Business Insider's personal finance team compared Discover Home Loans to the best mortgage lenders and found it to be a strong choice for refinancing or getting a home equity loan, but lacking in options for other borrowers.
Discover Home Loans is one of the best home equity loan lenders. You can refinance or get a home equity loan from this lender while paying zero closing costs — making it an affordable option if that's what you're looking to do. But it doesn't offer any other types of mortgages. Its average rates are also a bit high.
680
Conventional refinance, home equity loan
- No closing costs
- Easy online application
- Only offers mortgage refinancing and home equity loans
- Fixed-rate loans only
- Higher than average rates
If you're looking to refinance your mortgage or get a home equity loan, Discover is a strong option. It's one of the best home equity loan lenders, and its lack of closing costs make it incredibly affordable. But it doesn't offer any other types of mortgages.
- Available everywhere in the U.S. except Iowa and Maryland
- Loan amounts from $35,000 to $500,000
- Offers 10, 15, 20, and 30-year terms on its loans
Overview of Discover Home Loans
Discover's home loans are available everywhere in the U.S. except Iowa and Maryland.
Discover launched its Home Loans business in 2012, initially offering conventional and FHA mortgages.
Loan Options
Discover only offers conventional mortgage refinancing and home equity loans.
Loan amounts start at $35,000 and go up to $300,000 for home equity loans and $500,000 for refinance loans. For both refinances and home equity loans, you can choose between a 10-, 15-, 20-, or 30-year term length.
With a refinance from Discover, you can do a simple rate-and-term refinance or you can borrow from your equity using a cash-out refinance.
How to Apply
Discover makes it quick and easy to submit an online application. You can also get started over the phone.
Whether you're applying for a mortgage refinance or a home equity loan, you'll need a credit score of 680 and a debt-to-income ratio below 43%.
For its home equity loans, your CLTV has to be below 90%. This means all of the loans on your property combined can't exceed 90% of the property value.
Discover's Mortgage Rates and Fees
Comparing Discover's Rates and Fees to National Averages
Discover lists the range of rates it offers on its Home Loans website. Home equity loan rates will be slightly higher than refinance rates. To get a better idea of what rate you might get based on your finances, you'll need to start an application or talk to a loan officer over the phone.
Discover doesn't charge any origination fees on its mortgages, and you won't need to bring any cash to closing, since the lender will also pay any third-party costs you incur. The data backs up this claim: according to HMDA data, conventional borrowers getting a mortgage from Discover paid $0 in origination charges in 2023.
However, because you won't have any closing costs, you'll likely take on a higher rate with this lender. According to our review of the Home Mortgage Disclosure Act data, borrowers paid slightly higher-than-average mortgage rates on Discover's first-lien conventional loans in 2023.
Pros and Cons of Discover Mortgage
Pros
- You don't need any cash at closing, since Discover doesn't charge origination fees and it covers your third-party costs
- Easy online application process
If you want to refinance or get a home equity loan but don't have a ton of cash for out-of-pocket expenses, Discover might be a good lender for you. Discover doesn't charge any fees on its mortgages, and it will also cover your third-party costs (such as home appraisal fees).
Cons
- Extremely limited mortgage offerings
- No adjustable-rate options
- Somewhat high rates
The biggest drawback of Discover is that it only offers mortgage refinances and home equity loans, and its loan amounts only go up to $300,000 for home equity loans and $500,000 for refinances. You'll also only be able to get a fixed-rate mortgage from this lender.
Additionally, Discover's rates are slightly higher than average, according to our review of the latest HMDA data.
Is Discover a Trustworthy Mortgage Lender?
Overall, we think Discover is a trustworthy mortgage lender. It has an A+ rating from the Better Business Bureau and no recent major scandals.
What Borrowers Are Saying About Discover
Customer Reviews and Ratings
Discover has good customer reviews, but the company is more widely used for its Discover credit cards than its mortgages. This makes it difficult to get a sense of how satisfied borrowers are with Discover as a mortgage lender.
Availability of Customer Support
In general, Discover customers appear to really like the company's customer service.
If you need help with an in-process loan, you can reach customer support between Monday through Friday from 8 a.m. to midnight ET, or 10 a.m. to 6 p.m. on Saturday and Sunday.
Compare Discover to Other Mortgage Lenders
Discover Home Loans vs. U.S. Bank Home Loans
U.S. Bank Mortgage is a strong lender overall, and like Discover, it's one of our favorite home equity loan lenders.
U.S. Bank offers home equity loans in amounts from $15,000 to $750,000, so you might prefer it if you need a larger loan amount, since Discover's home equity loans only go up to $300,000.
U.S. Bank also offers conforming, jumbo, FHA, VA, and construction mortgages, as well as HELOCs. You can use its mortgages for either a purchase or refinance, unlike Discover's mortgages.
Discover Home Loans vs. Bank of America Home Loans
If you're looking for a HELOC rather than a home equity loan, you might like Bank of America Mortgage, which is one of the best HELOC lenders available. A HELOC is a line of credit that borrows from your equity and may be a better option if you're not exactly sure how much you need to borrow (like if you're doing a home improvement project that will have ongoing costs).
Bank of America also offers conforming, jumbo, FHA, and VA mortgages, plus its Community Affordable Loan Solution. The Community Affordable Loan Solution is a zero-down, zero-closing-cost mortgage aimed at first-time homebuyers in certain areas.
Though its competitors generally have more mortgage options, Discover still stands out thanks to its lack of fees.
Bank of America Mortgage Review
Discover Home Loans FAQs
What makes Discover Home Loans stand out among other lenders?
Discover charges no fees on its mortgages and has a reputation for great customer service.
Can I refinance my existing mortgage with Discover?
Yes, Discover offers both rate-and-term and cash-out refinancing.
How difficult is it to get a home equity loan from Discover?
You'll need at least a 680 credit score and a max CLTV of 90% to qualify for a Discover home equity loan.
How long does the Discover mortgage application process take?
According to the Discover website, it could take as little as 30 days for you to get your home equity loan funds. But it says the average time it takes to close is 55 days. For refinances, it says that the process typically takes six to eight weeks.
Does Discover charge any mortgage application fees?
Discover doesn't charge any fees on its home loans, and it will pay any third-party fees you incur as well.
Are Discover home equity loans good?
Discover's home equity loans are a good option if you're looking to keep your costs down, since Discover doesn't charge any closing costs and pays for any third-party fees you incur.
Why You Should Trust Us: How We Reviewed Discover Home Loans
To review Discover Home Loans, we used our methodology for reviewing mortgage lenders.
We look at four factors — loan types, affordability, customer satisfaction, and trustworthiness — and give each a rating between 1 and 5, then average these individual ratings for the overall lender rating. Lenders get higher ratings if they offer a high number of loan types with affordable features, have positive customer reviews, and don't have any recent public controversies.
Our Overall Lender Rating
Loan Types: 2 out of 5
Discover's mortgage offerings are extremely limited. If you're looking for a mortgage to purchase a home, you'll need to look elsewhere.
Affordability: 3.5 out of 5
Discover's lack of fees makes it an overall affordable lender. However, it's rates are a bit high. You'll also need to have good credit to qualify for one of this lender's mortgages.
Customer Satisfaction: 4 out of 5
On WalletHub, Discover has a 4 out of 5-star rating based on over 14,000 customer reviews.
Trustworthiness: 5 out 5
Discover has an A+ rating from the BBB. The BBB evaluates companies by looking at responses to customer complaints, honesty in advertising, and transparency about business practices. Discover has no recent public scandals.
