Are you a homeowner looking to acquire a loan? If your answer is yes, then this article is for you. This article will explain a home equity loan, how it works, and the process and time involved in getting a home equity loan.
A home equity loan is the amount of money you borrow against your home's equity. A good example is: If your home is valued at $300,000 and you have a mortgage balance of $100,000, a lender can give you a home loan of up to 85% of your home value.
To understand a home equity loan, you need to understand the concept of a mortgage because a home equity loan is also known as a second mortgage.
The value of your home might appreciate or increase as time goes by. For instance, a home worth $300,000 might appreciate $350,000 after five years; this will put you in a better position to acquire a home equity loan while still repaying your mortgage.
As long as you can repay your home equity loan, taking it can be very beneficial because of the following reasons:
As much as it is a good idea to consider taking a home equity loan, there is also a side to it that you have to consider; The application process and the paperwork involved may be relatively longer than other forms of loans.
Everything is getting simpler by the day. You can now apply for a mortgage loan online. Isn't that some good news? Let me take you through it: there are online loan lenders that offer a platform where you can get your home equity loan from the comfort of your couch. All you need to do is upload copies of all documents required by the lenders, then leave everything to them to verify and process the loan while you wait. Easy! Right?
Different home equity loan lenders do have different requirements, but as a borrower applying for a home equity loan, the following factor should be in place for you to be eligible for the loan;
With all these factors in place, carefully select a lender with the best interest rates you can pay within the period specified. Defaulting payments may lead to losing your home since it acts as collateral.
Well, the amount of the home equity loan that you can get is dependent on the total unpaid primary mortgage and any other existing unpaid home equity loans, and the new equity loan, which cannot exceed 90%.
For example, if your home is appraised at $400,000, with an existing mortgage balance of, say, $150,000, you can take a mortgages loan of up to $210,000 if approved.
The time taken to get a home equity loan depends on you, but it can go for two weeks to two months.
The online loan lender will need you to produce copies of your mortgage statements, the tax bill on your property, and proof of your income; the sooner you can produce these copies and verify them, the faster you will get the loan.
A home equity loan is a good way of securing a lump sum of money and using the money for investments and home development and, in turn, repaying in fixed installments for some time. Since taking a home equity loan may be a lifelong commitment to payment, I recommend talking to a loan expert before making the big decision.