker, the Discover website provides a detailed checklist of necessary documents to help you start your application. Be prepared to have the following documentation such as your Form W-2, bank statements and other personal financial information. Once you have all of your documents gathered, you can upload them using the Discover loan application portal, from which you can manage the rest of the loan process from.

Discover says that if you upload your documents online (rather than send them via mail or fax), it will speed up your processing time. You can expect to receive your funds in full four days after your loan closes, according to Discover.

Customer service

To apply for a home equity loan, you can call a personal banker or submit your application online through Discover's website. Once you set up your online account, you can access Discover's loan portal to keep track of your application. Homeowners can reach customer support on weekdays from 8 a.m. to 12 a.m. ET and on weekends from 10 a.m. to 6 p.m. ET.

Live phone support: 

  • New loan applications and loan applications in progress: 855-361-3435
  • Funded home loans: 855-295-2193
  • General support: 855-361-3435