Home Equity Loan
Question: Does anyone know a site where I can get unbiased information concerning home equity loans?
I’m not interested in any responses from mortgage reps, etc. I’d like to find out about the costs (hidden and otherswise), requirements.
Thanks for your help.
Answer: Home equity loans are pretty straightforward these days. Most banks (or their web sites) can explain them fairly clearly. BankBoston has a calculator that lets you plug in the numbers and will tell you what you can do. Most bank web sites can do this.
Just remember that you are basically INCREASING the mortgage on your home. So, it’s not “free” money.
If you have good credit most banks offer no-cost home equity loans at or near prime and these are indeed no-cost. I just did one with BankBoston. Called in, gave the info, they sent out a confirmation letter and within in a few weeks went down and signed the papers – took about 15 min.
The only confusing thing to newbies is the amount of equity you have in the home and the max amount they will loan you. The typical home equity loan is an “80%” loan. This means that the bank will give you a home equity loan to the amount such that the SUM of your mortgage principle and home equity loan are 80% of the appraised value of your home. Yes, a no-cost loan includes a free appraisal.
For, example,
Your home is appraised $200K 80 % is 160K your mortgage principle 125K
Max equity loan is $35K
There’s usualy a minimum loan, i.e. about $25K
Some banks may offer %100 or even 125% BUT the interest rate on these is higher than prime.
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