Incredible Equity Loans 4 All. Info

Do You Have Enough Equity?
Typically, a lender will limit the total amount you can borrow based on the market value of your home, which is determined by the appraisal. The limit usually ranges from 70% to 80% of the equity in your home, although there are some loan programs that will allow you to exceed these limits.

Home Equity Line
So, you know you need to borrow money, but are unsure how much you need. Then, a home equity line of credit may be a better alternative. This kind of loan is also securitized by your home, but it works more like revolving credit. Based on the amount of equity you have, you will be approved for a certain amount of credit.

So, when you need to access the money, you can write a check for the amount you need which will be drawn against your line of credit. Home Equity Lines of Credit usually have an access period where you can use and re-use your available credit line. Some lenders will allow you to use a debit card or even attach the credit line to your regular checking account.

The interest rate on a home equity line is often adjustable and is based on an index, such as the prime rate. Your interest rate adjusts as the prime rate changes. However, these loans do have a rate cap, which the interest rate can never exceed.

For many home equity line programs, your minimum payments are interest only for a specified term. You do not have to pay the principal until the loan is due. The term for these types of loans vary by lender, but usually range from 5 to 15 years. Normally, you can pay the loan back as quickly as you want, although some lenders charge a pre-payment penalty during the first three to five years.

What's the Approval Process Like?
A benefit of a home equity line of credit is that the approval process is less stringent than a home equity loan. However, a lender will still look at your creditworthiness and the market value of your home. A home equity line of credit often allows for a higher percentage of the appraised value to determine the maximum amount of the credit line.

Also, closing costs are usually lower than a home equity loan. In fact, there is so much competition that many lenders offer home equity lines of credit with no closing costs. Beware that these loans may have a higher initial interest rate, so compare the APR carefully.