Easily unlock your home investment value with a Home Equity Line of Credit (HELOC). With this secure line of credit you can can get better interest rates, reasonable terms, smaller or no repayment penalties, and gain access to large amounts of money anytime you need it. But first you’ll need to meet the minimum equity requirements.
Minimum Equity Requirements
A HELOC may be offered to you if you have a bare minimum of 20 percent equity in your home already. Although this can vary a little based on the lender you choose, the 20 percent minimum requirement is pretty strict throughout the industry, as it helps to reduce the risk in the eyes of lenders. So, the more home equity you have, the better your interest rate will be on your Home Equity Line of Credit.
With the set minimum there must also be a maximum too. Most lenders allow HELOC up to 80 percent of your home’s equity value, however there are brokers and lenders out there that can get you up to 95 percent, and AKAL Mortgages is one of them.
Other HELOC Requirements
There are a few other HELOC requirements you also need to be aware of, these include:
A financial background check on both the homeowner and any co-applicants which assesses your repayment ability
An assessment of your credit history will be done to determine your interest rate and get your HELOC approved
A risk assessment will also be completed when your lender reviews your debt-to-income ratio
A home appraisal will be done, and your lender will verify of all owner documents to determine your mortgage position on your home
Ability to prove steady income and repayment capabilities
If self-employed, you’ll need to be able to provide ample proof regarding job stability and repayment abilities
Provide any/all documentation for any second mortgages, as well as the repayment history
These are all of the minimum requirements you’ll need to meet in order to qualify for a Home Equity Line of Credit. These requirements have been set in order to lower the risk that both borrowers and lenders face. Since there is so much investment put into your home, it would be a shame to lose it. Wise financial planning can help to ensure that this doesn’t happen. When using funds from your HELOC, consider the return-on-investment on your purchases, it should generally be higher than the interest rate on your line of line of credit.
Have questions about a HELOC? Our mortgage team is here to assist you, get in touch today.
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