Capital One Home Equity Review

Capital One, a national bank known for its wide range of financial products, has been a go-to for many seeking diverse banking solutions. 

It caters to various financial needs, offering credit cards, auto loans, bank accounts, and more. Capital One was once a player in the mortgage and home equity business—but it no longer offers home equity products. 

Keep reading because we’ll explore the best alternatives to Capital One’s home equity line of credit (HELOC), providing options that align with your financial goals.

What happened to the Capital One HELOC?

A HELOC, often used for home improvements, debt consolidation, or as a financial safety net, allows homeowners to open a line of credit using their home equity. 

You can borrow from the line of credit for a draw period of two to 10 years, often making interest-only payments during that time. Then, you begin a repayment period of 20 years or more. 

Capital One offered a HELOC as part of its mortgage line. But in November 2017, it announced its exit from the residential mortgage business, including HELOCs. 

This strategic shift meant Capital One ceased originating and servicing residential mortgage loans, affecting products from companies it had acquired, such as Chevy Chase Bank and GreenPoint Mortgage.

Source: Capital One

What happened to borrowers who had a HELOC with Capital One?

The transition was significant for those who had a HELOC with Capital One. The company transferred servicing of these loans to other financial institutions. 

Borrowers received notifications about the new servicers and any changes to payment addresses. The list of new servicers included well-known entities such as Bank of America and Mr. Cooper. Capital One advised borrowers to contact their new servicer for any loan-related inquiries.

Capital One HELOC alternatives

Because Capital One is no longer an option for HELOCs, we’ve identified the best HELOCs if you’re seeking an alternative.

These competitors offer similar products, ensuring you can still access flexible home equity financing options. Keep reading for more about home equity products from each company in the table below, or click the lender’s name to find out more about its home equity products.

Figure

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Best overall HELOC

• Editorial rating: 4.9 out of 5
• Fixed rates on all HELOCs
• Get funds in as little as 5 days

What makes it a good alternative to Capital One?

Figure, our top-rated HELOC lender, harnesses advanced technology to revolutionize the home equity process. Using blockchain and sophisticated algorithms, its platform speeds up the underwriting process, which can take weeks with other lenders. 

Figure lets homeowners apply online and get approved within minutes. The application involves a soft credit check and an equity assessment. Once you’re approved, funds can be available in days, not weeks. 

Access between $20,000 and $400,000, with competitive fixed rates—uncommon with HELOCs, where variable rates are standard. 

Figure requires borrowers to draw 100% of the funds at origination with a redraw option during the two- to five-year draw period on the portion you repay. This lender’s availability across 45 states and Washington, D.C., makes it an accessible option.

Figure pros and cons

Here’s what we like best about Figure—along with the downsides to consider.

Pros

• Fast, technology-driven approval and funding

• Comprehensive online application process

• Redraw option for repaid funds

• Wide state availability

Cons

• Mandatory full draw at origination

• Origination fees up to 4.99%

• No branches for in-person support

• Excludes Hawaii, Kentucky, New York, Texas, West Virginia

Bethpage FCU

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Best for large HELOCs

• Editorial rating: 4.7 out of 5
• Borrow up to $1 million
• No application, origination, or appraisal fees

What makes it a good alternative to Capital One?

Bethpage Federal Credit Union offers a unique blend of variable- and fixed-rate HELOCs, appealing to those seeking flexibility and predictability in their borrowing. Bethpage stands out for its cost-effective approach with no closing costs or hidden fees for credit lines up to $500,000. 

The credit union offers a competitive introductory APR for VantageScores of 720 and up, transitioning to a variable rate after 12 months. You can convert a portion of your variable-rate balance to a fixed rate, offering stability against fluctuating interest rates. 

Membership in the credit union is required, but joining is easy—just open a Bethpage savings account with a minimum balance of $5. It also offers rate discounts to those who schedule payments from their Bethpage account.

Bethpage pros and cons

Here’s what to know about Bethpage.

Pros

• Competitive introductory rates

• High loan limits and flexible rate options

• Transparent fee structure

• Almost nationwide availability (excludes Texas)

Cons

• Requires credit union membership 

• Variable rates after introductory period

• Unclear maximum loan-to-value ratio

• Longest funding timeline among alternatives

• Initial draw of $25,000 required

Am I eligible for a HELOC?

To qualify for a HELOC, you must meet certain criteria. Here are the typical requirements:

• Equity in your home: Most lenders require at least 15% equity in your home.
• Credit score: A good credit score is crucial. Most lenders look for scores above 620 and tend to offer the best rates to those with higher scores.
• Debt-to-income ratio (DTI): Most lenders prefer a debt-to-income ratio lower than 43%. This ratio helps lenders determine your ability to manage monthly payments.

Lenders may have specific requirements, so it’s important to check with individual lenders for their eligibility criteria.

Is a HELOC right for you?

Before deciding on a HELOC, consider the following risks and factors:

• Variable interest rates: HELOCs often have variable rates, meaning your payments can increase if interest rates rise.
• Risk of overborrowing: With easy access to funds, you might be tempted to take out more than you need, which can lead to financial strain.
• Impact on credit score: Like any form of credit, a HELOC can affect your credit score. Late payments or defaulting on the loan can have negative consequences.
• Risk of losing your home: Your home is the collateral on a HELOC—so if you can’t make payments, the lender can seize your house.

A HELOC is a powerful financial tool, but it requires careful consideration of your financial stability and the ability to responsibly manage the line of credit.

Be sure you’ve weighed your options to determine the best one for you, including:

Product	How it works	Pro	Con
Home equity loan	Provides a lump sum, often at a fixed interest rate	Fixed interest rates make for predictable monthly payments	Less flexible than a HELOC because you get all funds upfront and start accruing interest immediately
Cash-out refinance	Refinance your current mortgage for more than you owe and take the difference in cash	Potentially lower interest rates than a HELOC or home equity loan with just  one mortgage payment	Rates might be higher than your original mortgage, and you’ll often pay closing costs
Personal loan	Unsecured loans that don’t require home equity	No risk of losing your home as collateral + quick funding	Higher interest rates than secured loans and shorter repayment periods
Credit card	Use credit cards, especially those with a 0% introductory APR offer, for short-term financing needs	Easy, immediate access to funds and can be appropriate for smaller expenses	High interest rates after the introductory period can lead to high debt without proper management
Reverse mortgage	Available to seniors (typically over 62), allowing them to convert part of their home equity into cash	No monthly mortgage payments because the loan is repaid when the borrower sells the home, moves out, or passes away	Can be complex and costly, and reduces the equity in your home
401(k) loan	Borrow against your 401(k) retirement savings	No credit check required + when you pay interest, you’re paying it to yourself  in your retirement account	Risky because it jeopardizes retirement savings + you may need to repay the loan immediately if you leave your job

Every option has a more comprehensive set of pros and cons than we listed, and certain products are more suitable for different financial situations and goals. We recommend consulting a financial professional to determine the best product for your needs.

How to choose the best Capital One HELOC alternative

If you’re confident a HELOC is the right product for you, plan to take the following steps to ensure you’re satisfied with your choice:

• Prequalification and rate shopping: Start by prequalifying with lenders that allow you to do so with a soft credit check. This can help you understand what rates you’re eligible for and compare lenders without affecting your credit score.
• Compare loan features: Beyond rates, look at loan amounts, draw and repayment periods, and any additional fees or requirements.
• Understand the terms: Pay attention to the fine print, including interest rate changes, potential penalties, and conversion options for variable-rate loans.
• Documentation and application process: Prepare all necessary documents in advance.
• Evaluate customer service and support: Consider each lender’s level of customer support. This includes availability, responsiveness, and helpfulness in answering your questions. Check out reviews on websites such as Better Business Bureau and Trustpilot.
• Consider timelines: Be aware of how long it takes for each lender to approve the loan, process it, and make funds available. (For example, does your lender require an in-person appraisal?) This knowledge can be crucial if you have an urgent need.

By considering these aspects, you can make an informed decision and feel confident you’re choosing the best lender for you.

Capital One home equity FAQ

Why did Capital One stop offering HELOCs?

In November 2017, Capital One announced its exit from the residential mortgage business, including HELOCs. This decision was part of a strategic shift to focus on other areas of its financial services.

What happened to open Capital One HELOCs?

If you had a HELOC with Capital One, the servicing of your loan was transferred to another financial institution. You should have received information about your new servicer and any changes to your loan terms.

How do I choose the best Capital One alternative?

Consider interest rates, maximum loan amounts, fees, and the lender’s reputation when looking for a HELOC. It’s also important to compare the features and terms of each alternative to find the one that best suits your financial situation.