KeyBank: 2022 Home Equity Review

Founded in Albany, New York, in 1825, KeyBank is one of the oldest major banks in the US. Now headquartered in Cleveland, Ohio, it has more than 1,000 branches in 15 states and offers homeowners several options for home equity loans and home equity lines of credit, or HELOCs. 

One benefit of a KeyBank HELOC is that it comes with a fixed-rate option, which can provide borrowers with valuable savings in today's rising interest rate environment. In addition to home loans, the bank also offers such banking services as checking and savings accounts, investment accounts and personal loans. 

KeyBank is best suited for people who seek a longer repayment term as it offers borrowers a 30-year repayment option. It also offers a low minimum loan amount of $10,000 for its HELOC, ideal for people who only need access to a smaller amount of money and don't want to pay interest withdrawing additional funds they won't be using.

For both HELOCs and home equity loans, homeowners can borrow up to 80% of their combined loan-to-value, or CLTV, ratio, which is the total of your outstanding mortgage balance and any other loans against your home, divided by the home's current value. 

What we like

Interest rate discount: If the borrower, or a family member who lives in the house, opens a KeyBank checking and savings account, the bank will shave 0.25% off of their interest rate, which can save them tens of thousands of dollars over the lifetime of the loan.  

Fixed-rate option: Although the interest rate on a KeyBank HELOC is variable, the bank offers options to fix the rate, which can save you money when interest rates climb.

Principal and interest payments: Instead of making interest-only payments during the beginning years of paying off your HELOC, you have the option to make payments on your principal balance plus the accrued interest -- again, saving you money in the long run -- provided you can afford the higher monthly payments early on.

Low minimum loan amount: The minimum amount for a HELOC is $10,000, which is helpful if you don't need a lot of cash for a small project such as a home office renovation. When a HELOC has a higher minimum, however, it can result in a homeowner taking out more money than they need, which they have to pay interest on.

What we don't like

Restricted availability: The bank only offers home equity loans in 15 states: Alaska, Colorado, Connecticut, Idaho, Indiana, Massachusetts, Maine, Michigan, New York, Ohio, Oregon, Pennsylvania, Utah, Vermont and Washington. For a KeyBank HELOC, you're eligible to qualify anywhere in the US except in Alabama, Arizona, California, Nevada, Texas and the District of Columbia.

High minimum home equity loan amount: If you're a homeowner who needs less than $25,000, a KeyBank home equity loan doesn't qualify.

Early termination fee: You're required to reimburse KeyBank for any third-party fees it paid on your behalf if you pay off your loan in full and close your account within 36 months. 

Home equity loan options

KeyBank offers home equity loans and both fixed- and variable-rate HELOCs. It also offers a home construction loan for home renovations, which not all banks provide as an option. 

Fees

KeyBank charges a $295 origination fee for home equity loans, and depending on the amount of your loan, you may also have to pay title insurance premiums. For both HELOCs and home equity loans, if you pay your home loan back in full and close your account within 36 months of opening it, you're responsible for repaying KeyBank for the third-party fees it covered on your behalf during the closing process. 

How to qualify

Although KeyBank doesn't disclose its minimum credit score requirements, many lenders will consider scores starting in the mid-600 range, provided you have sufficient home equity (usually at least 15% to 20%) and adequate, steady income. You can apply for a home equity loan with KeyBank as long as you live in one of its 15 qualifying states and have current hazard insurance on your property.

Getting started

You can apply online or in person at one of KeyBank's 1,000 branches. You'll need the requisite paperwork to be approved for a home loan such as your recent Form W-2, pay stubs and tax returns to verify your income and employment, as well as any documentation pertaining to your existing mortgage. 

If you sign up for a KeyBank checking and savings account during the process, you can receive a 0.25% discount on your interest rate. 

Customer service

Call KeyBank or schedule an appointment at a bank branch. Its customer service home loan inquiries line is available Monday to Friday, 5 a.m. to 5 p.m. PT, as well as Saturdays from 6 a.m. to 12 p.m. PT. 

Live phone support:

• Home loan options: 888-539-0018 
• Existing home loan clients: 800-422-2442