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Alternative Financing Options To Helocs

Customers having issues at Truist Bank in wake of SunTrust merger

If you dont want to use a line of credit, you may want to consider other home equity financing solutions, such as home equity loans or home equity investments.

Both options allow you to use the equity youve built in your home to secure a lump-sum payment that can be used however youd like.

A home equity loan is more closely related to a HELOC than a home equity investment. These loans generally come with fixed rates and repayment periods between five and 30 years. Borrowers make fixed monthly payments for the duration of the repayment period to pay off the loan.

A home equity investment, on the other hand, is much different. Its usually for homeowners who arent eligible for traditional home equity financing. While your home will still serve as collateral, there are no monthly payments. Instead, homeowners receive a lump-sum payment in exchange for a percentage of their home equity. The investment company will then share in the appreciation or depreciation of your home during the term. In most cases, youll be required to make one payment to repay the investment. This can be done with cash, through a mortgage refinance, or a home sale.

Which Is Right For You: A Home Equity Loan A Home Equity Line Of Credit Or A Cash

Home equity loans, HELOCs and cash-out refinances all allow you to turn some of your home equity into cash, to use as you see fit.

Your home is the collateral for all three of these loan types, so it’s considered safest to use the cash in a way that will improve your financial position. That’s one reason these are often used for value-adding home renovations.

Here are some of the key things to know when you’re comparing home equity loans, HELOCs and cash-out refinances.

Home equity loan

  • Provides you with a one-time payment that you pay back over time at a fixed rate. You’ll pay off this loan in addition to your mortgage, since a home equity loan is technically a second mortgage.

  • Can have a shorter loan term, depending on how much you borrow and how quickly you want to repay the loan.

Home equity line of credit, or HELOC

  • Gives you a line of credit that you borrow against as you need it, rather than requiring you to figure out an exact sum beforehand .

  • Has an adjustable interest rate, which means that your interest rate will change over the life of the loan. Some lenders also offer a fixed-rate option.

Cash-out refinance

  • Replaces your mortgage with a new home loan that’s greater than the amount already owed on your existing mortgage. You get the difference between the higher loan amount and the amount owed as a cash payment.

  • Generally has a higher interest rate than a rate-and-term refinance, but a lower rate than home equity loans or HELOCs.

How We Created This List Our Methodology

This is the criteria we used to evaluate the contenders and create this list:

  • Eligibility Requirements

How easy it is to qualify with the lender. What is the minimum credit score? Are there any salary requirements? Do restrictions apply?

  • Types of Lenders

What products they specialize in. We looked at lenders that mainly specialized in HELOC or standard home equity.

  • Fees and Repayment Terms

The total APR payable and what additional costs might come into play. Is there an application or closing costs? Is there a penalty for paying the loan early? What repayment terms does the company offer?

  • Credibility and Online Reputation

The companys reputation. We stuck to firms that have a sterling track record and a reputation for treating their clients fairly.

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How Much Equity Can You Borrow

The amount of money you can borrow typically depends on your chosen lender. Lenders give you a percentage of your total equity, and part of how much you qualify for may depend on your credit profile. Thus, some lenders may give you up to 85% or more of your equity if you have a good credit score backed by a strong financial profile.

Suntrust Mortgage Review For 2022

Current Home Equity Loan Rates Bbt

SunTrust stresses the personal aspects of its mortgage offering. We want to make absolutely sure you get the mortgage thats right for you, the company says. So we talk to you about itface-to-face at a branch and over the phone. This level of engagement will appeal to many first-time buyers and others who appreciate traditional relationships in mortgage matters.

Even better, SunTrust has a range of low- and no-down payment mortgage options. Along with its face-to-face customer service, this could make SunTrust especially attractive to new home buyers.

But it may be less of a draw for those who prefer the more modern, Rocket Mortgage style of mortgage buying which reduces personal interactions down to almost zero. In theory, you can use SunTrusts online application process to achieve a similar type of engagement. But the app does seem geared toward encouraging calls and meetings.

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Types Of Home Equity Loans

There are several ways to tap into your homes equity: home equity loans, home equity lines of credit or cash-out refinance loans.

These loans all require that you have sufficient equity in your home , and your approval will depend on your , combined loan-to-value ratio, debt-to-income ratio and employment.

Home equity loans

A home equity loan is a fixed-term loan that uses the equity youve accumulated in your home as collateral. Often called a second mortgage, home equity loans let borrowers obtain a lump-sum payment that can be used for major home renovations, consolidating debts or paying for college tuition. This type of loan offers the option of paying it back in equal installments.

Typically, home equity loans are for 80% to 90% of the propertys appraised value. Loan terms include a fixed interest rate and fixed monthly loan payments for up to 30 years.

Home equity loans can have lower interest rates than the best credit cards or personal loans if you have a good , but it puts you at risk of losing your home if you were unable to make payments. Do note that the first mortgage remains as the primary loan on a property if it still carries a balance.

Home equity lines of credit

A home equity line of credit, or HELOC, is a credit line that gives borrowers access to a certain amount of funds based on the accumulated equity in their home. This type of line of credit is a cross between a mortgage and a credit card, letting you tap into your home equity when needed.

What Fees Will You Pay

Truist isnât entirely transparent with the fees it charges on its loans. A company spokesperson says that borrowers can expect to pay origination fees and that Truist doesnât assess prepayment penalties however, youâll have to check with the lender to see exactly what you might be charged.

Keep in mind that Truist offers rate discounts that could help to reduce your overall loan cost. These discounts for existing customers, automatic payments and some elements of affordable loan products like FHA loans. Additionally, borrowers can qualify for a $500 lender credit to put toward your closing costs.

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Golden 1 Credit Union: Nmls#669333

National / regional

Golden 1 Credit Union offers flexibility to borrowers with a wide range of loan terms.

Pros

  • Offers a variety of purchase and refinance loans, including jumbo mortgages.

  • Has a preferred real estate agent program that can save a borrower money on closing costs.

  • Offers some flexibility on guidelines for loan qualification.

Cons

  • Does not offer VA or USDA loans.

  • Products available only to California residents.

Truist Mortgage Rates And Fees

Blend CEO on how his company is transforming home equity loan process

Truist publishes the current mortgage rates but doesnt disclose origination fees for its mortgages. If you need to know the rate specific to your loan product, you must call a Truist mortgage specialist or apply online.

Borrowers can refer to the online list of mortgage fees that apply after closing on their loan.

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Average Mortgage Rates At Major Lenders

SunTrust*
Avg 30-Yr Interest Rate, 20211 3.59%
Median Total Loan Costs, 20211 $3,766
$0

*Truist Mortgage 2021 lending data

Average rate and fee data were sourced from public rate and fee records required by the Home Mortgage Disclosure Act .

Remember, interest rates vary a lot by customer. And SunTrust could have higher rates on average if it helps more outside-the-box borrowers.

Buyers are also able to purchase discount points for lower rates and more affordable mortgage payments. SunTrusts online mortgage calculator helps you assess the costs of your borrowing options.

So if you like what SunTrust has to offer, its still worth getting a rate estimate to see how competitive this lender is for you.

Best Home Equity Loan Lenders

Lender NerdWallet rating

NerdWallet’s ratings are determined by our editorial team. The scoring formulas take into account multiple data points for each financial product and service.

National / regional Max LTV Min. credit score

Minimum credit score on top loans other loan types or factors may selectively influence minimum credit score standards

Learn more

Best for Kansas City borrowers

Best for variety of loan terms

Best for variety of loan terms

National / regional

Why we like it

Flagstar offers one of the highest loan limits among home equity loan lenders researched by NerdWallet.

Pros

  • Offers a wide range of loan types and products, including FHA, VA and USDA.

  • Has a full suite of online conveniences.

  • Offers customized online rate quotes with monthly payment estimates, including mortgage insurance, when applicable.

Cons

National / regional

NBKC can be a strong choice for borrowers in the Kansas City metro area.

Pros

  • Offers government-backed loans and some harder-to-find products, such as construction loans and specialty mortgages for pilots.

  • Offers low rates and fees compared with other lenders, according to the latest Federal data.

  • Displays customized rates, with fee estimates, without requiring contact information.

Cons

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How To Qualify For Mortgage Refinancing

In order to qualify for mortgage refinancing, lenders will judge whether an applicant meets certain criteria. Broken down, these categories reference a borrowers credit score, income, savings, debt, and the ratios between them. By and large, these guidelines are meant to indicate whether the applicant has both the reputation and the means to repay a loan.

Some lenders are more flexible than others. A loan insured by the Federal Housing Administration , for instance, has more flexible standards and guidelines for approval. That said, for those with lower credit scores, the initial down payment will be markedly higher. In the case of a credit score of 550, the down payment will be around 10 percent. Higher credit scores, on the other hand, will require about four percent.

A loan backed by the Home Affordable Refinance Program is one insured by the Federal Housing Finance Agency. By design, it is meant for homeowners that have proven reliable in regards to their mortgage payments, but have very little equity in their homes.

In order to qualify for a HARP loan, an applicants mortgage must have been granted by Freddie Mac or Fannie Mae prior to June 2009. Additionally, eligible borrowers must have a loan-to-value ratio over 80 percent.

What Is A Home Equity Loan

BB& T Auto Loan Rates and Calculator

A home equity loan is a type of financing that uses your equity as collateral. The lender would decide how much to lend based on how much equity you have in your home. Most lenders will not lend you the full amount of your equity, as this increases their risk.

If approved, the lender will create a second mortgage and cut you a check for the full loan amount. Repayment works like any other installment loan, meaning you would make equal monthly payments over time until you pay off the loan balance.

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How To Get A Heloc With Truist

If you choose to proceed with a HELOC application, here are the steps to take:

  • Navigate to the Truist website and select Loans, then Home Equity Line of Credit.
  • Select Apply Now and follow the prompts to enter your property information, your personal details, Social Security number, employment history and income.
  • Review the application and submit it for review.
  • Wait to be contacted about the next steps.
  • Documents youll need

    San Diego County Credit Union: Nmls#580585

    Min. down payment

    SDCCU offers conventional loans for as little as 5% down.

    National / regional

    San Diego County Credit Union can be a strong choice for California borrowers.

    Pros

    • Offers purchase, refinance and jumbo mortgages, plus loans for second homes and home equity products.

    • Provides customized rate and fee quotes without requiring contact information.

    Cons

    National / regional

    US Bank offers convenient online banking for borrowers.

    Pros

    • Offers a full line of conventional and government loan products.

    • Provides home equity loans and lines of credit.

    • Allows borrowers to apply and track their loan’s progress online.

    Cons

    • No personalized mortgage rates available online.

    National / regional

    Min. down payment

    Navy Federal Credit Union offers down payments as low as 0% on loans for military families.

    View details

    Navy Federal offers flexibility to borrowers with a wide range of loan terms.

    Pros

    • Offers a wide range of affordable mortgage products, including 0% down payment loans, designed for military members.

    • Offers HELOCs and home equity loans.

    • Offers low rates compared with most lenders, according to the latest federal data.

    Cons

    • Website does not provide customized mortgage rates based on credit score or other factors before you apply.

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    What Home Equity Products Does Truist Offer

    Truist offers HELOCs with a 10-year draw period and a 20-year repayment period. While a Truist HELOC is a variable-rate line of credit, borrowers have the option of fixing all or part of the line to a fixed-interest loan for a $15 fee. Truist doesnt offer home equity loans.

    Requirements are standard

    Like other lenders, Truist uses your credit score to determine your eligibility and interest rate. To get the best rate, youll need to have a credit score of 740 or above, in addition to sufficient equity in your home, proof of income and a low debt-to-income ratio. A large amount of debt like a second mortgage or a car payment can make it harder to qualify for a HELOC.

    How Truist Compares To Other Personal Loan Companies

    Conventional Loan

    Truists personal loan offerings are limited. The bank redirects many borrowers to LightStream for personal loans and suggests shopping for other personal loan products or even credit cards as an alternative to its Ready Now Loan.

    If youre looking for a loan under $1,000, credit unions like Navy Federal or Alliant may be worth considering. Alternatively, an online marketplace like Credible can help you compare lenders and find loans as small as $600.

    For a larger personal loan, there is no shortage of options, even if you limit your search to credit unions. Alliant Credit Union is just one alternative that offers loans with relatively low APRs, up to $50,000.

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    When Does It Make Sense To Refinance

    The best time to refinance a mortgage is within the first third of the loan’s term, as monthly installments during that period largely go towards interest repayment. In the case of a 30 year term, for instance, refinancing for a lower interest rate within the first 10 years will yield more demonstrable effects than it would later in the term.

    Mortgage refinancing is best for those with good credit, those with interest rates above the nationwide average, or those who have existing government-backed mortgages. Conversely, if the borrower has bad credit, then their mortgage interest rates could increase, rather than decease.

    If the borrower cannot afford said increase, then they should not attempt to refinance. Should a potential borrower feel confident in his or her economic profile, then our top ten refinance experts would be happy to assist with the next steps.

    Truist : Loan Types And Products

    Truist doesnt offer reverse mortgages or renovations loans, though most borrowers will find what theyre looking for on the lenders menu. Heres what Truist Bank offers right now:

    Construction-to-permanent loans allow homebuyers to finance the costs of building a new home. After the home is constructed, the loan converts into a traditional 15- or 30-year mortgage. This type of loan has become popular as home inventory is shrinking but housing demand is increasing.

    Truist also gives homebuyers an option between fixed- and adjustable-rate mortgages. With a fixed-rate mortgage, your mortgage rate never changes. This could be a good option if you find a low rate and you prefer predictable payments. An ARM offers a fixed rate only for a certain amount of time. Then, based on market conditions, the rate may go up or down at specified intervals for the rest of the loan term. Truist offers ARMs with terms of 5/6, 7/6, or 10/6. So with a 5/6 ARM, for instance, the rate is fixed for the first five years then adjusts every six months. Truists ARMs are subject to rate caps per adjustment as well as life of loan.

    And if you have an existing mortgage, you can swap it out with a rate-and-term refinance, cash out refinance, FHA streamline refinance, VA cash-out refinance, VA IRRRL refinance, or USDA streamline refinance.

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    What People Are Saying About Truist

    Truistâs Better Business Bureau rating is 1.11 out of 5.00 stars based on 1,791 reviews as of September 22, 2022. The BBB has closed 1,914 complaints about the company in the last 12 months and 3,570 complaints in the last three years. Keep in mind that Truist provides a large variety of banking and lending products, so these reviews arenât solely reflective of consumer feelings regarding the companyâs mortgage offerings.

    The BBB gives Truist an A+ rating, but this rating isnât based on customer reviews. Instead, it reflects how the company responds to complaints, its time in business, size and other factors.

    The CFPB has received 1,279 complaints regarding Truistâs mortgage services from December 2019 through September 2022. Most of these complaints were about having problems during the payment process while others were about issues paying a mortgage, during the application process or closing on a loan.

    Note that the CFPB does not verify the accuracy of consumersâ complaints. Additionally, while these numbers might seem high, they donât compare to the vast amount of customers that Truist serves in a wide array of areas, including mortgages.

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