What is a US Bank Home Equity Loan?
A national chain with a strong west coast presence, U.S. Bank offers both home equity loans and home equity lines of credit. While their standard fixed-rates for home equity loans and variable rates for HELOCs are not the lowest rates, they do accept a much broader set of applications than most other home equity lenders. They will loan against homes with a second mortgage, do not have a strict credit score cut off, and allow for a loan-to-value ratio of up to 90%. They also also allow for some of the largest home equity loan amounts, up to $1 million in California.
US Bank Home Equity Loan Rates & Fees
For home equity loans, U.S. Bank currently offers minimum rate of 4.89% on a 10-year loan term, and 5.24% on a 15-year term loan. It should be noted that these are minimum interest rates, with several requirements, including a loan amount between $50 and $250k, a FICO score of 730 or higher, and automatic payments set up from a U.S. Bank personal checking account (0.25% discount for the checking account, and an additional 0.25% for setting up automatic payments).
Like other home equity lenders, U.S. Bank minimum rates are tiered, meaning your minimum interest rate depends on a variety of factors, including credit history, debt-to-income ratio, the value of your home, loan-to-value ratio, and where your home is located.
When it comes to loan-to-value ratio (or LTV), 60% is considered the cutoff point after which minimums begin to escalate in 10% increments. In other words, all LTVs below 60% are considered the same, and after that the tiers are 60%-70%, 70%-80% and 80%-90%, with each successive tier commanding a higher minimum interest rate. These tiers vary by state, however the maximum LTV range for all states is between 80% and 90%.
While the minimum loan amount for U.S. Bank is technically $15k, you will have to pay 0.5% higher interest rates for U.S. home loans with a value of less than $50k, and 1.5% higher interest for loan amounts less than $25k. The maximum loan amount is $750k ($1 million in California).
Home equity loans from U.S. Bank are fixed rate, meaning once your interest late is calculated, it’s set for the term of the loan, and you’ll always make the same monthly payment. This is different than U.S. Bank’s HELOC, which like many others has a variable rate based on the prime rate. Interest rates may be tax deductible so it’s worth checking with your tax advisor on how to benefit from this.
One major plus side is that U.S Bank does not have any closing costs, application fees, or annual fees associated with their home equity loans. There is however, a a $90 maintenance fee for HELOCs. It should be noted that there is an early closure fee of 1% (up to a maximum of $500) if a home equity loan is repaid in the first 3 years. Customers can choose to avoid paying a closure fee by paying an origination fee of 1%, however this is not recommended, as you are essentially committing to paying a loan off in 3 years, for no additional benefit or reduction in price.
US Bank Home Equity Loan Requirements
The only hard requirement for a U.S Bank home equity loan is to have property insurance on the home whose value you’re borrowing against. Unlike many other lenders, U.S. Bank accepts second mortgages for home equity loans and HELOC, and they don’t require a specific credit score. They instead look at your credit report as a whole.
While U.S. Bank representatives confirmed that applications were still accepted for individuals with a credit score of less than 680 (a common minimum standard in home equity lending), they did say that notable red flags on a credit history report – such as late payments, major bankruptcies, and a very high debt-to-income ratio – could disqualify any applicant, regardless of credit score.
The U.S. Bank representatives we spoke to also estimated the application process to take about 4-5 days for approval, and then 2-3 weeks for the funds to be accessible.
U.S. Bank Home Equity Loan Reviews
It appears U.S. Bank has historically had mixed reviews in regards to its home equity lending. However, it seems the company’s reputation is improving.
- For example, In J.D. Power’s 2018 U.S. Home Equity Line of Credit Satisfaction Survey, U.S. Bank received 3 out of 5 “Power Circles” – putting it below the industry average, and in the bottom half of home equity lenders nationwide. However, this year’s survey has U.S. Bank up at 4 out of 5 circles, rating it as the “Better Than Most” (albeit at the bottom of this cohort).
One of the big downsides to U.S. Bank appears to be their lack of locations. The company only has branch locations in 28 out of 50 states, a big downside for those who prefer an in-person presence. When examining J.D. Power’s Retail Bank Customer Satisfaction Survey, it appears that while U.S. Bank has the highest rating of any bank in California, its customer satisfaction greatly diminishes in the Northwest, Southwest, and Southern regions of the country.
U.S. Bank Home Equity Calculator
U.S. Bank provides a number of excellent resources for calculating your payment. Their home equity rate calculator asks a number of quick questions – such as credit score, home value, loan amount and properly location – and then quickly calculates your rate for both a home equity loan, and line of credit. These often provide details about different rates by loan term.
Home Equity Loan vs Home Equity Line of Credit
As U.S. Bank offers both loan options, it’s worth asking which type is best for you.
While there are a number of factors that affect which type of loan is best for you, the main factor is whether you want a lump sum amount upfront, or if just want access to a credit line, which you may access fully, or in any portion up to your credit limit, as your situation requires. One of the common uses for a home equity line of credit is to fund home improvements – considered an investment in your home value – or to consolidate debt from various outstanding balances such credit cards into one loan with a lower rate.
When it comes to HELOCs, U.S. Bank currently offers a 12-month introductory rate of 3.99% APR, with a rate of between 4.75% and 8.25% afterwards. It’s also worth noting that U.S. Bank offers fixed rates for home equity loans, but variable interest rates for HELOCs.
Pros & Cons of a US Bank Home Equity Loan
U.S. Bank is a great option for those looking for a home equity loan or HELOC on their second home, or for those who currently have a accounts with the bank. They also present an opportunity for individuals who may have a worse credit score than their complete credit history might suggest.
The interest rates aren’t the best, however they are very average, and can vary favorably depending your individual factors. The largest variable in the quality of service still appears to be regional, with U.S. Bank showing improvement in its reputation nationally.
- No minimum credit score
- High maximum loan amount of $750k
- Discounts of up to 0.50% for existing U.S. Bank customers
- Offers both HELOC and Home Equity Loans
- High maximum LTVs allowed
- No application or closing fees
- Only has branches in 28 out of 50 states
- Interest rates are average
- Early closure fee of 1% for loans repaid in under 3 years
If you are looking to get a home equity loan on your second home, or want a particularly large loan or high LTV, U.S. Bank is a great choice. Their application approval relies much more on credit history than credit score, so if you are overcoming damage to your credit that doesn’t reflect your current situation, U.S. Bank is an option worth exploring. They also have discounts available to existing customers, which is a considerable incentive for those looking to reduce their interest rate. The major determinant for whether you go with U.S. Bank depends on whether they offer service in your area.