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Discover Home Equity Loans Review
By Stephanie Colestock MONEY RESEARCH COLLECTIVE
Discover is a popular, nationwide lender that offers consumers a number of different financial products. It serves as a credit card issuer as well as a lender for lines of credit and student, personal and home loans. For borrowers looking to tap into the established equity of their property, Discover also offers a home equity loan.
Keep reading to learn all about Discover, the home equity loans they offer and what to expect from the borrowing process.
Discover home equity loan features
- Annual Percentage Rate (APR): Loan rates starting at 5.99% APR
- Loan Amounts: $35,000 to $300,000
- Payments: 10, 15, 20 or 30 year loan terms
Table of Contents
- Discover’s Services
- Discover’s Credentials
- Discover’s Accessibility
- Discover’s Customer Satisfaction
- Discover FAQ
- How We Evaluated Discover Home Equity Loans
Discover Home Equity Loans Overview
- Borrow up to 90% LTV
- Maximum home equity loan limit is $300,000
- Loans only offered on primary homes
- HELOCs aren't available
Discover Financial Services, known popularly as Discover, launched its first credit card product in 1985. Since then, the company’s line of services has grown and expanded to include a range of credit card products, deposit accounts and loans, including student, personal and home equity loans. Beyond its financial services, Discover is perhaps best known for providing fee-free accounts and 100% U.S.-based customer service.
Discover also makes home equity loans that give homeowners an alternative to cash-out refinancing or personal loans. Home equity loans offer a sound option to people who want to pull equity out of their home for home improvement, debt consolidation, large expenses or other needs. They are a second mortgage on your property that gives you access to the cash you need.
The application process is quick and can be started online in just a few minutes. The underwriting process can vary in length depending on factors such as the borrower’s credit and debt-to-income ratio (DTI).
Discover Home Equity Loans have helped more than 20,000 homeowners access the value in their properties to meet their financial goals. Since introducing the product in 2013, Discover has funded over $1 billion in home equity loans.
Discover’s Services
Discover is a financial services company with a wide — and ever-growing — range of products and services for U.S. consumers. They offer banking and consumer credit products with no fees and competitive interest rates.
What’s offered
- Home equity loans — Discover’s home equity loans allow consumers to borrow a lump sum of up to $300,000. The loan is secured by the home’s established equity. Loans come with terms between 10 and 30 years and are either variable or fixed-rate.
- Credit cards — Discover offers a variety of credit card products including rewards, cash back, student, travel and even secured credit cards. Discover doesn’t charge annual fees on any of these cards, either.
- Deposit accounts — Whether you’re looking for an online checking account, savings account, money market account, certificate of deposit (CD) or even a retirement account, Discover has the deposit accounts you need.
- Student loans — Discover lends to student borrowers looking to take out up to 100% of their school-certified educational expenses. Discover student loans are available to undergraduate, graduate, professional, career, or even parent borrowers. Consolidation loans are also available.
- Personal loans — With a Discover personal loan, borrowers can take out between $2,500 and $35,000 with flexible repayment terms and no origination fees. These loans can be used to pay off existing debt, cover an unexpected expense or even make a large purchase.
Requirements for a home equity loan
In order to qualify for a home equity loan from Discover, homeowner borrowers will first need to meet a few requirements. These include having:
- A FICO credit score of at least 620
- History of responsible credit management
- Verifiable income
- Enough equity in your home
Discover allows you to borrow up to 90% of your home’s loan-to-value (LTV) ratio. To calculate this, simply multiply your home’s value by 0.9, then subtract your current mortgage balance and any other liens that may be held against your property.
This means that if you still owe $100,000, but the current market value of your home is $400,000, you can borrow as much as $260,000 out of the total $300,000 available equity in your home.
Be aware, though, that people with lower credit scores may be limited to an LTV that’s lower than 90%.
What’s not offered
- Home equity lines of credit (HELOCs) — Similar in some ways to a home equity loan, a HELOC also allows you to tap into your home’s equity on a rolling, as-needed basis. Many mortgage lenders and banks offer both products, but Discover only offers a home equity loan.
- Loans on second or investment properties — Currently, Discover only offers home loan options on primary residences. This means that if you’re trying to borrow against the equity of a vacation home, investment property, rental home, etc., you’ll need to find a different lender.
Discover’s Credentials
Discover is a top-rated U.S. financial services company offering a range of home equity, credit card, banking and loan products in all 50 states.
Licenses and registrations
Discover is an FDIC member institution and deposit accounts are protected by this agency up to eligible maximums. It’s a licensed mortgage underwriter in all the states where it does business.
Awards and certifications
- Investor’s Business Daily, #8 on the Most Trusted Financial Companies list (2021)
- Forbes’ Best Employers for Women (2021)
- Forbes’ Best Employers for New Graduates (2021)
- Brand Keys Index, #1 in Credit Card Brand Loyalty (2021)
Third-party ratings
Discover Financial Services currently holds a standalone baseline credit assessment (BCA) rating of baa2 from Moody’s.
Regulatory or legal actions
There are no current regulatory or legal actions pending against Discover.
Discover’s Accessibility
Discover is a financial institution that services customers in all 50 states. They offer live, U.S.-based customer service as well as live chat, web and mobile app accessibility options.
Availability
Discover is an online-based banking institution, with no brick-and-mortar branches. However, they operate in all states and offer a robust mobile app, comprehensive website, live chat options and phone-based customer service.
Contact information
New and existing customers can contact Discover in various ways whether they need help applying for a new loan or managing a current account.
You can contact a live, U.S.-based agent by calling 1-800-DISCOVER (1-800-347-2683). If you’re specifically looking for help with a home loan, agents in that department can be reached by phone at 1-855-361-3435, weekdays from 8 a.m. to midnight ET and weekends from 10 a.m. to 6 p.m. ET.
You can also send a message or live chat with an agent directly through the Discover website or mobile app. If you need to send written correspondence, the Discover Home Loans department’s address is 1 Corporate Drive, Suite 360, Lake Zurich, IL 60047-8945.
User experience
Discover’s online and mobile platforms are easy to use and navigate, and both offer a robust resource library to answer many of your most common financial questions. Opening an account is also simple, with the ability to start a home loan application online in just a few minutes, or over the phone with an agent. Applications cannot be completed through Discover’s mobile app.
Limitations
Customer service agents are available weekdays from 8 a.m. to midnight ET and weekends from 10 a.m. to 6 p.m. ET.
Discover’s Customer Satisfaction
Discover consistently earns top marks in customer satisfaction from many of the leading industry agencies, receiving awards and recognition for its customer service, mobile app and website, credit card rewards and even communication.
Customer complaints
Discover is a Better Business Bureau (BBB)-accredited company with an A+ rating. The most common consumer complaints listed on the BBB website include lengthy hold times to reach an agent and issues with reversing unauthorized transactions on credit card accounts.
And though the company earns top industry ratings in consumer satisfaction, they only have a 1.7 out of 5 rating on Trustpilot. That does only take into account 160 consumer reviews, however, most of which have nothing to do with home equity loans. Further, consumer reviews are subject to manipulation and tend to skew negative across the board, especially for financial services companies.
Third-party ratings
When it comes to third-party ratings, Discover has a tendency to shine. The financial giant earns award after award for customer service and satisfaction, particularly from JD Power.
Recent JD Power awards include:
- JD Power U.S. Consumer Lending Satisfaction Study (2021) — #2 in overall consumer satisfaction
- JD Power U.S. Credit Card Satisfaction Study (2021) — #2 in overall consumer satisfaction
The Discover mobile app also has a 4.9 out of 5-star rating in the App Store, with more than 3.6 million ratings, and a 4.7 out of 5-star rating in the Google Play store, with over 255,000 reviews.
Discover FAQ
How long does it take to get a home equity loan through Discover?
Discover does not disclose how long the home equity loan process takes. Depending on whether a home appraisal is needed, whether you meet all eligibility requirements, and how long it takes to gather the necessary documentation, the process could take anywhere from a matter of days to a month or more.
What credit score is needed for a Discover loan?
In order to take out a home equity loan from Discover, you and/or your cosigner will need to have a minimum credit score of at least 620, in addition to meeting other eligibility requirements.
Can I pay off my Discover home equity loan early?
Discover allows home equity loan borrowers to pay off their loan at any time without prepayment penalty. However, if you pay off your loan within the first 36 months, you may be required to reimburse Discover for certain expenses related to title fees and transfer taxes (not to exceed $500).
How We Evaluated Discover Home Equity Loans
To properly evaluate Discover as a financial institution and as a home equity lender, we looked at key factors such as availability, product offerings and ease of navigation through their website and mobile app. We also considered consumer satisfaction ratings, industry awards, and the company’s financial stability.
Summary of SacBee’s Discover Home Equity Loans Review
When it comes to borrowing against your property’s value, a home equity loan from Discover can help you tap into that unused equity when you need it most. With top consumer satisfaction ratings and a simple application process, Discover is easily one of our picks for the best home equity loans.
Stephanie Colestock is a DC-based personal finance writer with nearly 11 years of freelance writing experience. She covers a wide range of finance-related topics and is currently working toward her CFP®️ certification. Her work appears on sites such as Business Insider, MSN, Fox Business, CNET, Investopedia, and more.