How much equity do I need for a home equity loan?
The portion of your house you’ve paid off is called home equity. Home equity is the appraised value of your property, not including any outstanding loan and mortgage balances.
Generally, home equity builds over time as you add value to your house or pay down loan balances. Home equity is one of the most valuable assets a homeowner can have because you can use it to borrow home equity loans.
The question is, how much equity do you even need to be able to apply for a home equity loan?
Contact our mortgage professionals Castle Rock Mortgage if you want to know if you can qualify for a home equity loan in Maricopa County.
How does a Home Equity Loan Work?
A home equity loan lets you borrow against your home’s equity. This type of loan comes as a lump sum of cash. You secure the loan by your home, which can be used to pay for big expenses, like house renovations, college tuition fees, etc., or consolidate debt. Monthly payments and interest rates are fixed, which makes the repayment schedule predictable.
Get in touch with a home equity lender in Arizona if you want to apply for a home equity loan.
Have at least 15% to 20% of Home Equity
To be able to borrow from your home’s equity, you need to have enough equity in your property, usually between 15 to 20%. Equity is the difference between what your property is currently worth and what you owe your lender. Lenders use this number to calculate the loan-to-value ratio, a factor that helps determine if you’re eligible for a home equity loan.
If you think you’re qualified for a home equity loan, get a loan from Castle Rock Mortgage in Scottsdale, AZ.
Benefits of Home Equity Loans
Long Repayment Terms
Home equity loan terms can range from five to thirty years. This fact, plus the lower interest rates than unsecured loans, can make your monthly repayment installment more affordable.
Home equity loans have a fixed interest for life, unlike a HELOC with a variable interest rate that will change, sometimes drastically, after a few years.
Lower Interest Rates
Because home equity loans are secured by your house, lenders will usually offer a lower rate than unsecured forms of borrowing like credit cards.
Taking out a home equity loan can be a smart decision if you need cash for house renovations or to consolidate a huge debt. As long you’re capable of paying monthly payments, this type of loan will be a perfect fit for you if you have at least 15% of home equity.
Ready to get some funds for your expenses? Get a home loan from Castle Rock Mortgage.
* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.