Finding a 125% Home Equity Loan

A home equity loan is distributed in a loan to value ratio based on your asset. This loan to value ratio will go up or down depending on how the lender values your property. It is more common to get a loan rate under 100% than over it. However, if the right circumstances are present, you may be able to secure a 125% home equity loan.

Strong Financial Portfolio

A lender may be willing to extend you a greater home equity loan if you have other assets on your portfolio of great worth. Even though you do not have to place these other assets as collateral, they will serve as assurance to the lender. Home equity lenders are subordinate to your primary mortgage holder. In a bankruptcy, they will be the last to recover. This is a primary concern when the lender feels your equity will not be sufficient to cover all your current debts. If the lender is fairly certain they will recover the funds in a bankruptcy case, then they may lend you far more than the average borrower. Stocks, other homes, businesses and automobiles may all be used to boost your financial portfolio.

Plans Made for Home Improvement

You may be planning a change to your home that will significantly raise its value. In fact, one of the primary reasons people seek home equity loans is to make improvements to the property. You can submit these plans to a potential lender or real estate appraiser. If the professional believes your changes will significantly contribute value to your home, you may find your lender will loan you money based on this future value. Since it is challenging to approximate the value added to a home through improvements, the more concrete your plans, the better your chances.

Very High Income

You can increase the limits on most loans if you have a high income. Your lender will want to see this income is stable over time and not the result of a recent new job or promotion. If you have a record of lengthy employment with consistently improving income, this will provide some stability on your loan application. Business owners, salespeople and independent contractors will have a harder time proving income stability. In this situation, you can submit tax schedules from years past. Your bank may also provide a statement regarding the average balances of your checking and savings accounts.

Market Performance is Favorable

There are external factors that will affect your loan as much as your individual application. The general liquidity of the credit market at any given time affects each loan distributed. During a booming economy, credit is easier to come by, and high loan to value ratios are more likely. In a slow economy, it would be hard for the lender to quickly seize and liquidate the asset for cash. As such, the loan to value ratios tend to be a little lower. If you are looking for a 125% home equity loan, you will need to search in a favorable market.


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