For home improvement, debt consolidation, education costs or anything else—home equity loans are a great choice for many homeowners looking to access cash from their home.
What is a Home Equity Loan?
Home equity loans allow homeowners to access the equity in their property through creating a second lien, or second mortgage, on their property. This new mortgage may have different terms than the property’s first mortgage and creates a new payment schedule.
Therefore, home equity loans differ from first mortgage refinance loans by adding a second mortgage onto your property rather than changing the terms of your existing mortgage.
Q: how much cash can you access?
Many refinance cash out loans won't let you access as much cash as home equity loans. And many traditional bank home equity loans won't let you access as much cash as non-bank lenders.
For instance, Spring EQ allows homeowners to access cash up to 95% of their home's equity. If you're interested, take a moment to let us know and we'll reach out to help you explore your options.
The cash homeowners need to achieve their goals
The result of obtaining a home equity loan is a lump sum of money at closing that is paid in fixed monthly payments. Lenders typically require homeowners to take out a minimum sum of $35,000 that can then be used for their own personal use.
Some common reasons for obtaining a home equity loan might include funding home improvement projects to increase property value, paying off high-interest debts, or paying for the child’s college tuition.
Fixed rates + flexible terms
Other important aspects to home equity loans are their interest rates and closing costs. Home equity interest rates are usually a fixed rate and dependent upon the prime rate, customer’s credit score, credit limits, lender, and loan-to-value (LTV) ratios. Closing costs are often similar to your original mortgage, around 2-5% of the loan amount be taken out. The combination of fixed interest rates and similar closing costs allow for predictable repayment costs.
When determining what lender to choose, make sure to review the Loan Estimate forms provided to you from each lender. This three-page form details the differences between what lenders are willing to offer and gives you a rundown of interest rate, closing costs, and fees you may encounter.
Is a Home Equity Loan Right for You?
Obtaining a home equity loan might be right for you if you need a sum of money to fund an anticipated project or event. When considering your options, it is important to consider the amount of money you need and your budget.
If you're interested in starting the process of exploring a home equity loan with Spring EQ, take a minute to get pre-qualified instantly.