Lower HELOC review: Competitive variable rates, origination fees

Couple working on a home-improvement project in their yardImage: Couple working on a home-improvement project in their yard
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Lower HELOCs at a glance

  • Fixed or variable rate: Variable rate
  • How to withdraw funds: Online transfer or with a check or debit card
  • Origination fee: 1% origination fee on HELOC transactions
  • Loan-to-value ratio: Up to 95%
  • Time to fund: Unclear

Lower offers a home equity line of credit, or HELOC, with competitive variable interest rates that borrowers can use for various financial needs, such as home renovations or debt consolidation.

Pros

  • Soft credit inquiry allows you to preview potential rates
  • You can access up to 95% of your home equity
  • You may qualify for discounted refinancing in the future

Cons

  • Not available in all states
  • Origination fee on HELOC transactions

3 things to know about a Lower HELOC

Here are some key things to consider before borrowing from Lower.

1. Access up to 95% of your home equity

Lower offers HELOCs of up to $350,000 with access of up to 95% of your home equity, which is more than some other lenders. Accessing more of your home equity may help you pay off more higher interest debt or complete a larger home improvement project.

But keep in mind that it can also cause you to put your home at risk if you can’t afford your new HELOC’s monthly payments.

2. Origination fee — but a refinance deal

If you take out a Lower HELOC, you’ll pay a 1% origination fee on HELOC transactions.

But if you want to refinance your home in the future with Lower, you may be able to avoid closing costs. Lower has a “Free Refi for Life” promise that waives origination, processing and administrative fees.

Costs to refinance your home typically run between 3% and 6% of your mortgage amount.

3. Competitive HELOC rates

Your interest rate will determine how much you pay for borrowing money, so a competitive rate is invaluable for keeping your costs down.

A Lower HELOC has a variable interest rate, which means your rate can change over time — though Lower says it’ll stay between 4% and 18%. As of October 2022, Lower’s current average HELOC APR is competitive.

Who is a Lower HELOC good for?

Homeowners looking to renovate often may use a HELOC as a home improvement loan or home repair loan, so a Lower HELOC is worth considering for people who want to renovate their homes.

If you anticipate refinancing your primary mortgage in the future, a Lower HELOC can be a good choice. Lower waves the origination, underwriting, processing and administration fees on future refinances for its current clients. This can save thousands in future fees. A Lower HELOC also has competitive APRs compared to other HELOCs on the market. That makes it worth a look if you’re considering a debt consolidation loan since you can use the HELOC to pay off higher-interest debts.

How to apply for a Lower HELOC

There’s an online application for a Lower HELOC. You can check your potential rate without a hard credit inquiry before deciding whether to proceed.

To be eligible for a Lower HELOC, you must live in a state where the lender is licensed and meet its minimum credit requirements. You may need a property appraisal, which typically costs several hundred dollars.

To apply …

  • You’ll need to provide your personal information, including your name, email and phone number.
  • A loan specialist will call you once they have your information.
  • The loan advisor will submit the full loan application and provide you with a loan disclosure document, which outlines the rates and terms.

You’ll also need to submit documents that prove monthly expenses, income, debts and assets (such as W-2s, 1040s, paycheck stubs, and bank and loan statements).

Not sure if Lower is right for you? Consider these alternatives.

  • Alliant Credit Union: This lender’s HELOC is worth considering for borrowers who want a lower-fee option.
  • Bank of America: This nationally known bank offers an option to convert your HELOC to a fixed rate.