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Home equity loans and home equity lines of credit are similar, but there are a few key differences between the two. With both types, you will be able to borrow against the equity of your home to utilize the loan amount for other areas of improvement.
A home equity loan is often called a second mortgage and is a debt secured by borrowing against your home. Typically, you will be able to request up to 80% of the equity that you put into your home. Home equity loans come in a lump sum payment with a fixed interest rate and a term of 10 to 15 years, depending on the agreed-upon terms. Usually, the interest rate will be dependent on your credit, as well as a few other factors.
Starting at the beginning of the process when applying for a home equity loan, there are a few prerequisites that you must make sure you meet.
The requirements for a home equity loan usually include:
- Good credit - Before issuing a loan, loan companies generally look for a credit score of 640 or higher. This can be flexible if there are extenuating circumstances, so keep in mind that this is a general rule of thumb and not a hard and fast rule.
- Low debt-to-income ratio - Just like when you’re applying for a mortgage or a conventional home loan, your ratio of debt-to-income should be 41% or less.
- Income rates - For most loans, the amount of income that you have will factor into whether or not you’re awarded the loan, as well as the amount that you receive.
- Consistent payment history - For a home equity loan, a history of reliable payments on your mortgage or other debts is extremely important. It serves as proof that they can rely on you to make steady payments on this loan as well.
- Percentage of equity in your home - Since equity is defined as the difference between what you owe on your house and the market value, this is an important factor for more lenders when considering awarding a home equity loan.
- Current address
- Driver's license and Social Security number
- Two months of bank statements
- Income history for the past two years
- W-2s for the last two years and proof of income for the past 30 days
- List of current debts
Definitely not (unless you want to)! You can do the ENTIRE process online, applying for a Solarity home loan from your home computer or mobile device. In addition, you can call our expert Vancouver, WA Home Loan Guides. If you walk into a branch, we can connect you with our Home Loan Guides that way, too!
We will work around your schedule and will communicate with you in the manner that's most convenient for you. We go to great lengths to make the entire process for you as easy as we can. You can even close the loan from your mobile phone (message and data rates may apply). We can't wait to help you get started!
Definitely not (unless you want to)! You can do the ENTIRE process online, applying for a Solarity home loan from your home computer or mobile device. In addition, you can call our expert Yakima Home Loan Guides. If you walk into a branch, we can connect you with our Home Loan Guides that way, too!
We will work around your schedule and will communicate with you in the manner that's most convenient for you. We go to great lengths to make the entire process for you as easy as we can. You can even close the loan from your mobile phone (message and data rates may apply). We can't wait to help you get started!
Definitely not (unless you want to)! You can do the ENTIRE process online, applying for a Solarity home loan from your home computer or mobile device. In addition, you can call our expert Spokane County Home Loan Guides. If you walk into a branch, we can connect you with our Home Loan Guides that way, too!
We will work around your schedule and will communicate with you in the manner that's most convenient for you. We go to great lengths to make the entire process for you as easy as we can. You can even close the loan from your mobile phone (message and data rates may apply). We can't wait to help you get started!
A pre-approval letter is a document that states the dollar amount a lender is willing to lend toward a Spokane County home purchase. It is important to have it when you start house hunting because it will show both your real estate agent and the sellers' agent that you’re a serious and qualified buyer.
A pre-approval letter is a document that states the dollar amount a lender is willing to lend toward a Yakima home purchase. It is important to have it when you start house hunting because it will show both your real estate agent and the sellers' agent that you’re a serious and qualified buyer.
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