Home equity is the difference between your property's current market value and the remaining balance of your mortgage.



Home Equity

iceh2o.net After several years of making mortgage payments, you will have accrued an amount of equity in your property based on how much of the loanfs principle you have already paid off. In other words, home equity is the difference between your propertyfs current market value and the remaining balance of your mortgage.
For instance, if your home is valued on the current market at ’150,000 and the balance of your mortgage is ’50,000, the amount of your equity in your home would be ’100,000.
Back in the 1980fs, many homeowners had what was called gnegative equityh when their properties were devalued after the housing market went through a recession. Because of the large mortgages that they had when the prices of their homes went down, people ended up owing more money than their properties were really worth.
Am I Eligible?
The standards for eligibility vary, just as with other loans. The common prerequisite is whether or not you have already paid off some of the mortgage loanfs principal. Most homeowners easily meet this requirement, unless they bought the house through an interest-only mortgage.
How Much Can I Borrow?
> Home Equity Loan Rates
Since you are putting up your property as security, home equity loans have generally lower rates compared to other loans. Increasing the amount you borrow also tends to lower the rates, which is offset by the longer length of your repayment period.
The APR (Annual Percentage Rate) of your home equity loan will vary depending on a number of factors:
> Loan Calculators
Many financial services web sites feature loan calculators, but just keep in mind that different lenders have their own method of computing the amount you can borrow. Nonetheless, these calculators are a good guide for determining how much you may be able to expect.