Discover Home Loans Review: Learn About Discover Home Equity Loans and Mortgage Refinancing (2024)

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If you're looking to refinance your mortgage or get a home equity loan, Discover is a strong option. It's one of the best home equity loan lenders, and its low mortgage rates and zero closing costs make it incredibly affordable. But it doesn't offer any other types of mortgages.

Discover Home Loans

Discover Home Loans Review: Learn About Discover Home Equity Loans and Mortgage Refinancing (1)

Insider’s Rating

3.63/5

Recommended Credit

680

Types of Loans Offered

Conventional refinance, home equity loan

Cons

  • Only offers mortgage refinancing and home equity loans
  • Fixed-rate loans only
  • Higher than average rates

Insider’s Take

If you're looking to refinance your mortgage or get a home equity loan, Discover is a strong option. It's one of the best home equity loan lenders, and its lack of closing costs make it incredibly affordable. But it doesn't offer any other types of mortgages.

Product Details

  • Available everywhere in the US except Iowa and Maryland
  • Loan amounts from $35,000 to $300,000
  • Offers 10, 15, 20, and 30-year terms on its loans

Overview of Discover Home Loans

Types of Mortgage Products Offered

Discover only offers conventional mortgage refinancing and home equity loans. Its home loans are available everywhere in the US except Iowa and Maryland.

History of Discover in the Mortgage Industry

Discover launched its Home Loans business in 2012, initially offering conventional and FHA mortgages.

Discover's Mortgage Rates and Fees

Comparing Discover's Rates and Fees to National Averages

Discover lists the range of rates it offers on its Home Loans website. Home equity loan rates will be slightly higher than refinance rates. To get a better idea of what rate you might get based on your finances, you'll need to start an application or talk to a loan officer over the phone.

According to our review of the latest Home Mortgage Disclosure Act data, borrowers paid slightly higher-than-average rates on Discover's first-lien conventional loans in 2022.

Discover doesn't charge any origination fees on its mortgages, and you won't need to bring any cash to closing, since the lender will also pay any third-party costs you incur. The data backs up this claim: according to HMDA data, conventional borrowers getting a mortgage from Discover paid $0 in origination charges in 2022.

Discover Home Loans Overall Rating

Loan Types: 2 out of 5

Discover's mortgage offering are extremely limited. If you're looking for a mortgage to purchase a home, you'll need to look elsewhere.

Affordability: 3.5 out of 5

Discover's lack of fees makes it an overall affordable lender. But you'll need to have good credit to qualify.

Customer Satisfaction: 4 out of 5

On WalletHub, Discover has a 4 out of 5-star rating based on over 14,000 customer reviews.

Trustworthiness: 5 out 5

Discover has an A+ rating from the Better Business Bureau. The BBB evaluates companies by looking at responses to customer complaints, honesty in advertising, and transparency about business practices. Discover has no recent public scandals.

Pros and Cons of Discover Mortgage

ProsCons
  • You don't need any cash at closing, since Discover doesn't charge origination fees and it covers your third-party costs

  • Easy online application process

  • Extremely limited mortgage offerings
  • No adjustable-rate options
  • Somewhat high rates

Advantages of Choosing Discover

If you want to refinance or get a home equity loan but you don't have a ton of cash for out-of-pocket expenses, Discover might be a good lender for you. Discover doesn't charge any fees on its mortgages, and it will also cover your third-party costs (such as home appraisal fees).

Potential Drawbacks

The biggest drawback of Discover is that it only offers mortgage refinances and home equity loans, and the loan amounts it offers are relatively low (you can only get a loan up to $300,000). You'll also only be able to get a fixed-rate mortgage from this lender.

Additionally, Discover's rates are slightly higher than average, according to our review of the latest HMDA data.

Loan Options and Terms

Loan amounts on both of Discover's mortgage options start at $35,000 and go up to $300,000. For both refinances and home equity loans, you can choose between a 10-, 15-, 20-, or 30-year term length.

With a refinance from Discover, you can do a simple rate-and-term refinance or you can borrow from your equity using a cash-out refinance.

Customer Service and Support

Customer Reviews and Ratings

Discover has good customer reviews, but the company is more widely used for its Discover credit cards than its mortgages. This makes it difficult to get a sense of how satisfied borrowers are with Discover as a mortgage lender.

Availability of Customer Support

In general, Discover customers appear to really like the company's customer service.

If you need help with an in-process loan, you can reach customer support between Monday through Friday from 8 a.m. to midnight ET, or 10 a.m. to 6 p.m. on Saturday and Sunday.

How to Apply with Discover

How to Apply

Discover makes it quick and easy to submit an online application. You can also get started over the phone.

Eligibility Criteria

Whether you're applying for a mortgage refinance or a home equity loan, you'll need a credit score of 680 and a debt-to-income ratiobelow 43%.

For its home equity loans, your CLTV has to be below 90%. This means all of the loans on your property combined can't exceed 90% of the property value.

Compare Discover to Other Mortgage Lenders

Discover Home Loans vs. U.S. Bank Home Loans

U.S. Bank Mortgageis a strong lender overall, and like Discover, it's one of our favorite home equity loan lenders.

U.S. Bank offers home equity loans in amounts from $15,000 to $750,000, so you might prefer it if you need a larger loan amount, since Discover only lends up to $300,000.

U.S. Bank also offers conforming, jumbo, FHA, VA, and construction mortgages, as well as HELOCs. You can use its mortgages for either a purchase or refinance, unlike Discover's mortgages.

Discover Home Loans vs. Bank of America Home Loans

If you're looking for a HELOC rather than a home equity loan, you might like Bank of America Mortgage, which is one of the best HELOC lenders available. A HELOC is a line of credit that borrows from your equity and may be a better option if you're not exactly sure how much you need to borrow (like if you're doing a home improvement project that will have ongoing costs).

Bank of America also offers conforming, jumbo, FHA, and VA mortgages, plus its Community Affordable Loan Solution. The Community Affordable Loan Solution is a zero-down, zero-closing-cost mortgage aimed at first-time homebuyers in certain areas.

Though its competitors generally have many more mortgage options, Discover still stands out thanks to its affordability.

Discover Home Loans FAQs

What makes Discover Home Loans stand out among other lenders?

Discover charges no fees on its mortgages and a reputation for great customer service.

Can I refinance my existing mortgage with Discover?

Yes, Discover offers both rate-and-term and cash-out refinancing.

How difficult is it to get a home equity loan from Discover?

You'll need at least a 680 credit score and a max CLTV of 90% to qualify for a Discover home equity loan.

How long does the Discover mortgage application process take?

According to the Discover website, it could take as little as 30 days for you to get your home equity loan funds. But it says the average time it takes to close is 55 days. For refinances, it says that the process typically takes six to eight weeks.

Does Discover charge any mortgage application fees?

Discover doesn't charge any fees on its home loans, and it will pay any third-party fees you incur as well.

Are Discover home equity loans good?

Discover's home equity loans are a good option if you're looking to keep your costs down, since Discover doesn't charge any closing costs and pays for any third-party fees you incur.

Why You Should Trust Us: How We Reviewed Discover Home Loans

To review Discover Home Loans, we used our methodology for reviewing mortgage lenders.

We look at four factors — loan types, affordability, customer satisfaction, and trustworthiness — and give each a rating between 1 and 5, then average these individual ratings for the overall lender rating. Lenders get higher ratings if they offer a high number of loan types with affordable features, have positive customer reviews, and don't have any recent public controversies.

Molly Grace

Mortgage Reporter

Molly Grace is a mortgage reporter for Business Insider with over six years of experience writing about mortgages and homeownership.ExperienceIn addition to her daily mortgage rate coverage, Molly also writes mortgage lender reviews and educational articles on homebuying and analyzes data and economic trends to give readers actionable and up-to-date information about the housing market.She also tracks affordable mortgage and down payment assistance programs offered throughout the country to keep her readers informed of homebuyer programs available to them.Before Business Insider, Molly was a blog writer for Rocket Companies and helped to create Rocket Mortgage’s Shorty Award-winning podcast Home. Made.Molly is passionate about covering personal finance topics with empathy. Her goal is to make homebuying knowledge more accessible, especially for groups that may think homeownership is out of reach.ExpertiseMolly is an expert in the following topics:

  • Mortgages and mortgage lenders
  • Home equity
  • The housing market
  • The economy and the forces that impact mortgage rates
  • Budgeting and saving
  • Credit
  • Insurance
  • Retirement savings

EducationMolly earned a bachelor's degree in journalism from Indiana University.She is based in Michigan and has a dog and two cats.

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Discover Home Loans Review: Learn About Discover Home Equity Loans and Mortgage Refinancing (2024)

FAQs

Is it hard to get a home equity loan with Discover Bank? ›

Discover's home equity loan is best for borrowers with good credit but little equity in their homes. If you have a minimum credit score of 680, you may be able to tap into 90% of your home's value — compared to the standard 80% to 85%. The loan comes with no fees, and Discover will cover the closing costs.

What is the interest rate on Discover home equity loans? ›

Tap into your home equity with low fixed rate loan options
Current Home Equity Loan Rates
Term Length Options:Rate Range: APR Disclosure
30-Year Fixed Rate7.99% - 12.59% APR
20-Year Fixed Rate7.99% - 12.59% APR
15-Year Fixed Rate7.99% - 12.59% APR
1 more row

What credit score do you need for Discover home equity? ›

Qualifying credit score: You will need to meet your lender's minimum credit score requirements. For example, Discover Home Loans requires a credit score of 680 or above to qualify for a home equity loan.

How long does it take to close on a Discover home equity loan? ›

We'll gather third-party information about your home and then send your complete application to underwriting for a final decision. Closing you loan (around 1-2 weeks). We'll contact you to schedule your closing and then arrange for your loan funds to be sent to your accounts.

What disqualifies you from getting a home equity loan? ›

Past Bankruptcy or Foreclosure

Having a bankruptcy or foreclosure on your short- to mid-term credit history will likely make it difficult to qualify for all types of loans, including HELOCs. These marks against your creditworthiness are not permanent, but they also don't vanish overnight.

What is the monthly payment on a $50,000 home equity loan? ›

A $50,000 Home Equity Loan at 7.99% would equal an APR of 7.99% with 120 monthly payments of $606.38.

Can I pay off my Discover home equity loan early? ›

Discover home equity loan fees

Prepayment penalty: No fee if you pay off your loan early. Rate lock fees: Discover will lock your fixed rate for free as soon as you complete your application.

How much would a 30k home equity loan cost per month? ›

Today's 10- and 15-year home equity loans come with average interest rates of 8.77% and 8.75%, respectively. Here's how much money you would need to pay per month on a $30,000 home equity loan at those rates: 10-year home equity loan at 8.77%: Your monthly payment on this loan would be $376.30.

Which bank has the best home equity loan rates? ›

Some of our top picks for the best home equity loan rates are from Discover (6.74%), Navy Federal Credit Union (7.34%), Bethpage Federal Credit Union (6.99%), Third Federal Savings & Loan (7.29%), Spring EQ (7.83%) and TD Bank (7.99%).

Why would you not get approved for home equity loan? ›

Most lenders require you to have at least 15% to 20% equity left in your home after factoring in the new loan amount. If your home's value has not appreciated enough or you haven't paid down a big enough chunk of your mortgage balance, you may not qualify for a loan due to inadequate equity levels.

Is a home equity loan better than a HELOC? ›

Typically, HELOCs will have lower interest rates and greater payment flexibility, but if you need all the money at once, a home equity loan is better. If you are trying to decide, think about the purpose of the financing.

Will a home equity loan hurt my credit score? ›

Though taking out a home equity loan can cause your credit score to drop, the impact is usually fairly small, and you can improve your score over time by managing your credit responsibly.

Are Discover home equity loans hard to get? ›

It's not too hard to get a Discover home equity loan given its minimum requirements. In general, lenders prefer that your DTI not exceed 36%, so Discover's maximum DTI of 43% offers more wiggle room for borrowers.

How soon do you have to pay back a home equity loan? ›

A home equity loan term may range anywhere from 5-30 years. HELOCs generally allow up to 10 years to withdraw funds, and up to 20 years to repay.

Can a home equity loan be denied after closing? ›

Your loan can be denied anytime from the point of application to the point of closing. However; at closing' and 'after closing' differ in that at closing, the final documents are yet to be signed. Therefore, cancellation is still possible if the lender finds that you no longer meet some requirements for the loan.

Do home equity loans ever get denied? ›

Unfortunately, some applicants are denied their home equity loans. Don't panic if you're one of them. Try to find a different lender that's more sympathetic to your situation. Some are more flexible than others.

Is it hard to get approved for home equity? ›

Home equity loans are relatively easy to get as long as you meet some basic lending requirements. Those requirements usually include: 80% or lower loan-to-value (LTV) ratio: Your LTV compares your loan amount to the value of your home. For example, if you have a $160,000 loan on a $200,000 home, your LTV is 80%.

What is the lowest score for a home equity loan? ›

Requirements for home equity loans

Typical requirements for home equity loan applicants include: A minimum credit score of 620. At least 15 percent to 20 percent equity in your home. A maximum debt-to-income (DTI) ratio of 43 percent, or up to 50 percent in some cases.

How long does it take to get approved for a home equity loan? ›

The home equity loan process time depends on several factors, but generally can take anywhere from two weeks to two months.

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