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Mortgage Refinance

Refinancing with a Home Equity Loan

One refinancing alternative that some may not think about is refinancing with a home equity loan. Discover offers home equity loans from $35,000-$200,000 without application, origination, or appraisal fees, and no cash is required at closing.

Evaluating Home Equity

The mathematical formula for determining the equity in your home is simple:  Market value – mortgage balance(s) = home equity

Refinancing with a home equity loan allows you to borrow a fixed amount, which is determined by the equity in your home. To compute the amount, estimate the current market value of your home. Zillow or Trulia can be helpful in estimating your home value.  Next, determine all debt incurred from your home (i.e. mortgage, other preexisting home equity loans, etc.). Subtract this from your home’s market value to learn your equity amount.

Tapping into your home equity can open up a lot of options. Whether you want to make a home renovation or addition, pay for a major life event like a wedding or your higher education, consolidate debt, or anything else, your home equity can be a valuable asset.

Pros and Cons

There are many advantages to a home equity loan. Naturally, there are disadvantages too:


  • While it varies by lender, Discover Home Equity Loans has no application, origination, or appraisal fees, and no cash is required at closing.
  • No mortgage insurance required, unlike other refinancing options.
  • Enjoy lower interest rates compared to unsecured loans like credit cards or personal loans, if your goal is getting money for certain expenses.


  • Compared to a conventional refinancing, interest rates when refinancing with home equity loans may be slightly higher.
  • The total amount you can borrow may be more restrictive than conventional refinancing. For example, if you were to refinance with Discover Home Equity Loans, your total loan amount (primary mortgage balance plus any cash out amount) would have to be between $35,000 and $200,000.

If you’re looking to refinance your mortgage for a lower rate, different loan terms or to get cash out of your home to use for any expenses, a home equity loan refinance may be for you. As mentioned, some HELs don’t have closing costs, which can represent significant savings and you can put more towards the principal amount.

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