Pay for Major Expenses with a Home Equity Loan
A home equity loan is a type of second mortgage that uses your home’s equity as collateral to acquire financing. It provides a lump sum of cash with consistent monthly payments and a variety of repayment terms. With predictable monthly payments, a home equity loan can be a helpful option for budgeting toward your financial goals.
You can use a home equity loan to help with large one-time expenses, such as a home remodel, weddings, debt consolidation, and more.
Benefits of a Home Equity Loan
- Borrow up to 95% of your home’s value
- Multiple repayment terms available
- Consistent monthly payments
Competitive Home Equity Loan Rates
We offer competitive low rates to ensure you get the most out of your second mortgage. Apply for a home equity loan today or set up an appointment with one of our experienced Mortgage Consultants.
How Does a Home Equity Loan Work?
A Utah home equity loan allows homeowners to access their home’s equity by borrowing a lump sum with a fixed rate and repayment term. This provides predictable payments, making it a reliable option for funding home improvements, consolidating debt, or covering major expenses.
While often mistaken for a second mortgage loan, it's important to note that a second mortgage can refer to both home equity loans and home equity lines of credit (HELOCs). The key difference is that a home equity loan provides a one-time payout, whereas a HELOC offers a flexible credit line from which you can draw as needed.
Eligibility Criteria for Home Equity Loans
Knowing what lenders look for can make a big difference when considering home equity loans. First, you'll need to have built up enough equity in your home, which is usually at least 15-20% of its value. This equity acts as collateral, giving lenders confidence in the loan.
Your credit score is another key factor. Most lenders prefer a score of 620 or higher, as it shows a history of responsible borrowing. Some lenders might still work with lower scores, but often at higher interest rates.
Stable income is crucial as well. Lenders will check debt-to-income (DTI) ratios to ensure loan payments are within a reasonable budget. A DTI of 43% or less is generally favored, though some lenders might consider higher ratios if other factors are strong.
Common Fees Associated With Home Equity Loans
Understanding the fees tied to home equity loans helps reveal the actual cost of borrowing. One key fee to watch out for is the origination fee, which lenders charge to process your loan application. This fee represents a percentage of your loan amount and can differ between lenders.
You'll also need to cover appraisal fees, which pay for evaluating your home's market value to determine your available equity. Closing costs are another consideration, encompassing expenses like credit report fees, title searches, and legal documentation. These costs can quickly add up, so it's wise to scrutinize them closely.
To keep these fees in check, compare offers from various lenders. Some might provide reduced fees or special rates. It's also worth negotiating with your lender to see if they can lower or waive any fees. Contact us directly to learn more about available rates and promotions.
Tips for Managing a Home Equity Loan Wisely
Effectively managing a home equity loan is key to maintaining financial stability.
- Create a budget that includes your loan payments, ensuring they fit comfortably within your monthly expenses. This approach helps avoid late fees and protects your credit score.
- Make payments on time. Consider setting up automatic payments to avoid missing due dates. If you have extra cash, paying down the principal can reduce interest costs over time.
- Stick to the original purpose of your loan, whether it's for home improvements or consolidating debt. This focus helps you achieve your financial goals without unnecessary strain.
- Avoid using the loan for non-essential expenses, as this can lead to financial trouble. By managing your loan carefully, you can use your home's equity to support your financial goals and improve your financial health.
- Refinancing a home equity loan might lower your monthly payments and interest costs if the rate drops. However, weigh the savings against any refinancing fees to ensure it's worthwhile.
Meeting Financial Needs With Home Equity Loans
Canyon View Credit Union is ready to help if you're considering a home equity loan. We guide you through the application process and offer competitive rates that suit your financial needs. Our team is committed to helping you make the most of your home's equity.
For more details or to start your application, contact us today through our Contact Us page, or call 801-481-8800 to speak with one of our experienced representatives. Let us assist
you in exploring the benefits of a home equity loan and securing a stronger financial future.
Loans are subject to approval and actual terms will depend on credit worthiness and equity position. See current rates and terms. For example, a $100,000 loan approved at 80% of value would have a minimum payment of $1,186.50 with a 7.49% APR on a 10-year term. The monthly obligation will be determined by the total loan amount at the time of closing and the term and interest rate of the loan. See our Loan Calculators for specific examples. Homeowner Insurance will be verified. Consult a tax advisor regarding the tax deductibility of interest related to your Home Equity Loan. Other restrictions may apply.