Have you heard of 100% home equity loans? Ever wondered exactly what that means and if you qualify? If so, you are certainly not alone, but you may find the following information to be very helpful. Here we will define what a 100% home equity loan is, highlight the qualifications and criteria for receiving such a loan, and provide some reasons why this may be a good idea if you do indeed qualify.
What is it?
A 100% home equity loan is a second mortgage (a term, because of the negative connotation it represents, that many people shutter at the thought of), but before you balk at the sound of this, allow us to explain. These loans allow you to borrow up to 100% of the real value of your home (the current value minus what you still owe on your first mortgage) and are usually completely tax deductible. The money is paid to you in one lump sum and can be used for any reason. Fix up your home, take a vacation or invest in a small business. Whatever you need the money for is okay.
Interest rates for loans vary, but since you will be using the equity in your home as collateral they are usually very easy to qualify for and the rates are very competitive. If you shop around you’re almost certain to find a great deal.
Repayment of a loan can be as long as 30 years in some cases, but most companies offer a term of 15 years for repayment in full.
Qualifications for a Loan
To qualify for a loan, the following factors usually apply, although they will vary slightly depending on the lending agency:
• A FICO based score of 600 or higher
• Ownership in the property for at least 6 months in order to get a new appraised value
• No bankruptcies or foreclosures in the last 2 years
• A documented source of income
Reasons for Getting a Home Equity Loan
We already mentioned that a home equity loan could be used for any purpose you want—home renovation, vacation, business, etc—but there are a few other reasons for considering a 100% home equity loan as well. Among them are:
• Pay off high interest credit cards
• Consolidate your monthly obligations into one payment with a competitive interest rate
• Tax deductions
• Pay college tuition
A 100 % home equity loan is a fantastic way to receive a lump-sum payment fast, without having to go to all the trouble of taking out another unsecured loan that can cost you a fortune in the long run. If you own your own home, have built up equity over the years by making your payments consistently and on time, and you need a little cash for…, well, whatever, these loans can be a perfect way to get the money you need and deserve.