100 home equity loan.html

 100 home equity loan

Be 100 Percent Sure How To Access The Equity In Your Home

You've probably heard about home equity loans, but what about a 100 percent home equity loan?
It's one way to free up resources from your home. Another way is to simply refinance your current mortgage. Either route you choose, you may be able to tap into the equity that you've accumulated.

How A 100 Percent Home Equity Loan Works

To begin, all lenders establish a maximum loan-to-value (LTV) ratio (i.e. all outstanding loan amounts divided by the home's appraised value). For example, a lender that establishes a maximum LTV of 80 percent would allow $80,000 to be borrowed if the appraised home value is $100,000 (80,000/100,00 = 80% LTV).
With a 100 percent home equity loan, you actually borrow 100 percent of your home's value (e.g. $100,000/$100,000 = 100% LTV).
Under the above example with $80,000 in existing loan amounts, the borrower could access $20,000 of equity; the difference between the appraised home value and the amount of the outstanding loans.
Simply stated, a 100 percent home equity loan means you open an additional loan or line of credit accessing your home's equity. The home equity loan or credit line combined with your current mortgage balance totals 100 percent of your home's value, and you end up with more than one loan.
For example, if your home's value totals $100,000 and your loan balances equal $80,000, you could open a $20,000 home equity loan or line of credit.

100 Percent Mortgage Refinance

While the difference is subtle, a mortgage refinance works a little differently.You still access the equity in your home, but you're getting to it in a slightly different way. With a refinance, you replace your existing loan with a new loan and ask for an additional amount (equal to the equity value) which is added to the new loan. With a refinance equal to 100 percent of the home's value, you end up with one loan instead of multiple loans