Home Equity Loan

 

 

 

What is a Home Equity Loan?

A home equity loan (HEL) is a unique 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 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

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.
1
How Much Equity Do I Have In My Home?
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:
2
How Much Cash Can I Take Out?
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:
3
Calculate Your Home Equity Loan Monthly Payment?
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:
4
How Much is My Current Monthly Mortgage 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:
5
Home Equity Loan - Review of Total LTV and Payments
Review your HEL and Current Mortgage based on LTV and Monthly Payments.
Home Value:
Mortgage
Amount
Monthly Payment
LTV
Current
Home Equity
Total-Mortgage
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. 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

 

 

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.

1
How Much Equity Do I Have In My Home?
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:
2
How Much Cash Can I Take Out?
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:
3
Which of the following cases applies to you?
Make sure the amount doesn't exceed maximum amount available
Get a Home Equity Loan quote
Now
2 Comments
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  • 35x35
    Bridget,
    May, 2020

    I received charged-off papers on a home equity loan a couple of years ago and I thought that charged-off meant I was free from the debt. So about a few weeks ago I received more papers in the mail from a second or third party that bought the home equity loan from my bank and there telling me if I don't pay the full balance $10,900 in 30 days they're going to take my house. and do I have to pay the full amount all at once? I asked them if they could wave the finance charges they said no.

    • 35x35
      Daniel,
      Jul, 2020

      Bridget, I can't give legal advice, as only an attorney can properly do so. Here are a couple of thoughts, with the understanding that I am not giving you legal advice.

      First, a charge-off doesn't mean you are no longer responsible for the debt. It relates to how the lender shows the loan on its books.

      I can't tell if the debt collector is being fully accurate. Do you have a first loan that still has a balance or is the Home Equity Loan the only loan. If it is not the only loan, then they can't foreclose without paying off the first mortgage lender. Is there sufficient equity to do so? 

      Do you know the value of the home today and what you owe on any mortgages on the property?

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