|
Home Equity Loan
There are a few options for you if you're looking for a home equity loan. You can get a loan off of the value of your home or you can get a line of credit against your homes equity as well.
The traditional mortgage loan is based on the worth of your home minus the amount you owe. Which means the bank will allow you to borrow the amount that the home is worth because it means no risk to them. The problem is in this tough economy the home equity loans are only allowing 80% of the homes worth minus the amount you owe.
The bank will do an appraisal on your home to check the current worth and then let you know how much you can borrow. Of course your borrowing power will have to be high enough to afford the amount the bank can give you. As long as you can afford the mortgage then the bank will give it to you.
An equity line of credit is more for a business because you don't use it right away. It's available in a special account for you to use whenever you need and you don't have to pay interest until you start using it.
Assume you write a check for $2,000 and you have a line of credit for $10,000. Then you will have to start paying interest on the $2,000 right away but not the $8,000 balance. The interest rate is adjustable so when you write the check it may be higher or lower than when you first got the line of credit.
I have calculators on my site to help you figure out what you can afford for a monthly mortgage payment. Usually these home equity loans are over a shorter term so make sure you check a mortgage calculator before going to the bank just to realize you cant afford the loan. | 
