Home Equity Loan

Do you have equity in your home? Maybe you can take a second mortgage or a Home Equity Loan to pay off debt, make home improvements or pay for college. 

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What is a Home Equity Loan?

A home equity loan is a special type of mortgage, which allows you to tap into your home’s value to take out cash. There are many reasons to take out a home equity loan including debt consolidation, home improvements, or paying for college.

You can take advantage of rising home prices, or the fact that you paid off your mortgage and the balance decreased in order to take out an additional mortgage.

A Home Equity Loan is similar to a purchase mortgage, or a refinance mortgage. You take out a lump sum and repay it in monthly payments over a set repayment period. When shopping for a HEL consider the interest rate, lender fees, and third-party fees.

For more information about a home equity loan and how it works ...Read More

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Home Equity Loan Calculator

How Does a Home Equity Loan Work?

Home Equity Loan requirements are similar to other mortgages. Here are three essential steps to taking a home equity loan:

  1. Figure out how much equity you have, and how much you can take out, based on lenders Loan to Value (LTV) guidelines.
  2. Once you figure out how much you want and whether that amount fits into your needs, you can estimate the monthly payment for the HEL, in addition to your current mortgage
  3. Finally, to qualify for a Home Equity Loan, lenders also look at your credit score and debt-to-income ratio.

Calculate your Home Equity Loan amount and monthly payment by using these five steps:

  1. Calculate Your Home Equity: You need to know your mortgage balance and home value.
  2. Calculate the amount of mortgage you can take: Usually, lenders will go up to an 80-85% LTV.
  3. Calculate your monthly HEL payment: You need to estimate today's mortgage rates and decide on the loan repayment period.
  4. Calculate your current monthly payment: Add in your current interest rate and amount of time left to pay. (This payment doesn't include your property taxes and insurance payments).
  5. Find out your total payments and LTV.
Your home equity depends on the value of your home and your mortgage balance. If you have more than one mortgage, then use the total amount for your “Mortgage Balance.” The result box shows both your Loan to Value ratio (LTV) and the total amount of equity, in dollars, you have based on current values.
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=
LTV
(Loan to Value Ratio)
My Equity is Now:
After completing step one you have a good idea of how much equity you have in your home. However, the amount of cash you can take out of your home depends on lenders underwriting rules. In general, lenders offer up a LTV up to 80%, although some lenders do offer higher ratios.
Maximum Cash Available Is:
Figure Out How Much Your Payment will be based on current mortgage rates, the length of the loan, and the amount of the Home Equity Loan
Home Equity Loan Monthly Payment:
Calculate Your Current Mortgage Payment based on the current balance, number of years left to pay, and your current interest rate. (This is for principal and interest only and doesn't include your property taxes, property insurance and if applicable mortgage insurance costs).
Existing Mortgage Payment Is:
Review your HEL and Current Mortgage based on LTV and Monthly Payments.
Home Value:
Mortgage
Amount
Monthly Payment
LTV
Current
Home Equity
Total-Mortgage
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Make sure the amount doesn't exceed maximum amount available
 

Home Equity Loan Rates

What is the secret to finding the best home equity loan rates?

Three steps you can take to qualify for the best rates are:

  1. Improve your credit score
  2. Lower your repayment period and make larger monthly payments
  3. Shop around and compare rates and fees.

When shopping around you can talk to your current lender, your local bank or credit union, or use an online shopping comparison tool. Compare your offers carefully. Not all lenders offer home equity loans. Some banks, like Wells Fargo, provide either a cash-out refinance the mortgage or a HELOC. 

For more information about Home Equity Loan Rates...Read More

 

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Check Your Home Equity Loan Alternatives

Do you have enough equity in your home to take out a new mortgage? Are you not sure which mortgage option best fits your situation? Maybe you want to lower your overall payment? Or, you want flexibility in drawing out money.

Use the Bills.com calculator to see if a HEL, HELOC, or Cash-out Refinance best fits your situation.

Your home equity depends on the value of your home and your mortgage balance. If you have more than one mortgage, then use the total amount for your “Mortgage Balance.” The result box shows both your Loan to Value ratio (LTV) and the total amount of equity, in dollars, you have based on current values.
/
=
LTV
(Loan to Value Ratio)
My Equity is Now:
After completing step one you have a good idea of how much equity you have in your home. However, the amount of cash you can take out of your home depends on lenders underwriting rules. In general, lenders offer up a LTV up to 80%, although some lenders do offer higher ratios.
Maximum Cash Available Is:
Check Out a Cash-out Refinance Mortgage
Check Out a Home Equity Loan
Check Out a HELOC
 
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