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Home Equity Loans

Should You Consider a Home Equity Loan?

Should you consider a home equity loan? A home equity loan is secured against the equity you have in your home, yielding a set amount of money, and paid off in regular monthly intervals, for a fixed length of time. So when might a home equity loan be appropriate? A good rule is that you consider a home equity loan for large amounts, such as twenty-five thousand dollars or more. Common uses are home improvements, major purchases, like weddings and college costs, or consolidating bills. So what do you need to consider? The amount you can borrow will be impacted by key factors such as, 1. How much equity you have in your home. Lenders want you to have at least 5-20 percent remaining after taking out the home equity loan. 2. Your income. 3. Your outstanding debts. Typically with your total monthly debt payments not exceeding 43 percent of your monthly income. And finally, your credit score. Some banks even offer free calculators to help you figure out how much you can borrow. These are elements to consider, when you’re planning for a substantial expense. Like that home improvement you’ve been thinking about. Learn more at Discover Home Equity Loans.

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