how long do you have to be in a home to get an equity loan?

lucky32September 12, 2007

We have been in ours for 2 years and our home actually cost us less to build than it's worth. We just need a "chunk" of money to do some things around here that need to be done, probably 15-20K would work for us. So any input would be great! thanks!

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patser

We signed all the paperwork for our equity line of credit on the same day as we signed the mortgage for purchasing the house. Start checking around now - you should be ready to go.

    Bookmark   September 12, 2007 at 5:54AM
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celticmoon

Time of ownership isn't really a factor, other than helping to demonstrate financial stability.

Really there are two issues: 1) the amount of equity in the house; and 2) your ability to repay whatever you borrow. Both of those figure into the lender's risk in handing you the money.

The first, equity, is the current value of your home (not what you paid) less your existing mortgage balance. Housing values may be heading up or down where you are and lenders are sensitive to that. Used to be easy to cash out 100% of your equity, but that has led to big problems in declining markets. A little tighter now out there on 'loan to value' (LTV). Which is probably a good thing.

Your ability to repay is assessed from your income, your other debt and your credit rating. Again, all the turmoil in the mortgage markets has led to tightening. The days of lending without reasonable documentation of income are hopefully over. Another good thing.

So long as you are not cutting it close on qualifying (income/debt/credit history) or equity (LTV), the mortgage 'crisis' shouldn't affect your equity loan. Just don't overextend yourselves based on equity that may decline.

Good luck.

    Bookmark   September 12, 2007 at 11:30AM
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lucky32

thanks! well my husband is very money cautious, he keeps me in check, so I'm sure we wouldn't do it unless we knew it would be better in the long run. I just want to get that nice chunk to get some left over stuff from building that we need to do around our home ... we are the kind of people who just need to DO stuff cause if we say oh we'll work on it here and there...well it never gets finish!

    Bookmark   September 13, 2007 at 1:16AM
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Jonesy

I would never, ever get an equity loan. I know it is a common thing these days, but I wanted our home paid for when my husband retired so we could live well on our income. We were out of debt except for one car payment. We had been saving so much of our income that when he retired, we felt rich with no bills and far more income than we needed to live.

    Bookmark   September 13, 2007 at 10:04PM
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