Home Equity Loan Line of Credit Calculator and How To Use It
If you want to make some big profits but your only appraisable asset is your house then you can either sell it or continue to live in it and access the of an amount equal to the one you can find by using the home equity loan line of credit calculator.
This is second mortgage that many homeowners draw out on the market value of their home. The amount received is higher than that owed on the primary mortgage. There are benefits and drawbacks of each type of loan and every consumer selects the one that fits their requirements.
Most financial advisors say the only reason to use the home equity loan line of credit calculator is if you are going to spend on increasing its value.
How the Home Equity Loan Line of Credit Calculator Works
You can find out how much home equity you can tap into by subtracting the amount of money owed on the mortgage from the value of the property. Depending on the credit history, borrowers can receive up to 85% of the home equity. However, extreme caution is advised because defaulting on payments could result in foreclosure of the property.
The amount that is owed on the home loan should be divided by the market value of the home to obtain the overall loan-to-value ratio. If the value in the home equity loan line of credit calculator is high then lenders will be less likely to let you access the home equity.
One example is a home with a market value of $300,000 but they already owe $150,000 then the loan-to-value ratio would be 50% and those that allow a combined ratio of up to 80% will allow the homeowner to borrow 30% of the equity i.e. $90,000.
More About the Home Equity Loan Line of Credit Calculator
The home equity loans are very similar to the home equity line of credit because you are basically borrowing against the home equity value. However the loaned amount can be received all at once while the line of credit can be taken out in installments, as needed. You only have to pay an interest on the amount that is withdrawn.
The home equity loan line of credit calculator often starts at lower interest rates and then adjusted to higher values. It is variable and the payments owed per month are also subject to change.