A home equity loan is a loan secured by your home's equity. Because the home is likely to be a consumer's largest asset, many homeowners use their equity only for major items such as education, home improvements, or medical bills and not for day-to-day expenses.
For borrowers with bad credit, home equity loans are used to reorganized debt obligations, lower monthly payments, and even save a home from foreclosure...in which case a home owner would lose their built up equity.
Our maximum home equity loan is determined by taking the LTV (loan-to-value ratio) you are approved for and multiplying it by the appraised value of your home. Then deduct the balance owed to all senior mortgage liens remaining after the home equity loan closes. For example:
| Appraised value of home |
$400,000 |
| Max LTV Percentage |
x70% |
| Lendable equity |
$280,000 |
| Less remaining mortgage balance |
-$200,000 |
| Potential home equity loan amount |
$80,000 |
In determining your actual maximum loan amount, we also consider your ability to repay, by looking at your income, debts, and other financial obligations. We don't want togive you a loan you can't afford.
Our equity loans are not lines of credit where you draw upon a credit line at a later date. Lafayette Financial does not offer lines of credit. Only equity loans (2nd and 3rd mortgages) where all funds are dibursed at close of escrow.
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