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Discover home equity review 2024

E. Napoletano
·Contributor
8 min read

The Yahoo view: Discover only has home equity loans, cash-out refinancing, and rate-and-term refinancing — no HELOCs or mortgages for buying a home. It offers competitive rates and a (mostly) fee-free borrowing experience. However, it’s important to note that their “zero costs due at closing” doesn’t mean no closing costs; it simply means those costs are rolled into your loan.

Discover Bank doesn’t just issue credit cards with catchy commercials; it also offers mortgage products, like refinancing and home equity loans. And, if you’re looking for a no-fuss, no-muss lending experience, Discover could be a top contender. The lender boasts a lot of zeros, and in the best possible way — no origination or appraisal fees and no costs payable at closing.

In addition to being the largest originator of home equity loans by dollar amount and volume as of 2022 (the most recent data available for home equity lenders), Discover offers what we consider a consumer-first lending experience. When you land on their home equity product page, borrowers have instant access to interest rates, calculators, and lending timelines.

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In this article:

Discover

Key benefits:

  • Discover home loans offer lower fees than many lenders. There are no loan application, appraisal, or origination fees, and no fees are due at loan closing.

  • The online lending experience simplifies applying and uploading important application documents through the website.

  • Generous loan-to-value ratios (LTVs) give you access to up to 90% of your home’s equity.

  • Multiple home equity loan terms, including 10, 15, 20, and 30 years, help borrowers choose terms and payments that fit their budget.

Need to know:

  • Discover only offers fixed-rate home equity loans.

  • Home equity loans are available from $35,000 to $300,000.

  • While no costs are due at closing, there are closing costs, and totals are murky at best.

  • Those looking for home equity loans of less than $35,000 should look for another lender.

  • Although Discover offers home equity loans, it doesn’t have home equity lines of credit (HELOCs).

Discover’s tagline is “We treat you how you’d treat you.” By and large, this claim holds up in our review of Discover’s home equity loan product.

The website offers a veritable ton of information from the first click: rates, terms, lending limits, and plenty of loan examples to give borrowers a sense of monthly payments. Depending on your borrowing needs, you can choose loan values ranging from $35,000 to $300,000, with loan values up to 90% of your home’s equity (wow). You’ll also find generous repayment terms ranging from 10 to 30 years — a definite plus in the affordability column for those tapping a higher percentage of their home’s equity.

Another check in the “plus” column is Discover’s conspicuous lack of fees for all its mortgage-related products. First, there are no home appraisal, origination, or application fees (thanks, Discover). Second, there’s no cash due at closing — a definite win, but let’s clarify that one.

While you can skip bringing cash to the closing table, Discover home equity loans do have closing fees. We couldn’t tell you what they are. We literally clicked on every disclosure link and scoured the website for a clue, but came up empty.

Learn more: Home equity loan vs. HELOC

If you’re looking to consolidate debt or pay for other major expenses, Discover offers cash-out refinancing.

One major advantage of Discover is that they offer refinancing for first and second mortgages. You’ll score the lowest APR when you have top-tier credit and refinance a first mortgage; second mortgage refinancing could hike your interest rate by over 4%, depending on your credit score.

Loan values and repayment terms for a cash-out refinance are the same as those offered for Discover’s home equity loans.

Dig deeper: Home equity loan vs. cash-out refinance — Which should you choose?

Discover’s rate-and-term mortgage refinancing may help you lower the interest rate on your first or second mortgage — if your outstanding mortgage is $300,000 or less.

We find the lending limits at Discover a bit frustrating, especially in today’s higher interest rate environment. With the average single-family home costing a hefty $513,100 as of Q1 2024, buyers in the past year or so likely won’t find interest rate relief with a Discover refi. You’d have to have taken out your mortgage a (very, very, very) long time ago or with a fairly low credit score to make Discover’s rates attractive.

Those refinancing a second mortgage with a rate above 13% may have better luck, as Discover’s rate-and-term refinancing rate for seconds currently tops out at 12.86%.

Read more: Is it time to refinance your mortgage? 5 ways to prepare.

Discover’s home equity and refinancing rates are generally attractive — especially for those with excellent credit. The current rates are available in large print and on multiple web pages, so they’re easy to find. However, their loan disclosures aren’t very specific about what credit score or other criteria you need to qualify for the lowest rates.

Rates for home equity loans are slightly higher than those for refinancing, which isn’t uncommon. However, both lending options offer the same no-fee structure with no cash due at closing (see our frustrations with this above under “home equity loans”) and the same loan values.

To dial in your rate on either product, click one of Discover's website's many orange “Get Started” buttons on their website. From there, you’ll provide information to help Discover deliver a more personalized rate for your unique situation.

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To qualify for a home loan with Discover, you’ll naturally need to meet a few criteria.

For either a home equity loan or mortgage refinance, you can apply and submit the required documentation online or over the phone. Discover estimates that the loan process lasts six to eight weeks from application to closing.

If you’re a fan of running numbers, Discover sees you and will happily feed your needs.

From its home loans landing page, you can find calculators for four tasks: cash-out refi, debt consolidation, loan amount, and rate and payment.

Here’s the bummer: If you click the “Rates & Calculators” tab, you’re only taken to a rates page. The only way to get to Discover’s actual calculators from that tab is to:

  • Hover over the tab

  • Take a deep breath and let the submenu pop up on your screen

  • Select a calculator from the drop-down

Honestly, it’s a minor frustration that could easily be remedied by a little tweak to the site visitor experience (paging anyone from Discover’s web team).

Discover also offers a wide range of helpful articles under a handy “Articles & More” tab. Clicking that link actually works, delivering you to an article library with easy-to-navigate topics to quickly get where you want to go.

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While Discover and Rocket Mortgage both offer home equity loans and mortgage refinancing, only Rocket Mortgage offers purchase loans. For home equity loans, however, there are some notable differences between the mortgage lenders.

Rocket Mortgage has a higher minimum home equity loan amount — $45,000.01 versus Discover’s $30,000. Rocket also has a more generous DTI ratio — 50% compared to Discover’s less-than-43%. And here’s a fix for our frustration with Discover and closing cost disclosure: Rocket clearly states that closing costs will typically run 2% to 6% of your loan. Thanks, Rocket.

Rocket Mortgage review

While Discover offers a more user-friendly website experience, Guild comes out ahead for easy navigation. Both mortgage lenders offer home equity loans and mortgage refinancing. However, Guild’s site navigation makes it easy for borrowers to choose between rate-and-term and cash-out refis.

Guild is more generous on multiple lending points. Guild offers HELOCs as well as home equity loans, and the minimum borrower credit score is 660 for its HELOC. Guild also offers loan values up to $750,000 for HELOCs, or $500,000 for home equity loans compared to Discover’s $300,000 (booyah). Finally, Guild HELOCs offer loans for up to 95% of your home’s equity and give you a choice between fixed and variable-rate loans.

Discover comes out ahead on rate transparency, though. No matter how deep you dig, you won’t find a single APR listed on Guild’s website.

Guild Mortgage review

Discover Home Loans' maximum loan amount is $300,000. This amount applies to both of its mortgage lending products: home equity loans and mortgage refinancing.

Discover Bank does not offer mortgages for purchasing a home. The bank only offers mortgage refinancing and home equity loans, both for up to $300,000.

Discover calculates appraisals using an automated valuation model (AVM). AVMs use data on sales and local property values to determine a home’s market price. Traditional appraisals use human appraisers to evaluate a home’s market value via an in-person inspection and recent sales data from local comparable homes.

This article was edited by Laura Grace Tarpley