Home Equity Loan
Highlights of the
Home Equity Loan
(1) Interest rate is usually fixed, so your monthly payments stay the same. (2) Lower interest rates compared to credit cards and personal loans (3) If you use the loan for home improvements, the interest may be tax-deductible.
Eligibility
Here are some of the eligibility requirements for the Home Equity Loan program. Select ‘Get Started’ to check if you’ll be a good fit.
Typically need at least 15-20% equity in your home
Lenders prefer a credit score of 620 or higher
DTI of 43% or lower to ensure you can manage the additional loan payments
Strong history of on-time mortgage payments
Updated home appraisal is often required to determine your home’s current market value
Proof that you own the property and maintain homeowners’ insurance
Common Questions
How much can I borrow with a home equity loan?
Typically, you can borrow up to 80-85% of your home’s appraised value, minus what you still owe on the mortgage.
Is a home equity loan the same as a home equity line of credit (HELOC)?
No, a home equity loan provides a lump sum with a fixed interest rate, while a HELOC is a revolving line of credit with a variable interest rate.
What can I use a home equity loan for?
You can use the funds for almost anything, such as home improvements, consolidating debt, paying for education, or covering medical expenses. However, using it for home improvements may allow for potential tax deductions.
How long does it take to get approved for a home equity loan?
Approval can take anywhere from a few weeks to a couple of months, depending on the lender, the complexity of your application, and whether an appraisal is required.
Can I pay off a home equity loan early?
Yes, most lenders allow you to pay off the loan early without a penalty, but it’s always a good idea to check the terms before committing.
Other Info
Effect on Your Home’s Value
Taking out a home equity loan means you owe more on your property, which could impact your financial flexibility or ability to sell in the future. It’s important to consider how much equity you’re willing to risk.