Choose a country
United States
Select a city
Select a city
Select language
English
Select country
Choose a country
United States
Canada
España
México
Philippines
United States
Việt nam
Казахстан

Home Equity Loans of december 2022 in the United States

Apply for a home equity loan from companies verified by our specialists. On 03.12.2022 you have access to 0 home loans with a low rate. Increase your chances of getting money — fill out a multi-application with a free credit rating check.

Home Equity Loans calculator in the United States

The best home loan calculator
Home loan amount
i

The amount you want to receive

USD
USD
50000 $
1000000 $
Home loan amount
i

Home loan amount

USD
USD
50000 $
1000000 $
Down payment
i

Specify the percentage of the down payment

%
$
3
30
Your home loan amount
$
Home loan term
i

Specify the desired length of the home loan

years
months
5
30
Interest rate
i

Choose the interest rate on the loan

1 %
10 %
Type of payments
i

Specify the type of payment for calculating

Mortgage online application in the United States

Mortgage amount:
10000 $
200000 $
Term:
i

Specify the loan term for the calculation

15
30 years
Mortgage online application
Your data is securely protected. Will not affect your Credit Score.
Loan amount
0 $
Loan term
0 months
Monthly payment*
1 143 $
More

Types of mortgage loans

Arrowhead Advance
3.2
Olivia H
Olivia H
01.12.2022 at 06:07
My experience with getting a personal loan from this company was quite pleasant. The service was fast, no one asked about any collateral or my creditworthiness. Such things are always annoying...
Review
Spotloan
4.4
Noah J
Noah J
30.11.2022 at 20:45
Before taking out a loan, I compared Spotloan with other lenders and found out that their rates are the most acceptable. The mobile application works flawlessly. I quickly received approval...
Review
Spotloan
4.4
Isabella H
Isabella H
30.11.2022 at 20:40
At first, I liked everything in this company. I needed a payday loan and they offered a good alternative. Almost no documents are needed, it's true...
Review
Spotloan
3.8
Camila J
Camila J
30.11.2022 at 20:40
Spotloan is like a good old friend to me. I always try to make payments on time, so I usually have no problems with creditors. This company has simplified all possible procedures for obtaining a loan...
Review
Spotloan
3.6
Emma S
Emma S
30.11.2022 at 20:40
A very convenient application of the company. You can borrow small amounts starting from $3,000. In addition, the company operates in most states...
Review
Spotloan
4.6
Mateo J
Mateo J
30.11.2022 at 20:35
If you've never seen a company that can give you a maximum of $800, then this is just about it. But they respond to the application very quickly, they also quickly approve and transfer money to you...
Review
Home Equity Loans of december 2022

What is a home equity loan?

A home equity loan, also called a second mortgage, or a home equity installment loan, is a consumer loan allowing borrowers to take out a loan against the real estate's equity. 

The amount of this type of loan depends on the difference between the real price of real estate on the market and the current mortgage balance of the borrower. 

There are two types of home equity loans. These are home equity loans with fixed interest rates and home equity line of credit (HELOC), which has variable rates. Fixed-rate equity loan allows to borrow money once, and a home equity line of credit comes with a revolving line of credit.

How does home equity loan work?

Another name for a home equity loan is the second mortgage, since the basic principles of these types of loans are similar. In a home equity loan, the borrower's real estate is collateral for a bank, lender, or other financial institution. The property is transferred to the lender's ownership if the borrower cannot repay the loan. The lender will sell the property and will not lose profit. The loan amount is calculated partly from the combined loan-to-value (CLTV) ratio of 80% to 90% of the real estate's estimated value. Also, the available loan amount for the borrower is affected by their credit score and payment behavior when mortgaging or renting housing. A home equity loan with a fixed rate has a certain repayment term, just like a traditional mortgage. The borrower must pay fixed monthly payments, which consist of principal and interest.

Home equity lines of credit are an alternative to home equity loans that allow the borrower to get revolving lines of credit. The borrower takes a certain amount according to his credit limit, returns it, and can take a new amount. The draw period most often ranges from 5 to 10 years. After this period, there comes a repayment period of 10 to 20 years in length, during which it is impossible to withdraw money. Usually, HELOC has a variable rate, but some lenders may offer a home equity line of credit with a fixed interest rate.

Home equity loans and HELOCs allow the borrower to convert the home's equity into cash to cover various bills. This loan option is ideal for paying for home renovations and installation improvements, as it increases the house's value on the market. The borrower can also use the amount received from the home equity loan for other purposes. For example, close credit card, medical, or college bills. Also, the borrower can make a debt consolidation.

However, the borrower should remember that this type of loan is quite risky. A home equity loan should be considered as the last option to find the right amount of money in an emergency, since the borrower risks losing the house if they have problems with work, for example. If the borrower used home equity to pay for another loan, then they should not take out a new loan since the home equity loan's repayment term can reach up to 30 years.

Pros and cons of home equity loans

Pros

  1. A home equity loan is easy enough to get, and this loan is secured, and therefore lenders do not have such high requirements for borrowers as, for example, for borrowers who take other consumer loans. The lender makes a credit check and orders an appraisal of the borrower's home to check the credit score and CLTV ratio.

  2. A home equity loan is an easy way to get a large amount of money. Other personal loans have a low maximum limit on the amount a borrower can take. This loan is suitable for those borrowers who need a large amount at once and have a stable source of income in which they are confident.

  3. Average home equity loan rates are 5.82%, 5.60%, 5.28%, and 5.61% for 15-year, 10-year, and 5-year fixed-rate loans and HELOC, respectively. These indicators are sometimes equal or even less than the mortgage interest rates. Moreover, such interest rates are much lower than other consumer loans such as credit cards or payday loans.

Cons

  1. Because it is easy to get a home equity loan and the borrower receives a large lump sum amount, some borrowers may fall into even greater debts. The first reason homeowners take out such a loan is to close other loans, such as credit card debt. After closing such a loan, the borrower still has considerable money. The borrower gets into a loan and closing cycle, and as a result, the home equity loan remains in even greater debt at the end of his life.

  2. Getting into even bigger debts provokes some borrowers to take a special home equity loan offering 125% of the property's value. Such a loan most often has an increased interest rate. Since the amount issued to the borrower is more than the amount of the real estate value, not the entire loan amount is secured by collateral in the form of real estate. Moreover, the interest the borrower paid on top of the cost of the house cannot be tax deductible.

  3. Taking a home equity loan is a risky move on the borrower's part regarding real estate ownership. This loan option has a very long loan term during which anything can happen to the borrower's source of income, for example, dismissal or business decline. By taking out such a loan, the borrower risks losing real estate that, for example, was taken on a mortgage, and the payment of this mortgage was a long and costly process. Also, the borrower should know that if the loan is not paid in full, it will cause damage to the credit history, and loss of real estate can lead to bankruptcy.

  4. Taking a home equity loan may close the borrower's access to other loans for the lifetime of this loan. Having a loan with such a large amount and such a long repayment term will reduce the trust of lenders in the borrower. For the entire loan term, which can be 30 years, the borrower will most likely not be able to get any other serious loan.

Conclusion

A home equity loan is suitable for borrowers who know exactly what they need an outstanding loan balance for. The borrower should weigh all the risks, of which there are many. This loan is not recommended for borrowers who often use credit cards and plan to take out any other loan in the next 10 to 30 years. Also, a home equity loan is not recommended for borrowers without a permanent source of income in which they are confident, as this is a big risk of losing the house.

How to get a home equity loan

Since home equity loans and home equity lines of credit are secured loans, most home equity lenders set lax credit requirements for borrowers.

Before applying for a home equity loan, the borrower must check their debt-to-income ratio and credit score. To obtain this loan option, the borrower must have a debt-to-income ratio of no more than 45%. Also, lenders usually require at least 600 to 620 credit scores. Also, a mandatory requirement for the borrower's credit history is not the presence of bankruptcies over the past 7 years, on-time mortgage payments, or rental housing. The borrower may not meet these criteria and receive a home equity loan, but in this case, the homeowner will have a high-interest rate as he will be a risky borrower for the lender.

The borrower must provide provable employment or another stable source of income that brings the borrower an income for a minimum of 2 years. Also, equity in their home should be greater than 20% of their value.

Modern second mortgage lender offers potential borrowers the process of obtaining a home equity loan online. To do this, the homeowner needs to go to the lender's website and click on the "Get Started" or "Apply Now" button. Next, the borrower needs to enter the zip code of their real estate address. On the first page of the application form, the borrower must fill in personal information such as name, phone number, email, marital status, SSN, and residential address. On the next page, the homeowner needs to enter information about employment or another source of income. They need to enter information such as the employer's name, phone number, and the amount of the term of employment. Next, the borrower needs to enter information about their real estate, namely the type of real estate, cost, ownership status, and location address. The application is completed in 10 minutes if all the necessary information is available. The credit approval comes to the borrower within a couple of hours.

The lender can request the download of these documents to confirm identity, employment, and income level:

  • Driver's license or state-issued ID

  • W-2 forms

  • 1099s

  • Tax returns

  • Pay stubs.

Ways to pay home equity loan back

Every borrower wants to repay the loan in full and in a short time. There are several ways to quickly close home equity loans or home equity lines of credit.

Learn the fees

Before signing a loan agreement, the borrower needs to pay attention to additional fees that can be added to monthly payments. These can be origination fees, prepayment, property insurance, homeowners insurance, and closing costs. In addition to studying additional fees, the borrower needs to study whether the interest they will pay at the end of the life of the loan is tax deductible, as this will significantly reduce the costs of home equity loans.

Make an additional payment

After the borrower has calculated their equal monthly payments, they need to calculate their budget to make an additional monthly payment at least once a year. An additional monthly payment will allow the borrower to reduce the loan term, thereby reducing the interest they have to pay.

Set automatic payments

Automatic loan repayments can be installed on the lender's website. These payments are made every month automatically from the checking or savings account of the borrower using ACH debit. Automatic payments allow the borrower not to be late with payments, thereby avoiding the commission for late payments.

Aim to refinance home equity loans

Refinancing home equity loans is a good way to lower the interest rate and reduce the loan term. The borrower should look for different refinancing options from credit unions, banks, and online lenders.

Do not use all cash from credit line in HELOC

The borrower who took HELOC has to pay interest for every amount they withdrew from the line of credit. To reduce interest and quickly pay off HELOC, the borrower is recommended to use only about 20% of the credit limit.

Legal regulations

Federal Reserve Consumer, Consumer Financial Protection Bureau, and Federal Deposit Insurance Corporation (FDIC) regulate the issuance, payment, and other processes related to home equity loans.

Among the federal laws, it is possible to distinguish several legal acts. This is the Truth in Lending Act (TILA) which regulates the sale of loans, and the Real Estate Settlement Procedures Act, which regulates that buyers and sellers are given disclosures about the full settlement costs related to home buying.

Also, the borrower should pay attention to the addition of the Equal Housing Lender to the name of the lender since this addition means that the lender does not discriminate against borrowers on any basis.

FAQ

What is the monthly payment on a $100,000 home equity loan?

Using a special home equity loan calculator and considering that the interest rate is 6.49%, it is possible to say that for the amount of $100,000 for 180 months, monthly payments will be $870.56.

Is it a good idea to get home equity?

A home equity loan is a rather risky type of loan since the borrower puts his real estate as collateral, and in case of non-payment of the loan, the bank will become the property owner. However, this loan may be suitable for paying unexpected expenses for borrowers with a stable source of income in which they are confident. In general, this loan will not be a good idea for everyone.

What is the advantage of a home equity loan?

A home equity loan is one of the easiest ways to get a large amount of money in a short period. A home equity loan allows the borrower to borrow more money than any other personal loan. This loan has lax requirements for the borrower since it is a secured loan. Moreover, a home equity loan has an interest rate lower than other loans.

How much equity can you borrow against your house?

The loan amount is calculated from the combined loan-to-value (CLTV) ratio of 80% to 90% of the real estate's estimated value and the borrower's mortgage balance. On average, a borrower can get about 85% of the appraised value of their real estate.