Michigan homeowners who would like to tap their home equity have several options to consider, but choosing a good lender can be challenging. The best Michigan home equity loans offer competitive interest rates, flexible payment options, and low fees. Our ranking rates the top contenders based on multiple factors specific to consumers in the state and varies from our national ranking of top providers.
Whether you’re looking to consolidate debt, pay for home improvements, or make a major purchase, these are the best home equity loans and home equity lines of credit (HELOC) options to fit your needs
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 conidering 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
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The Best Home Equity Loans in Michigan
Rocket Mortgage
Best Convenience Features
Why We Chose Rocket Mortgage
Rocket Mortgage, headquartered in Detroit, Michigan, is one of the top mortgage lenders in the U.S. It has an excellent reputation among Michigan homeowners for its streamlined online application process, fast approvals, and excellent customer service.
Rocket Mortgage is particularly well known for offering competitive fixed-rate home equity loans, making it a strong choice for those looking for predictable monthly payments for home renovations, debt consolidation, or covering large expenses.
However, Rocket Mortgage does not offer HELOCs, meaning homeowners who need a revolving credit line will need to look elsewhere. Despite this, its Michigan roots, high customer satisfaction, and user-friendly online process make it the best overall home equity loan provider in the state.
Pros
- Competitive interest rates (subject to credit score)
- Simple online application process
- Michigan-based company with local expertise
Cons
- No HELOC option available
- Stricter credit score requirements than some competitors
Better Mortgage (Better.com)
Best Online Experience
Why We Chose Better Mortgage
Better Mortgage is an online-only lender, known for eliminating traditional fees and offering a fully digital mortgage experience. Unlike many competitors, Better.com doesn’t charge origination fees, application fees, or prepayment penalties, making it an attractive option for Michigan homeowners looking to save on upfront costs.
With a fast and user-friendly prequalification process, you can check your eligibility within minutes and without affecting your credit score.
One of Better Mortgage’s standout features is its flexible home equity options, including both home equity loans and HELOCs. This provides options for how you choose to access your home’s equity, whether you need a lump sum or a revolving credit line.
However, because Better Mortgage operates entirely online, it lacks physical branch locations, which may be a downside for homeowners who prefer face-to-face interactions.
Pros
- No origination fees or application fees
- Completely online borrowing process
Cons
- Not as established as traditional credit unions or banks
- May not offer the lowest interest rates in Michigan
LendingTree
Best for Easy Shopping and Low Interest Rates
Why We Chose LendingTree
LendingTree operates as a lending marketplace, rather than as a direct lender, allowing Michigan homeowners to compare multiple loan offers from different financial institutions. This makes it an excellent choice for borrowers wishing to shop around for the best interest rates, fees, and loan terms without having to apply individually with multiple lenders, or taking multiple hits on their credit scores.
LendingTree borrowers can find both home equity loans and HELOCs, depending on which lender they choose or qualify for.
Because LendingTree isn’t a direct lender, loan terms, interest rates, and fees vary widely depending on the results of your prequalification. Some homeowners have reported inconsistent customer service, resulting from working with the individual lender instead of LendingTree itself after loan approval. However, for borrowers who want to quickly compare home equity loan options in Michigan, LendingTree can be a valuable resource.
Pros
- compare multiple loan offers easily
- Offers both home equity loans and HELOCs
Cons
- Not a direct lender
- Interest rates and fees vary by lender
Check Your Rates without affecting your credit score.
Navy Federal Credit Union
Best for Military Members
Why We Chose Navy Federal
Navy Federal Credit Union (NFCU) is an excellent option for Michigan veterans, active military personnel, and their families. It offers both home equity loans and HELOCs, providing flexibility for different financial needs.
What sets NFCU apart is its low closing costs and competitive interest rates, which can be particularly beneficial for service members looking to borrow against their home’s equity.
A key benefit of borrowing from NFCU is its dedicated customer support for military families. NFCU also provides financial education resources, deployment assistance, and flexible repayment options tailored to military borrowers.
However, membership is necessary to access NFCU’s home equity products, which excludes homeowners without military affiliations.
Pros
- Low closing costs compared to banks
- HELOCs with competitive variable rates
Cons
- Only available for credit union members
- Membership requirements exclude most civilians
Discover Home Equity Loans
Best for Fixed-Rates
Why We Chose Discover
The Discover company is primarily thought of as a credit card provider. However, it also offers highly competitive fixed-rate home equity loans. One of Discover’s biggest perks is its lack of annual fees, origination fees, or application fees, making it a cost-effective choice for borrowers.
Its fixed-rate structure ensures predictable monthly payments, ideal for homeowners seeking stability and budgeting certainty. Unlike some lenders on our list, Discover doesn’t offer HELOCs, meaning borrowers who need a revolving credit line will have to consider other options.
Additionally, Discover’s eligibility requirements are more stringent than those of many other lenders. The company typically requires a higher credit score and a lower debt-to-income ratio than many of its competitors. However, if you qualify, Discover provides a hassle-free application process and highly rated customer service.
Pros
- No annual or application fees
- Offers fixed-rate loans for predictable monthly payments
Cons
- No HELOC options available
- Stringent eligibility requirements
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.
