Home Improvement Fever

Put Your Equity to Work for You

You CAN Tackle That
Home Improvement Project

Thinking of upgrading your kitchen?
Remodeling the den for the big screen TV?
Adding a deck to your patio?

Investing in your own home not only makes it more enjoyable for you family, but it also adds value if you should ever decide to sell.

If you haven't quite saved enough to complete your home improvement project, consider a home equity loan, a home equity line of credit, or a cash-out refinance of your current home loan.

Home Equity Loan: The Basics

Over the years you have accumulated equity in your home. Equity is the difference between the fair market value of your property and the amount you still owe on the mortgage. A lender will allow you to borrow money against a portion of your equity.

For most lenders, you can typically borrow 75% – 80% of the equity in your home. This is your home's current value minus what remains (you owe) on your first mortgage. This is called the loan-to-value ratio (LTV).

Calculate How Much You Can Borrow
Current Home Value$135,000
Principal due on 1st mortgage($90,000)
Principal due on 2nd mortgage or line of credit– 0 –
Equity in your home$45,000
 
Loan-to-Value Ratio (LTV)Amount Available to Borrow
90%$40,500
80%$36,000
75%$33,750
Read more about the The Bigger Picture article…