The Best Home Equity Loans In Michigan, Reviewed and Rated

What is a Home Equity Loan?

When you buy a house with a mortgage, a lender loans money to pay for it. Over time and with continued mortgage payments, you build up home equity. Your equity is the monetary portion of the house that you actually possess.

As a homeowner, you can borrow against your equity with a home equity loan or HELOC, using the home as collateral, and take a lump sum of cash or variable withdrawals to spend on home repair, renovations, medical bills, debt consolidation, or any number of other things, with some limitations.

Lenders determine how much money they’re willing to loan to you based on the amount of equity in your home and how much equity you’ll still have after approval.

Home Equity Loan vs. HELOC

There are two primary options when choosing a home equity borrowing strategy, including a home equity loan and a home equity line of credit or HELOC. While both allow you to borrow against your home’s value, they function differently and serve different financial needs.

The one you choose will depend on how much you need to borrow, what for and how you’ll use the money, and whether you want fixed or flexible payment terms.

Home Equity Loan

• Pays a single sum with a fixed payment schedule
• Start paying back the loan immediately in regular monthly payments
• Is best to cover single expenses such as a major home renovation
• Generally consist of fixed interest rates

HELOC

• Acts as a revolving line of credit, similar to how a credit card works
• Features a draw period, when you can withdraw funds up to your credit limit, and a repayment period
• Allows multiple withdrawals against your borrowing limit, and repayments are possible throughout the draw and repayment periods
• Usually features a variable annual percentage rate (APR) and fluctuating payments based on the rate

Which Is Better for Michigan Homeowners?

A home equity loan is best for Michigan homeowners who need a lump sum of cash to finance a substantial single expense. Home equity loans are also good for helping homeowners cover extensive home improvements such as kitchen remodels, roof replacements, or bathroom upgrades.

Others use home equity loans for debt consolidation, using them to pay off credit cards or personal loans with high interest rates at a lower fixed interest rate. Home equity loans are also commonly used to finance unexpected medical expenses such as surgery or long-term care.

A HELOC, on the other hand, is best for those looking for ongoing access to cash over time instead of a single lump-sum amount. Many use a HELOC to pay for home remodeling projects that they will complete over time rather than all at once.

A HELOC can also act as a safety net to finance unexpected expenses, with borrowers being able to choose to withdraw funds or not. Homeowners with variable earnings, such as self-employed individuals or seasonal workers, can also benefit from a HELOC’s flexibility to fill income gaps when necessary.

For Michigan homeowners, selecting a home equity loan or a HELOC depends on the purpose of borrowing. If you prefer fixed rates and consistent monthly payments, a home equity loan is ideal. If you want borrowing access as needed with a variable rate, a HELOC might be a more flexible alternative. However, many of the best home equity providers are now offering fixed-rate HELOCs.

Comparing the Best Home Equity Loans in Michigan

Michigan homeowners have unique financial considerations when considering a home equity loan. The state’s diverse real estate market, which encompasses large metro areas like Detroit and Grand Rapids to small towns and remote rural areas, requires lenders to offer options that accommodate a wide range of home values and financial situations.

To help you choose the best provider for your needs, we ranked our competitors based on the following key factors:

• Loan amount limits
• Interest rate amounts and the availability of fixed or variable rates
• Eligibility criteria, including, credit score, income, loan-to-value (LTV) ratio
• Fees, such as closing costs, application fees, membership fees, and others
• Customer service and reputation
• Borrowing options offered
• Eligibility requirements
• Payment flexibility and available terms
• Years in business

Trusted Company Reviews does not allow ads for personal loans with an APR of 36% and above in the US.

How to Get the Best Home Equity Loans in Michigan

While choosing from the best home equity lenders in the state is an excellent starting point, follow these other actions to ensure you get the best options available to you.

1. Check Your Credit Score and Financial Standing

Lenders consider creditworthiness based on your credit score, debt-to-income or DTI ratio, and payment history. Most lenders require you to have a minimum credit score 620, with better loan terms available for those with scores above 700.

2. Calculate Your Home Equity

To determine your borrowing capacity, subtract your current mortgage balance from your home’s appraised value. Lenders typically allow borrowing up to 80% of your home’s equity. Many lender will offer assistance when determining how much equity you have.

3. Compare Lenders and Review Offers

Online lending platforms, like LendingTree, allow you to view multiple lender offers after submitting information for a prequalification step that doesn’t affect your credit score or appear on your credit report.
Compare lenders based on these criteria first:

• APR
• Closing costs
• Loan amounts
• Draw Period (for HELOCs)
• Repayment terms

4. Submit Your Loan Application

Provide your application along with supporting documents, which can include some or all of the following items.

• Proof of income
• Credit reports
• Property valuation records (Lenders can assist with this)
• Tax records
• Bank statements
• Identification
• Proof of residency
• Others

Then sit back and wait. Approval times vary, but it can take anywhere from a few minutes to several weeks to obtain approval and receive your money.