Good for rate match guarantee
Third Federal Savings & Loan
Good for rate match guarantee
Third Federal Savings & Loan
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Products offered:
Home equity loan, 5/1 home equity loan, HELOC
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Home equity loan terms:
5 year, 10 year, 5/1 adjustable rate (6-30 years)
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HELOC terms:
10-year draw period, 20-year repayment period
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Maximum LTV:
80%
NextAdvisor’s Take
Pros
- No application, closing, or origination fees
- Lowest rate guarantee
- Smooth online application process
Cons
- Limited geographic availability for home equity loans
- $65 annual fee on HELOCs (waived the first year)
The Bottom Line
Opened in the midst of the Great Depression in 1938, Third Federal Savings & Loan sought to help unemployed and underemployed Ohio residents achieve home ownership. Since its opening, Third Federal has expanded significantly, now offering HELOCs in 26 states and home equity loans in eight states. Home equity loans and HELOCs are available in amounts from $10,000 to $200,000.
Home equity loans and HELOCs with Third Federal come with an annual fee of $65 (waived the first year) but no application fees, closing fees, or origination fees. If you set up autopay from an existing Third Federal account before closing, you’ll be eligible for a 0.25% rate discount. Additionally, Third Federal offers a lowest rate guarantee on its HELOCs and home equity loans, meaning Third Federal will offer you the lowest interest rate relative to other similar lenders or pay you $1,000.
You can apply for a home equity loan or HELOC on the Third Federal website. Both applications are included on the same page along with multiple rate and term options, allowing the customer to assess what will be best for them. Third Federal also provides helpful tools and tips on its application page to answer questions that borrowers may have. You won’t have to register an account to apply, but you’ll still be able to save your application and return to it later.
We like Third Federal’s application process and the lender’s price transparency. If you’re not sure what kind of home equity product you’re looking for, the website provides useful information to help you decide. Third Federal also offers a unique product not commonly found among other lenders: a 5/1 adjustable-rate home equity loan, where the rate is fixed for the first five year and then adjusts annually, much like how an adjustable-rate mortgage works. However, you won’t be eligible for this product unless you live in one of the eight states in which Third Federal offers home equity loans.
Editorial independence
As with all of our home equity loan and home equity line of credit (HELOC) lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.
Third Federal Full Review
Operating out of Cleveland, Ohio, since 1938, Third Federal Savings & Loan offers home equity lines of credit (HELOCs) in 26 states and home equity loans in eight states. Through Third Federal, you can borrow up to $200,000 against the equity in your home. Although the bank doesn’t lend everywhere in the U.S., it made our list of the best home equity lenders thanks to its easy online application process, lowest rate guarantee, and price transparency.
Third Federal: Home Equity Loan Products
Third Federal offers home equity loans and HELOCs between $10,000 and $200,000. It allows a maximum loan-to-value (LTV) ratio of 80%, meaning your loan amount can go up to 80% of the value of your home.
Home equity loans come with a five- or 10-year repayment term. Third Federal also offers the unique option of a 5/1 adjustable rate home equity loan. If you opt for this loan type, your rate will be fixed for five years and adjusted annually after that.
Alternatively, you might select a HELOC, which comes with a 10-year draw period and 20-year repayment term. HELOCs come with a $65 annual fee, which is waived for the first year, but otherwise don’t involve application fees, closing costs, or origination fees.
Third Federal also offers a 0.25% rate discount if you set up automatic payments from an existing Third Federal account before closing your loan or HELOC. Plus, the bank offers a lowest rate guarantee, meaning it will beat the rate offered by similar lenders or pay you $1,000.
Third Federal: Home Loans Rate and Fee Transparency
Third Federal makes it easy to check your rates on a home equity loan or HELOC on its website with no impact on your credit score. You don’t have to register an account to check your rates and can compare multiple rate and term options on both home equity loans and HELOCs on the same page.
If you’re not sure which product is better for you, Third Federal’s website provides helpful tips and tools to help you decide. When lenders offer a transparent borrowing process, it makes it easier for borrowers to shop around and find the best option for them.
As you compare your options, remember that the lowest interest rate doesn’t always mean the most affordable loan. High fees can offset a low rate, so it’s worth taking both rate and fees into account to find the most affordable loan for you.
Third Federal Compared to Other Home Equity Lenders
| Third Federal | Flagstar Bank | PNC Bank | |
|---|---|---|---|
| HELOC | HELOC | HELOC, Interest-only HELOC | Fixed rate HELOC, variable rate HELOC |
| Home Equity Loan | Yes, including a 5/1 adjustable rate home equity loan. Repayment terms of five or 10 years (5/1 loans have terms of 6 – 30 years) | Yes, with terms of 10, 15, or 20 years | No |
| States Available | HELOCs in 26 states, home equity loans in 8 states | 49 states (home equity loans are more limited) | 44 states (not available in Alaska, Hawaii, Louisiana, Nevada, Mississippi, South Dakota) |
| Loan Amount Range | $10,000 – $200,000 | $10,000 – $1,000,000 | $10,000 – $1 million |
| HELOC Loan Terms | 10-year draw period, 20-year repayment period | 10-year draw period, 20-year repayment period | Repayment period of 5 – 30 years (5 – 20 years in Tennessee) |
| Max LTV | 80% | 80% | 89.9% (80% or 85% in some states) |
How to Get the Best Home Equity or HELOC Rate
With so many lenders to choose from, it can be tough to choose a home equity loan or HELOC. Here are some tips for helping you find the lowest rate and best loan product for you.
Compare Products Offered
First, take a moment to review the difference between a home equity loan and HELOC. A home equity loan is an installment loan, typically with a fixed interest rate. You borrow a specific amount upfront and pay it back on a monthly basis.
A HELOC, on the other hand, is a line of credit that you can draw on as needed. You usually have a 10-year draw period, and some lenders let you make interest-only payments until your draw period is over.
Some lenders offer both products, whereas others only offer one or the other. Products may differ by location, too — as mentioned, Third Federal offers HELOCs in 26 states but home equity loans in only eight.
Knowing which product is a better fit for you can help you narrow down your list of lenders and streamline your search.
Shop for Multiple Lenders
It’s always a good idea to compare options from multiple lenders before you borrow. Even if your current bank offers home equity products, shopping around might lead you to a better rate.
Many lenders let you check your custom rates online through prequalification. While prequalified offers aren’t locked in, they give you a sense of your loan rates and terms with no impact on your credit score.
If you see an offer you wish to move forward with, you can submit a full application, which involves a hard credit check. Hard credit checks can ding your credit score by a few points, but it should bounce back within a few months as long as you make on-time payments on your loans.
If you submit multiple full applications, try to keep them within a 45-day window to protect your credit score.
Search for the Lowest Rates and Fees
As you’re comparing your options, search for a loan or HELOC with the lowest rates and fees. Reducing your interest rate even a small amount can save you a good deal of money over the life of your loan or line of credit.
Remember that a low rate doesn’t necessarily mean the most affordable loan if it comes with high fees. Comparing APRs, rather than interest rate alone, can give you a better sense of loan affordability, since APR is a more inclusive term that takes both interest and fees into account.
Using an online loan calculator can help you estimate loan costs. Our amortization schedule calculator can also reveal how much of your monthly payments will go toward your principal balance vs. interest charges over time.
Only Borrow What You Need
Before borrowing against the equity of your home, think carefully about what you can afford to pay back. Home equity loans and HELOCs are secured loans that use your home as collateral. If you can’t pay them back, you risk losing your home.
Even if you can borrow up to 80% or 90% of the value of your home, that doesn’t necessarily mean you should. Make sure you can comfortably afford payments before taking out a loan against the equity of your home.
Improve Your Credit Score
Taking steps to improve your credit score is one of the most effective ways to ensure a competitive rate on a home equity loan or HELOC. Lenders look at your credit score to assess your risk as a borrower. They tend to reward the best rates to borrowers with the strongest scores.
You can view your scores for free from Experian or Equifax or purchase them from myFICO.com. For a free copy of your credit report, head to AnnualCreditReport.com. If you see any negative marks, see what you can do to resolve them. You might also dispute any reporting errors you find to get them removed.
There are a number of steps you can take to boost your credit, including paying down debts and decreasing your credit utilization ratio. By taking some time to work on your credit, you could qualify for better rates on a home equity loan or line of credit.
