Pennymac Home Equity Loan Review 2024 - NerdWallet (2024)

Pros

  • Homeowners can borrow up to 85% of the equity in their homes.
  • Repayment terms range from 10 to 30 years.
  • No penalty for early repayment.

Cons

  • Application fee and appraisal required.
  • Home equity loan rates aren’t published online.
  • Borrower must contact a loan representative to complete an application.
Compare great home equity lenders

Lender

Max. loan amount

Max LTV

Min. credit score

4.0
Visit Lenderat Better

at Better

$500,000

90%

680

Visit Lenderat Better

at Better

4.5

Visit Lenderat Figure

at Figure

$400,000

85%

640

Visit Lenderat Figure

at Figure

5.0

Visit Lenderat Bethpage Federal Credit Union

at Bethpage Federal Credit Union

$1,000,000

85%

670

Visit Lenderat Bethpage Federal Credit Union

at Bethpage Federal Credit Union

4.0

Visit Lenderat Rocket Mortgage, LLC

at Rocket Mortgage, LLC

$350,000

80%

680

Visit Lenderat Rocket Mortgage, LLC

at Rocket Mortgage, LLC

5.0

Visit Lenderat Guaranteed Rate

at Guaranteed Rate

$400,000

85%

640

Visit Lenderat Guaranteed Rate

at Guaranteed Rate

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Full Review

Pennymac home equity loan rates and discounts

Most home equity loan interest rates are indexed to a base rate called the prime rate. Your offered rate will include a margin the lender has added to the prime rate. Offered margins depend largely on factors like your credit score, your existing debt, your income and the amount you wish to borrow. They will vary by lender.

Current prime rate

Prime rate last week

Prime rate in the past year — low

Prime rate in the past year — high

8.50%.

8.50%.

8.50%.

8.50%.

Pennymac does not publish home equity loan rates online, so you’ll have to contact the lender for customized rates.

The lender does not offer a promotion or discount that could lower home equity loan rates.

» MORE: How much could you borrow? Try NerdWallet's home equity loan calculator

Applying for a Pennymac home equity loan

To apply, click “Get Started” on the Pennymac home equity loan page, which will bring up a contact form. You can fill that out and submit it, or you can call the number listed on the form. You can also request a call back and even schedule a time for the call. A loan representative then will guide you through the home equity loan application process. Pennymac offers a live chat to help answer questions, but you’ll need to be a current customer signed into your account to access the chat.

Pennymac says it takes less than 30 days from application to closing the home equity loan, and borrowers can track the progress of their loans online. Among the lenders we surveyed, that time ranged from five to 48 days. The lender requires a home appraisal to independently determine the value of your home. Pennymac says borrowers should expect a home appraisal to cost $600 to $1,000 to complete. Not all lenders we surveyed require an appraisal ahead of a home equity loan.

Pennymac charges an application fee of $500. Some home equity loan lenders do not charge this fee.

» MORE: Read our review of Pennymac mortgage

What you should know about Pennymac home equity loans

Pennymac allows qualified homeowners to borrow up to 85% of the equity in their homes, a generous percentage compared with some of its competitors. The lender says closing costs typically vary based on factors that include property location and loan amount. There is no penalty for paying off the loan early.

Pennymac offers home equity loans with terms of 10, 15, 20 and 30 years. Competitors we surveyed offer home equity loans with payback periods ranging from five to 30 years. And while some competitors offer home equity loans for second homes and investment properties, Pennymac does not.

Pennymac home equity loans are not available in Iowa, Michigan, North Carolina, Tennessee and Vermont. Borrowers seeking a home equity loan will need a credit score of at least 680, the lender says.

» MORE: Best home equity loan lenders

Alternatives to a Pennymac home equity loan

For borrowers seeking flexible terms, Network Capital offers a home equity loan with terms from 10 to 30 years, and Rocket Mortgage allows borrowers looking to borrow a large portion of their home equity to access 90% of their home’s equity.

Home equity loans let homeowners access a lump sum by converting equity into debt. You’ll repay the loan at a fixed interest rate over an agreed period of time. Alternatives to a home equity loan include a home equity line of credit (HELOC) or a cash-out refinance. HELOCs offer greater flexibility to withdraw funds, up to the credit limit, as needed, but often have adjustable interest rates. A cash-out refinance replaces your existing mortgage with a larger loan. It will be most appealing if mortgage rates are lower than your current rate, and closing costs will apply.

Pennymac offers a cash-out refinance option but no home equity line of credit (HELOC).

» MORE: HELOC, home equity loan, and cash-out refinance, compared

Pennymac Home Equity Loan Review 2024 - NerdWallet (2024)

FAQs

Which bank is best for a home equity loan? ›

Best home equity loan lenders in August 2024
LenderBankrate ScoreTerm Lengths
Discover4.4/510-30 years
U.S. Bank4.2/5Up to 30 years
TD Bank4.1/55-30 years
Regions Bank3.8/510-20 years
4 more rows

Is Pennymac trustworthy? ›

Pennymac receives a score of 592 out of 1,000 in J.D. Power's 2023 U.S. Mortgage Servicer Satisfaction Study. The industry average for servicing is 601. (A mortgage servicer handles loan payments.) Pennymac receives a customer rating of 4.37 out of 5 on Zillow, as of the date of publication.

What is the monthly payment on a $50,000 home equity line of credit? ›

To calculate the monthly payment on a $50,000 HELOC, you need to know the interest rate and the loan term length. For example, if the interest rate is 9% and the loan term is 30 years, the monthly payment would be approximately $402.

Why is no one offering home equity loans? ›

Homeowners in the market for a home-equity line of credit, which is a revolving line of credit secured by a mortgage, might find them difficult to come by these days. Several large banks suspended the origination of these loans last year because of the pandemic and resulting economic uncertainty.

What is the interest rate on equity loans in 2024? ›

As of August 28, 2024, the current average home equity loan interest rate is 8.52 percent. The current average HELOC interest rate is 9.28 percent. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets.

What is a good interest rate for a home equity loan? ›

Best Home Equity Loan Rates Of 2024
CompanyForbes Advisor RatingAPRs starting at
TD Bank5.07.99%
Navy Federal Credit Union4.07.34%
BMO3.58.19%
Connexus3.57.20%
3 more rows

How much would a $20,000 home equity loan cost per month? ›

Now let's calculate the monthly payments on a 15-year fixed-rate home equity loan for $20,000 at 8.89%, which was the average rate for 15-year home equity loans as of October 16, 2023. Using the formula above, the monthly principal and interest payments for this loan option would be $201.55.

What is the monthly payment on a $100 000 HELOC? ›

That noted, here's how much a $100,000 HELOC would cost per month if taken now, pegged to two different repayment periods: 10-year HELOC at 9.18%: $1,276.52 monthly for a total of $53,182.28 in interest paid. 15-year HELOC at 9.18%: $1,025.00 monthly for a total of $84,500.41 in interest paid.

How much is the payment on a 10 000 home equity loan? ›

10-year fixed home equity loan: 10-year fixed rate home equity loans currently have an average interest rate of 8.79%. At that rate, the monthly payment on a 10-year $10,000 home equity loan would be $125.54. You would pay $5,065.05 in interest over the 10-year loan term, bringing your total payoff cost to $15,065.05.

What is the downfall of a home equity loan? ›

Benefits of a home equity loan include consistent monthly payments, lower interest rates, long repayment timelines and a possible tax deduction. Downsides of a home equity loan include a 20% minimum ownership stake, closing costs and the potential to lose your house.

What is the downside of a home equity loan? ›

Home Equity Loan Disadvantages

Higher Interest Rate Than a HELOC: Home equity loans tend to have a higher interest rate than home equity lines of credit, so you may pay more interest over the life of the loan. Your Home Will Be Used As Collateral: Failure to make on-time monthly payments will hurt your credit score.

What should you not use a home equity loan for? ›

Home equity loans ideally should be used to finance home improvements or consolidate debt at a lower interest rate — but not to cover holiday, vacation or everyday expenses, buy a car, or invest.

Is it better to borrow from the bank or a home equity? ›

Personal loans are unsecured and your rate is tied to your credit and income. Home equity loans usually have lower rates, but your home is collateral for the loan. Personal loans may be a better choice for debt consolidation, while home equity loans include tax incentives if you're doing a home improvement project.

What is the downside to a home equity loan? ›

Home Equity Loan Disadvantages

Higher Interest Rate Than a HELOC: Home equity loans tend to have a higher interest rate than home equity lines of credit, so you may pay more interest over the life of the loan. Your Home Will Be Used As Collateral: Failure to make on-time monthly payments will hurt your credit score.

What is the best way to borrow against home equity? ›

Home equity loans, home equity lines of credit (HELOCs), and cash-out refinancing are the main ways to unlock home equity. Tapping your equity allows you to access needed funds without having to sell your home or take out a higher-interest personal loan.

What disqualifies you from getting a 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.

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