The Home Equity Loan appropriate for you will depend on your specific
needs. You may find a 30 year loan with lower monthly notes is more
suitable that a 15 year with higher monthly notes. If you are remodeling
your home you may find the option to borrow as you need more suited to
your needs. The following chart can assist you in determining the right
loan for you.
**The following are examples of loans, the lending
company you choose may offer other loan types.**
|
Home Equity Loans |
Line of Credit 100% |
Fixed Loans 100% |
125% Loan |
|
Key Benefit |
Borrow money as you need it |
Fixed rate and payments |
Borrow up to 125% of the property value |
|
Receiving Funds |
Receive the money as you need it |
Receive the entire amount borrowed up front |
Receive the entire amount borrowed up front |
|
Payment Amount |
Interest only (Minimum $100) |
Options available to base payments on 15 or 30 year payback |
Based on 15 year payback |
|
Length of Loan |
10 Year avg. |
15 Year avg. |
15 Year avg. |
|
Interest Rate |
Fixed Margin, varies with the Prime Rate |
Fixed Rate |
Fixed Rate |
|
Combined Loan-to-Value |
Reusable
credit line with line amounts up to 100% of the value of your home,
after subtracting your first mortgage. |
Loan
amounts up to 100% of the value of your home, after subtracting your
first mortgage balance. |
Loan
amounts up to 125% of your home's current value, after subtracting
your first mortgage balance. |
|
Typical Loan Amounts |
$20,000 to $250,000 |
$15,000 to $250,000 |
up to $75,000 (cash out up to $30,000 and pay off current debts up to
$45,000) |
|
Disadvantages |
Adjustable interest rate |
Can only draw money once
(unlike a line of credit) |
Higher rates than a loan or line that only goes up 100% of the
property value |
|
Potential Customers |
Bruce and Krissie have kids heading to college and would like to make
improvements to their home. They will need cash on many occasions for
both needs, but are not sure when or how much. |
David and Courtney want to make some home improvements and pay off
some high interest credit cards. They know how much they will need and
do not want an adjustable rate loan. |
Ricky and Jackie are looking to pay off some high interest loans and
credit cards and lower their monthly payment, but have little equity
in their home. |
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