Sometimes homeowners need a little help managing their finances. But finding information on how to do so isn't always easy, especially if you don't know where to start. With so many lenders willing to help you obtain loans and other money services, it can be confusing and frustrating choosing a lender who really cares about you. My blog provides the information you need to get started. You'll find information on how to complete loan applications, as well as tips on how to invest your money wisely. If you're tired of fighting a losing battle, keep reading. Thanks for stopping by.
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Factors That Affect Your Ability To Get A Home Equity Loan
Louane Dumont
If your home needs some updates to it, have you considered taking a home equity loan? A home equity loan is a loan where you borrow money against your house, and it is considered a second loan on a house. Using money from the equity in your home is a great idea if you need cash to make home improvements; however, you must have equity in your home to qualify for a loan like this. Here are several things you should know if you are considering looking into a home equity loan:
Compare The Amount You Owe To The Value Of Your Home
The first thing you should do in this situation is to compare the amount of money you owe on your house to its value. The difference between these two amounts is the equity in your home. For example, if you owe $80,000 on your house and it is worth $130,000, you have $50,000 of equity in the home.
Determine What Percentage You Owe
The next step in this is determining the percentage of the money you owe on the home compared to the value. In this situation, you would divide $80,000 by $130,000. The answer to this is 61.5%, which means you have almost 40% equity in the house.
This calculation is important because most lenders will only loan up to 80% of a home's equity. If you owe 61.5%, then you will be able to borrow enough money to where you owe 80% on the house. In this example, you could borrow up to $104,000 in all to reach the 80% point. If you currently owe $80,000, this would allow you to borrow $24,000 more through a home equity loan.
Find Out The Other Factors That Matter
To qualify for a home equity loan, you need equity in the house, but that is not the only thing you need. You may also need to have good credit in order to qualify. When you apply for a home equity loan, the lender will need to verify your income and your job to make sure that you make enough money to repay the loan. The lender will also look up your credit score to make sure you are credit-worthy. If you meet all the requirements, you should have no problem getting a home equity loan.
If you are interested in finding out if you qualify for a home equity loan, contact local mortgage services today.
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