Check out the 2022 Home Equity and Mortgage Refinance Review
Check out the 2022 Home Equity and Mortgage Refinance Review

Discover is a major credit card issuer, but its financial products and services go beyond that. In addition to credit cards and banking services, Discover offers home equity loans to qualified borrowers. These loans can be used for many purposes, including home improvement, debt consolidation, mortgage refinancing, and other major expenses.

  • With Discover home loans, there are no application or origination fees.
  • Several repayment term options are available with fixed monthly installments.
  • Discover offers a convenient digital application process.
  • Find out home equity loans are not available in all states.
  • The loans are fixed rate only, which can be a drawback for borrowers interested in a variable rate option.

Discover home equity loans are available between $35,000 and $300,000. All Discover home loans have fixed interest rates and fixed monthly payments, providing predictability in budget planning.

Discover does not provide mortgages for the purchase of property.

To begin the loan application process, you can call Discover or apply online. Discover will access your credit report and ask for information about your employment, debts and expenses, and other information.

Within three days of completing your application, you should receive a document explaining the fees associated with your loan.

Discover will need various documents from you before it can be approved for a home loan. Some things may be required of you:

  • W-2 tax forms and your tax returns from the previous two years.
  • Names and addresses of all your creditors, as well as the monthly payments and the total amount due for all your outstanding loans.
  • Statements of current assets, such as IRAs, certificates of deposit, stocks and bonds.
  • Account numbers and current balances of your bank accounts.

Discover will arrange a home appraisal; once the assessment is complete and you submit all required documents, Discover will begin underwriting your loan. The lender says they will provide you with a closing package containing your loan details before your closing date.

Discover offers loans from $35,000 to $300,000, and loan terms can be 10, 15, 20, and 30 years. Annual percentage rates range from 4.15% to 11.99% and monthly payments are fixed. The lender advertises no origination fees, application fees or appraisal fees, and no cash required at closing.

The Discover website states that the lender pays all closing costs during the loan process.

If you repay your loan balance in full within 36 months of closing the loan, you will be responsible for reimbursing Discover for some of these closing costs, not to exceed $500. However, those who live in Connecticut, Minnesota, New York, North Carolina, Oklahoma, or Texas are not required to repay closing costs.

In addition to meeting credit score requirements, potential Discover home equity loan borrowers must meet other expectations to qualify. These include:

  • Verifiable and constant income. You must provide a recent payslip and have at least two years’ professional experience. Other documents are required if you are self-employed.
  • A history of responsible credit use. Paying your bills on time and controlling your expenses can help show lenders that you are a safe risk.
  • Sufficient equity in your home. The value of your home plays an important role in determining how much you can borrow. To estimate equity, subtract the debt secured by your home (often just the mortgage) from the estimated market value of the home. The equity you need depends on the loan amount you want.

Discover has fixed loans from $35,000 to $300,000. The lender’s website states that it cannot use commercial property, investment property, or manufactured homes for a home equity loan.

You need a credit score of 620 or better to qualify for a home equity loan with Discover. The lender’s website states that loan amounts requested above $150,000 are only available to applicants with a credit score of at least 700.

Mortgage Refinance Calculator

Could refinancing your mortgage save you money? Try US News’ Mortgage Refinance Calculator to see if refinancing makes sense.

Discover’s home loans site states, “Not all products are available in all states or for all loan amounts,” but it does not specify in which states its products are not available.

Discover Financial Services has earned an A+ rating from the Better Business Bureau and has been BBB accredited since 1989.

In 2021, the Consumer Financial Protection Bureau received 17 mortgage-related complaints for Discover Bank. All complaints received a timely response and 14 were closed with an explanation, two with non-monetary relief and one with monetary relief. Complaints were most often related to:

  • Apply for or refinance a mortgage.
  • Problem during payment process.

Borrowers can prequalify online for a home equity loan, view their loan status, upload documents and more through Discover’s secure website.

  • People who want to pay a small upfront fee for a home equity loan.
  • People who need financing of $300,000 or less.
  • People who prefer a fixed interest rate.

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