Where to get a loan on a house with a clear title

Owning a home with a clear title can give you a major advantage when it comes to borrowing. Without a mortgage or liens, your entire property value becomes accessible equity. This equity can open doors, helping you accomplish what you want to—whether you're looking to fund a major renovation, cover unexpected expenses, or invest.

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Many lenders are eager to work with homeowners who hold a free title; however, they may still have other guidelines you'll need to meet.

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In this guide, we'll explore where to go for a loan on a house with a clear title and compare the different types of options available to help you make an informed decision.

Clear title: An overview

Before approving financing, lenders typically conduct a title search to verify legal ownership and check public records for disputes, encumbrances, or unpaid property taxes. A clean title not only simplifies the title search process but also helps reduce closing costs associated with resolving title issues. 

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Whether applying for a home equity loan or considering refinancing, a clear title establishes your claim to the property and increases your chances of a successful and smooth financing outcome.

Where to go for a loan on a house with a clear title

When your home has a clear title, you’ll find a number of products or lenders at your disposal—even with less than great credit or income. Your property’s full equity makes it a valuable asset.

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However, since most lenders offer terms based on your overall financial health—and not just your equity—it still makes sense to shop around, compare products, and prequalify where possible. 

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To find the right tool for your needs and situation, read on. 

How to take out a loan on a house with a clear title

Home equity loans

For a large single payout from your home's equity, consider a home equity loan. It works similarly to a personal loan, where the amount borrowed is repaid with fixed monthly payments over a defined term. However, the interest rates are more favorable, and the repayment period is longer (5 to 30 years)—which can help keep your monthly costs low. 

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Requirements:

• A credit score of 620 or higher.
• A debt-to-income ratio of 45% or lower.
• Sufficient income.

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Where to find lenders: You can take out a home equity loan through banks, credit unions, and online platforms. 

Home equity lines of credit

A home equity line of credit (HELOC) is among the most popular ways to secure financing using your home as collateral. HELOCs function like credit cards, giving you a flexible line of credit to draw from as needed.

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During the draw phase, typically 10 years, you can use your credit and are only on the hook for interest payments. Once this ends, the 10 to 20-year repayment period begins. You'll then repay the balance plus interest via monthly payments at a variable interest rate. 

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Requirements:

• A credit score of at least 620–680.
• A debt-to-income ratio of 43% or lower.
• Proof of income. 

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Where to find lenders: HELOCs are offered through banks, credit unions, and online platforms. 

Home equity investments 

Although not technically a traditional loan, a home equity investment (HEI) helps you convert your equity to cash without taking on monthly payments. With a clear title, you can breeze through the process. 

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You get a single payout in exchange for a share of your home's future appreciation. The investment is repaid anytime during a flexible 30-year term through cash reserves or when you sell or refinance the home. 

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Requirements:

• A credit score above 500.
• No income or debt-to-income ratio requirements.

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Where to find originators: There are various HEI originator platforms—the application process takes place online, and you can even prequalify without the commitment to continue.  

Reverse mortgages

If you're 62 years or older, you can leverage your equity for a single-sum payout, flexible line or credit, or monthly income via a reverse mortgage. With this type of loan, there are no monthly payments. Instead, the loan is repaid when the borrower sells the home or passes away.

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However, reverse mortgages come with pretty stringent conditions. It's best to weigh these carefully before proceeding.

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Requirements:

• Must be at least 62 years old.
• Sufficient income to cover property maintenance, taxes, and insurance.
• The home must be your primary residence.

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Where to find lenders: There are three types of reverse mortgages. HECMs, offered by the Federal Housing Administration, provide the most consumer protection. Single-purpose reverse mortgages are offered by some state and local goverments. If you want to leverage a lot of equity, explore proprietary reverse mortgages through online private lenders. 

Refinances

Refinancing with a clear title would allow you to tap into your equity for cash while creating a new mortgage loan. Your terms and rate would depend on your creditworthiness and market conditions. 

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Just like with your first mortgage, you'll be on the hook for monthly payments over a 15 to 30-year term. 

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Requirements: 

• A credit score of 620 or higher.
• Sufficient income.
• The home must meet the lender's appraisal standards.

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Where to find lenders: Refinancing with your original lender may provide the most favorable terms. However, many banks and online lenders can provide a loan. 

Frequently asked questions

What does a clear title mean in real estate?

A clear title, also called a clean title, means your property is free of liens, mortgages, or legal disputes. It indicates sole ownership, which helps streamline real estate transactions and financing backed by the equity in the property. 

Can I get a loan using my house as collateral?

Yes, whether you own your home free and clear or have debts tied to the property, there are various loans you can qualify for using your home as collateral. In addition to your home equity, lenders will base eligibility and terms on factors like credit score and income. 

What are the drawbacks of using my house as collateral?

Equity-backed financing isn’t free—you’ll have closing costs and appraisal fees to cover. Additionally, if you use your home as collateral, the lender can foreclose should you default on the loan.

How much can I borrow from home equity?

The amount you can borrow from your equity depends on the lender, your home's appraised value, and your stake in equity. Generally, you can access between 80% to 85% of your equity. 

Final thoughts

A clear title is a powerful financial tool that will help you unlock diverse borrowing options. From traditional home equity loans and HELOCs to innovative solutions like home equity investments, the choice depends on your financial goals and repayment preferences.

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Take advantage of no monthly payments with Point's Home Equity Investment. You can borrow up to $500K from your home's value to accomplish whatever you need to. Learn more at Point.com.  

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