Wells Fargo Home Equity Loan - Look Again!

Wells Fargo Home Equity Loan - Look Again!
Betsalel CohenApr 28, 2019
Key Takeaways:
  • Wells Fargo offers a wealth of information about home equity and mortgage loans.
  • However, Wells Fargo does not offer a Home Equity Loan.
  • They do offer home equity alternatives, such as a cash-out refinance mortgage and a home equity line of credit.

Wells Fargo Home Equity Loan Review

Are you looking for a Wells Fargo Home Equity Loan? If so, you are in for a big surprise. Wells Fargo is currently, as of April 2019, not offering a home equity loan. Although they are the biggest mortgage lenders in the country, Wells Fargo is restricting their home equity options. They are currently offering a cash out refinance or a Home Equity Line of Credit (HELOC).

Wells Fargo Equity Loan - Part of the HELOC

You will not be surprised that Wells Fargo offers a lot of information and tools about Home Equity and HELOCs. Their website includes a Home Equity Calculator that helps you shop for their HELOC product.

The main difference between a HELOC and a regular Home Equity Loan is flexibility. Instead of taking one lump sum, a HELOC allows you to borrow smaller amounts of money and utilize your line of credit as you see fit. HELOCs are especially helpful when you need money over an extended period for home improvements or college expenses. You can use your line of credit for ten years and then make fixed monthly payments.

HELOCs are much more complicated than a Home Equity Loan. The HELOC comes with a lot of uncertainty. Since your loan amount and your interest rate are variable, you don’t know your monthly payments.

Loan Amount: Just like other home equity loan options, lenders calculate the amount you can borrow by using your home value, your mortgage balance, and Wells Fargo Combined Loan to Value Ratio Guidelines. Based on their calculator you can borrow up to 85% of the value of your home. For example, if your home value is $400,000 and you owe $300,000 the maximum amount of money you can borrow is $40,000.

Interest Rate: In general, similar to your credit card, a HELOC interest rate has a base rate (market rate) and a margin.

Fixed Rate Advances

Wells Fargo allows you to take all or part of your home equity line of credit as a fixed loan. Wells Fargo will enable you to take a HELOC and set part of it as a fixed rate, which allows you to set your monthly payments.

One advantage of the Wells Fargo HELOC is that you can utilize the line of credit and then pay off part of that with a long-term fixed payment. Click here to see the Fine Print.

Choosing a fixed rate: Wells Fargo HELOC has a fixed rate option. You can take all of your initial draws as a fixed rate loan, similar to a Home Equity Loan. The repayment period is either five, ten or fifteen years. The initial rate is based on market rates and your LTV, credit score, and loan amount are crucial elements in setting the interest rate.

Here are some rates for a 15-year fixed rate payment on a HELOC fixed advanced draw, based on the Wells Fargo Home Equity Calculator on April 28, 2019:

CreditLTVInterest Rate
Excellent (760 and above)85%9.250%
Good (700-759)85%9.750%

source: https://www.wellsfargo.com/mortgage/rates/calculator/

Wells Fargo Home Equity Loan Options

Wells Fargo offers an excellent online platform to get information, compare rates, and apply for a mortgage. However, currently, they are not offering a traditional home equity loan.

Before you decide to take a Wells Fargo Home Equity Line of Credit check out your other options. For example, if you want a lump sum and a long-term mortgage, then a Home Equity Loan will most likely be less expensive. If you have excellent credit, a personal loan might be your best solution. If you are struggling with debt, then check out other solutions by using the Bills.com Debt Payoff Calculator.

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BBarbara Jacobs, Mar, 2020

I currently have a Wells Fargo HELOC for $80,000 Currently have used about $46,000. What is the interest rate I am now paying? With rates being so low I might want to shop around for a better rate than Wells Fargo.

DDaniel Cohen, Mar, 2020

Barbara, look at your monthly statement or the loan paperwork. I would have no way of knowing what your rate is.

By all means, compare what you have with rates today, but account for any fees you will pay for the new loan.