Not all lenders offer home equity loans or HELOCs. And the ones that do typically limit the amount you can borrow to only a portion of your home’s equity.
Let’s look again at a $300,000 home with a $200,000 mortgage. The owner of this home would have $100,000 in home equity.
Why such a small amount? Because mortgage lenders enforce loan-to-value requirements, which limit the amount of your home’s value that can be tied up in mortgages.
Calculating your maximum home equity loan amount
Loan-to-value (LTV) calculations can be confusing because they apply to both mortgage loans – your existing mortgage as well as the new home equity loan or HELOC.
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