A home equity loan can provide funding for major purchases. Consumers frequently secure a home equity loan or a home equity credit line (HELOC). Home equity loans typically have a fixed rate, while a HELOC has a variable interest rate. Both programs are equity-based and subject to creditor guidelines. A homeowner who selects a home equity loan will normally receive a disbursement for the full loan amount, in addition to a fixed rate on the next mortgage.
Tabulate the amount of money you’ll need for a home equity loan. This will give you an notion of how much money to request from a home equity lender. Your estimate must allow money for closing costs. Items like lender fees, appraisal costs and lawyer fees could exceed 5% of your loan amount.
Locate the approximate value of your home using a property values site. Lenders will typically lend up to 80 percent of the value of your home for another mortgage. With 80 percent of the value of your home, subtract the remainder of your mortgage. You are able to use the remaining amount to get a fixed-rate home equity loan. By way of instance, 80 percent of a home valued at $200,000 is $160,000. Subtract the mortgage balance of $120,000 from $160,000, leaving $40,000 as your maximum loan amount. You may use a portion of your equity or borrow the maximum amount.
Inquire about consolidating home equity loans from your current lender.
Review fixed-rate offers from several home equity lenders.
Apply for a fixed-rate home equity loan. The application process is quite similar to the processes which were utilized to obtain your principal mortgage; however, in the majority of cases your fees will be lower. You will be required to complete a loan application, complete disclosures and provide evidence of your present income.
Arrange a time to meet with a settlement officer and also sign final documents for your home equity loan.