What is Equity

When you apply for a home equity loan, lenders consider your credit when deciding whether or not to extend credit. Your credit is estimated based on three things. Credit history, income, and loan-value ratio

Credit History

As with any loan, your credit history will have a major impact on the availability of home equity loans and credit rates. Fortunately, the qualifications for financing the home you already have is much easier than qualifying for a new home loan. If you have good credit, you should have no trouble qualifying for home equity loans. You should also be able to get a fairly good rate. If you have bad credit, you should still be able to get a home equity loan, but the rate will probably be a little higher. Before applying for a home equity loan, take time to pull your credit report. If possible, improve your credit rating by removing bugs and old debt.

income

Although the equity that has built in your home belongs to you, lenders will still want to make sure that you can repay any amount that you borrow. To determine your ability to repay, lenders will evaluate your monthly income and your total debt-income ratio. (Debt-income ratio is a term used to describe how much monthly income goes toward paying off your mortgage, credit card debt, loan and other financial obligations, including home equity loan for which you are applying.) Most lenders will want to ensure that your Total debt can not exceed 38 percent of their monthly income.

loan-to-value

loan-to-value ratio is the amount you owe on your house in relation to the amount your house is worth. For example, if your home is worth $ 100,000 and you still owe $ 70,000, your loan-to-value ratio is 70 percent. When you get a home equity loan, the value of your home again ispitan.Vjerovniku will add your current mortgage balance at the request of a home equity loan amount, and divide the amount of your home at current vrijednost.Konačan amount of the new loan-value ratios. Many lenders want to keep that amount below 80 percent. However, some lenders are willing to loan 100 percent of your home value or more. Here is a list of recommended online. It is important to use a reputable lender online to make sure your personal information safe.