Pennymac Home Equity Loan Review 2024 - NerdWallet (2024)

Pros

  • Homeowners can borrow up to 85% of the equity in their homes.
  • Repayment terms range from 10 to 30 years.
  • No penalty for early repayment.

Cons

  • Application fee and appraisal required.
  • Home equity loan rates aren’t published online.
  • Borrower must contact a loan representative to complete an application.
Compare great home equity lenders

Lender

Max. loan amount

Max LTV

Min. credit score

4.5

Visit Lenderat Spring EQ

at Spring EQ

$500,000

95%

640

Visit Lenderat Spring EQ

at Spring EQ

4.0

Visit Lenderat New American Funding

at New American Funding

$750,000

80%

580

Visit Lenderat New American Funding

at New American Funding

4.5

Visit Lenderat Figure

at Figure

$400,000

85%

640

Visit Lenderat Figure

at Figure

4.0

Visit Lenderat Rocket Mortgage, LLC

at Rocket Mortgage, LLC

$350,000

90%

680

Visit Lenderat Rocket Mortgage, LLC

at Rocket Mortgage, LLC

3.5

Visit Lenderat Better

at Better

$500,000

90%

680

Visit Lenderat Better

at Better

Full Review

Pennymac home equity loan rates and discounts

Most home equity loan interest rates are indexed to a base rate called the prime rate. Your offered rate will include a margin the lender has added to the prime rate. Offered margins depend largely on factors like your credit score, your existing debt, your income and the amount you wish to borrow. They will vary by lender.

Current prime rate

Prime rate last week

Prime rate in the past year — low

Prime rate in the past year — high

8.50%.

8.50%.

8.0%.

8.50%.

Pennymac does not publish home equity loan rates online, so you’ll have to contact the lender for customized rates.

The lender does not offer a promotion or discount that could lower home equity loan rates.

» MORE: How much could you borrow? Try NerdWallet's home equity loan calculator

Applying for a Pennymac home equity loan

To apply, click “Get Started” on the Pennymac home equity loan page, which will bring up a contact form. You can fill that out and submit it, or you can call the number listed on the form. You can also request a call back and even schedule a time for the call. A loan representative then will guide you through the home equity loan application process. Pennymac offers a live chat to help answer questions, but you’ll need to be a current customer signed into your account to access the chat.

Pennymac says it takes less than 30 days from application to closing the home equity loan, and borrowers can track the progress of their loans online. Among the lenders we surveyed, that time ranged from five to 48 days. The lender requires a home appraisal to independently determine the value of your home. Pennymac says borrowers should expect a home appraisal to cost $600 to $1,000 to complete. Not all lenders we surveyed require an appraisal ahead of a home equity loan.

Pennymac charges an application fee of $500. Some home equity loan lenders do not charge this fee.

» MORE: Read our review of Pennymac mortgage

What you should know about Pennymac home equity loans

Pennymac allows qualified homeowners to borrow up to 85% of the equity in their homes, a generous percentage compared with some of its competitors. The lender says closing costs typically vary based on factors that include property location and loan amount. There is no penalty for paying off the loan early.

Pennymac offers home equity loans with terms of 10, 15, 20 and 30 years. Competitors we surveyed offer home equity loans with payback periods ranging from five to 30 years. And while some competitors offer home equity loans for second homes and investment properties, Pennymac does not.

Pennymac home equity loans are not available in Iowa, Michigan, North Carolina, Tennessee and Vermont. Borrowers seeking a home equity loan will need a credit score of at least 680, the lender says.

» MORE: Best home equity loan lenders

Alternatives to a Pennymac home equity loan

For borrowers seeking flexible terms, Network Capital offers a home equity loan with terms from 10 to 30 years, and Rocket Mortgage allows borrowers looking to borrow a large portion of their home equity to access 90% of their home’s equity.

Home equity loans let homeowners access a lump sum by converting equity into debt. You’ll repay the loan at a fixed interest rate over an agreed period of time. Alternatives to a home equity loan include a home equity line of credit (HELOC) or a cash-out refinance. HELOCs offer greater flexibility to withdraw funds, up to the credit limit, as needed, but often have adjustable interest rates. A cash-out refinance replaces your existing mortgage with a larger loan. It will be most appealing if mortgage rates are lower than your current rate, and closing costs will apply.

Pennymac offers a cash-out refinance option but no home equity line of credit (HELOC).

» MORE: HELOC, home equity loan, and cash-out refinance, compared

Pennymac Home Equity Loan Review 2024 - NerdWallet (2024)
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