Home Equity Loans

Home equity loans, also known as mortgage equity loans, equity loans, or a second mortgage, allow you to get cash against the equity you have built up on your home. The loan amount you can get is based on the difference between the current market value of your home and the balance due on your mortgage. Home equity loans generally have fixed-rate interest, i.e., the interest rate will be the same for the entire loan term.  

Principally, your home equity loan can be compared to a standard mortgage; thus, it is also known as a second mortgage. The equity in your home will serve as your collateral. The amount that you can borrow is partially based on your CLTV or combined loan-to-value ratio, which is 80-90% of the appraised value of your home. The loan amount and the interest rate you will pay depend primarily on your payment history and credit score. When considering a refinance and home equity loan, remember that refinancing replaces your existing mortgage with a new loan. In contrast, a home equity loan adds a second, separate debt to your home. Both options use your home’s equity but serve different financial strategies.

Getting a home/mortgage equity loan is the best way of converting the equity you have built up in your home into ready cash. You can invest the cash for home improvements, which will in turn also enhance the market value of your property. However, be aware that if the overall real estate values drop, you may find yourself owing more money on your home than the subsequent reduced value of your home. 

There are several options, including refinance and home equity loans, to fund essential repairs, renovations, and to add value to your lifelong investment: your cherished home.

• Home Equity Loan – Allows you to borrow money against your home's existing equity to fund home improvements. 

• Home Equity Line of Credit (HELOC) – Leverages a home's equity but allows homeowners to apply for an open line of credit. Then you can borrow up to a fixed amount on an as-needed basis and use that money for home improvements. 

• Unsecured Home Improvement Loans – Personal loans that can be used for home improvements like installing a swimming pool, upgrading your kitchen or repairing the roof.

• Home Refinance with Cash Out – Also known as a refinance and home equity loan, is a new loan used to refinance an existing mortgage plus draw on home equity for a cash amount, like a mortgage equity loan. The additional cash amount available depends on the home equity value.

Yes. Neither an equity loan nor a refinance and home equity loan can bar you from selling your home because it still belongs to you. Use the proceeds to pay off the loan balance.