Applying for a home equity loan may seem intimidating, but it doesn't have to be scary. Knowledge is power, and with a little research, you can feel confident as you start the home equity process.
What to consider before applying for a home equity loan:
1. Start the process early
2. Determine if you have enough equity in your home
|Market Value of Your Home||$100,000|
|80% of Market Value||$80,000|
|Available Home Equity||$30,000|
3. Ensure your finances are in order
You should evaluate your financial situation before applying for a home equity loan. Here are a few things to consider:
Your credit score and credit history
Your debt-to-income ratio – Your debt-to-income (DTI) ratio measures your ability to manage monthly payments and repay debts. DTI is calculated by dividing total recurring monthly debt (loan and credit card) payments by your gross monthly income. DTI is expressed as a percentage. At Texell, your DTI ratio should be 45% or less to qualify for a home equity loan.
Gather your financial documents – Having the necessary documents ready can help expedite the application process.
4. Complete a home equity application
Now it is time to complete your application. To finalize a home equity application, you will need:
Your Social Security card
A government-issued ID
Your credit union or bank statements
If applicable, your most recent mortgage statement
If self-employed, two years W2s
Tax returns for the past two years
Pay stubs for the last two months
Your homeowner's insurance
When you are ready to start your home equity loan, Texell's Home Loan Heroes are here to help. You can get more information and check rates on TexellHomeLoans.com, and when it’s time to get approved, our online process is the best in the business. If you have questions, we are happy to help at 888.922.3001.