Equity Loan: Your walls are loaded with money

There is money in 'them-thar-walls'. Ever done a renovation on an old house, and after tearing down a wall, find thousands of dollars hidden behind the drywall. Believe it or not, I had a friend who found $10,000 hidden in a wall when he was tearing it down. He didn’t feel guilty because his grandma had “willed” him the house, so the money was his anyway. He thanked her in a prayer and the money paid for the renovation.

This is an unusual situation, but in fact, you may even have more than $10,000 in your walls. It’s called equity, and you can withdraw it in an Equity Loan.

How much you can take out depends on the value of the home minus what you owe on it. For example, many lenders will set the amount of your equity loan by taking a percentage (say 75%) of the appraised value of the home and subtracting the balance owed on the existing mortgage.

Assume

Appraisal of home

Percentage

Percentage of appraised value

Less mortgage debt

Potential credit line

$100,000

x75%

$ 75,000

-40,000

$ 35,000

An Equity Loan can allow you to consolidate debt, finance a new business, pay off high interest credit cards, improve your home or simply get cash to buy a car or go on vacation. Equity loans are generally tax deductible so you may save on your taxes also.

The costs of obtaining an Equity Loan are similar to getting a regular mortgage. There is the standard fees for property appraisal, loan application, title and escrow search, etc.

To get your application costs and interest rates as low as possible, shop around, because lenders are always trying to be competitive in this field.

Use a home equity loan calculator and find out how much you can afford

In the olden days (way back, like 20 years ago), if you needed information about how much an equity loan would cost, or how large of an equity loan you could afford, you had to go to a mortgage "professional" and use his loan calculator. All that has changed with the advent of the internet.

In reality, you never have to interact face-to-face with a human anymore to use a home equity loan calculator, get a mortgage or secure a loan. Not that we wish to create totally unsocial people, but when time is at a premium, it is so convenient to simply sit in front of your computer and do all the legwork from the seat of your pants.

And a home equity loan calculator is just one type of calculator. Check this out. You can calculate almost anything. There are Mortgage calculators, Mortgage payment calculators, Home affordability calculators, Loan calculators, Mortgage qualifier calculators, New car payment calculators, Moving calculators, Relocation calculators, Military relocation calculators, Insurance calculators, Lifestyle calculators, Community calculators, Rent-vs-buy calculators, Refinancing your home calculators, and the list goes on.

When you're ready to apply for your home equity loan, use one of the many calculators available on the Net to see how much equity you have, and how much your monthly payments will be.

About The Author

Rene Hill is a successful freelance writer providing helpful tips and advice for consumers on loans, second mortgages and home equity loans. Her many years of mortgage industry experience have helped others understand the business.

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