How do I qualify for a home equity loan line of credit?

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I need money for home improvements, and I also want to get my mortgage payment lower.

I bought this home in march 07, and I have made minor improvements, but the house needs improvements.

If there are any real estate pros out there with some good practical advice please expound on this topic.

Also, I have paid off some credit card debt since I bought the house, so I think my credit rating is better.

5 Comments
  1. Reply
    luckibuggi
    May 18, 2011 at 2:31 am

    don`t borrow save up never a lender nor a borrower be…

  2. Reply
    fifibonjour
    May 18, 2011 at 3:20 am

    Dont improve the house. Take that money and buy somebody elses house (they couldn’t make their mortgage payments) Make minor cosmetic changes if you have to. rent it and then sell it later.

    You are on the wrong side of the curve. Change that.

  3. Reply
    Serge M
    May 18, 2011 at 3:54 am

    You qualify for a home equity line of credit if your credit is good and if there is sufficient equity in your home. Since you just bought the home a few months ago, there may not be enough equity to get a loan. You don’t provide any information on the value of the house, the amount of your loan, and other facts, so you can’t expect a good answer.

    Your statement that you paid off some credit card debt implies that you still owe more credit card debt. That means that you are paying interest at high rates. Yet you want to go further into debt to make home improvements. Piling on more debt does not make much sense. You should first pay off all credit cards and then use them only to the extent you can pay them each month in full. Let some equity build up in your home, then ask your bank for a home equity loan.

  4. Reply
    alterfemego
    May 18, 2011 at 4:26 am

    Max my dear, you need to be talking with your current lender and a couple of other local lenders to see what programs they have that will fit your financial situation. It’s possible that now that you have paid off the CC debt, you could qualify for more money. By refinancing, you might be able to reduce your interest rate, thus reducing payment, but keep in mind, the chances of your appraisal coming in alot higher than when you purchased the home in March are pretty slim, so you equity position might not be what you expect. A second mortgage is probably what you will end up with. But again, talk to your current lender and a couple of others for the best program for you.

  5. Reply
    Hopeful Home Solutions
    May 18, 2011 at 4:33 am

    You really need to give a little more information in order to get the best answer: how much is your house worth today, how much is your remaining mortgage, what interest rate are you paying.

    If you have some equity, go for a Home Equity Line of Credit (HELOC). Shop the interest rate and the terms around from your mortgage company, your bank, and other banks. Most offer $ 0 in closing costs as long as you keep the HELOC open for 3 years. Basically whatever the line of credit is, you can tap into by writing a check at any time, pay some off, and then write another check at any time up to your credit line. Generally the interest you pay on the money is also tax deductible. Also, you only pay interest when and if you use the line of credit. It doesn’t cost you anything unless you tap into it, so you can also use it for temporary emergencies, and just keep it open even if you don’t need it at the moment. It shouldn’t cost you anything to leave the line of credit open but unused.

    An interest rate with good credit is around the Prime rate (currently 7.75), plus or minus 0.25 point.

    If you have a high interest rate and/or an adjustable rate mortgage on your regular mortgage and your house is worth the same or more than when you bought it (it might not be in a lot of markets right now), then instead of a HELOC you should just look to refinance to a lower interest rate. Make sure it’s a fixed rate. Then you can use the money you save to pay off any higher interest debts such as credit cards and then do some of the repairs to your home.

    Being that you want to get your mortgage payment lower, you should refinance first, and then get the HELOC after you refinance to do the repairs.

    Good luck.

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