Home Equity Loan
Frequently Asked Questions (FAQ)
Learn about interest rates, closing costs, and the differences of a home equity loan and home equity line of credit. Find home equity loan questions and answers.
Questions and Answers for Home Equity Loan
Note: Information can vary from institution to institution
- How do I know if a Home Equity Loan will improve my cash flow?
- How can I reduce my interest rate?
- Is the interest tax deductible?
- What's the difference between a home equity loan and a home equity line of credit?
- What are the advantages of a fixed-rate loan?
- What are the advantages of a variable-rate line of credit?
- If I choose a line of credit, how will I access it ?
- How many advances can I take on my home equity line of credit?
- Do I need equity in my house to get a home Equity loan or line of credit?
- What type of property is eligible?
- Must I occupy the residence I'm using as collateral?
- Can I get a loan or line of credit if my home is for sale?
- How do I know the amount of equity I have in my home?
- What is a combined loan-to-value (CLTV) ratio?
- Is there any cost to apply?
- How do I apply for a Home Equity loan or line of credit?
- What is the loan process?
- Can I or my co-borrower be self-employed and still qualify?
- Can there be multiple borrowers on the same loan?
Frequently Asked Questions (FAQ)
How do I know if a Home Equity Loan will improve my cash flow?
After reviewing your online application and obtaining some additional information from you, an Account Executive will compare what you are now paying each month on your high-rate debt to what your payment would be on a Home Equity loan.
How can I reduce my interest rate?
You have the opportunity to "buy down" the interest rate by paying discount points - which is essentially paying a fee to lower your interest rate. By lowering your interest rate, you will have a lower monthly payment and reduce the amount of interest that you'll be paying over the life of the loan. A "point" is equal to one percent of your loan amount. Each point paid reduces your interest rate one quarter of one percent. Points are paid when the loan closes and can often be included in your loan amount. State restrictions may set limits on your option to pay points.
Ask your Account Executive about other options to lower your rate.
Is the interest tax deductible?
Interest paid on your account may be tax-deductible on the first $100,000 of home equity indebtedness and up to 100% of your home's value. Consult a tax advisor regarding your particular situation.
What's the difference between a home equity loan and a home equity line of credit?
Home Equity loans or lines of credit are also referred to as second mortgages. They work like traditional home loans and...
What are the advantages of a fixed-rate loan?
With a fixed-rate loan, you know what your payments will be each month for the life of your loan. Since the payments are fully amortizing, you will be able to actually see the principal balance reduced, and your equity increase, each month until the loan is paid off.
What are the advantages of a variable-rate line of credit?
You can use your credit line as often as you like up to your credit line maximum for the first 10 years (the draw period). That's 10 years of instant cash access for those variable expenses and surprises without any paperwork hassles. Home Equity line of credit has a variable interest rate with flexible monthly payments starting as low as interest-only during the draw period.
If I choose a line of credit, how will I access it ?
After your loan closes you will receive a checkbook that allows you access to your credit line. There is no charge for checks and there are no transaction fees.
How many advances can I take on my home equity line of credit?
You can write as many checks as you want, up to your maximum approved credit line. You can also order more checks at any time. Customers can take an advance on their home equity line of credit when the account is opened and can continue to access their line for 10 years.
Do I need equity in my house to get a Home Equity loan or line of credit?
No, many customers qualify for a loan up to 125% of the value of their home. These loans are frequently called no equity loans. Home Equity Account Executives can discuss your particular situation with you to see if you are eligible.
What type of property is eligible?
Single family homes, planned unit developments, condominiums, duplexes, and 3-4 unit properties are allowed property types. Mobile homes cannot be used to secure your loan.
Must I occupy the residence I'm using as collateral?
No. However, there is different pricing for non-owner occupied property.
Can I get a loan or line of credit if my home is for sale?
No. If your home is currently for sale or has recently been for sale, it must be off the market for 90 days before you can be eligible for a Home Equity Loan.
How do I know the amount of equity I have in my home?
Equity refers to the portion of a home's value that the homeowner owns outright. If your home is worth $150,000, and the amount due on your current mortgage is only $50,000, the equity you have in your home is $100,000...
What is a combined loan-to-value (CLTV) ratio?
Your combined loan-to-value-ratio (CLTV) is simply your combined mortgage balances divided by the value of your home. For example, assume that your home is worth $200,000 and you owe $100,000 on your first mortgage. If you take out a $50,000 home equity loan, and add it to your existing mortgage loan balance of $100,000, your combined balance would be $150,000. The $150,000 of mortgages divided by the home's fair market value of $200,000 means your CLTV is 75%.
Is there any cost to apply?
No. There is no money required to see what a Home Equity Loan or Line of Credit could do for you.
How do I apply for a Home Equity loan or line of credit?
Request Info
What is the loan process?
It's easier than you think to receive your free quote on an equity loan or line of credit...
Can I or my co-borrower be self-employed and still qualify?
Yes. Self-employment is not a barrier to getting a Home Equity loan or line of credit. Generally, Home Equity request 2 years' tax returns to document your income.
Can there be multiple borrowers on the same loan?
Yes. There can be multiple co-borrowers on your loan or line of credit.
