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Home Equity Loan
In the current economic times it would be very difficult to get a home equity loan. The housing market has been dropping for almost 2 years now and considered record lows in the last 5 years. A home equity loan is a loan that you can get based on the amount of equity in your home. The equity in your home is defined as the amount left over from the worth of the home minus the amount you owe on your mortgage. If you got an appraisal today and your home is worth $200,000 and you still owe the bank $150,000 then you have $50,000 in home equity.
You also need to know the loan to value ratio of your home in order to figure out how much of a home equity loan you can get. If you use the figures above to say $150,000 / $200,000 = .75 or 75% loan to value ratio. The reason you need to know that number is because now that the housing market is going downward the banks will only allow a home equity loan up to an 80% loan to value ratio. Since the example is already 75% you can only get another 5% loan using your homes equity. $200,000 x .05 (5%) = $10,000. That will bring you up to the 80% loan to value and you will be approved for the loan assuming your debt to income ratio isn't already to high. Your debt to income ratio basically tells the bank if you can afford the home equity loan payment based on your monthly bills.
When the real estate market was on the up swing a few years ago banks were allowing up to 110% loan to value ratio to its customers assuming they had the buying power to cover the monthly payment. That was a very big mistake and they got themselves into a lot of financial trouble by trying to increase business. However it wasn't that big of a deal for them because now we, as tax payers, are paying for their mistake by bailing out the banks in trouble. The government issued bail outs for banks in trouble and are forcing the banks to continue loaning money to those who don't approve for loans. These are known as "government backed loans" which means if those people don't pay then you and me, as tax payers, will have to pay it for them.
I went to the bank during the 110% loan to ratio times and asked for a loan for my home and I didn't want to put up and money for a down payment. So I asked for 100% financing and I wasn't approved. So I used a mortgage calculator to finagle some numbers and figure out what I could do to get the 100% financing and I ended up doing one better.
I put a down payment of 20% on the mortgage loan and got approved, signed the papers and it was a finalized deal. One month later I went to the bank and got approved for a 110% home equity loan and got that money within a week of signing the papers. So not only did I finance 100% of the loan but I ended up with an extra 10% on top of it. I even mentioned to the banker in the beginning that I was going to do that and he said it would probably work, but he couldn't give me the 100% financing in the beginning. | 
