What is a HELOAN?
A HELOAN, or Home Equity Loan, is a type of second mortgage that utilizes your home equity as collateral and allows you to borrow against the portion of your home’s value that you own outright. You receive the loan amount as a lump sum at closing. HELOAN’s have fixed rates and the borrower pays down both principal and interest starting with the first payment.
Who is eligible for a HELOAN?
To qualify for a HELOAN, you must be a homeowner who has built up equity in your property. Equity is the difference between the value of your home and the amount of money that you own on your mortgage. In addition, you must income qualify for the loan and have a sufficient credit score.
HELOAN by M&M Mortgage
What are the benefits of a HELOAN?
Unlike HELOC’s, HELOAN’s have fixed interest rates, which provide stability and protection against rising interest rates. HELOAN payments remain the same throughout the duration of the loan term, making budgeting easier. Borrowers receive a lump sum of cash at closing, which is ideal for one-time, large expenses such as home renovations, debt consolidation, college tuition, or establishing a rainy day fund. Because the loans are secured by your home, HELOAN’s offer lower interest rates than unsecured options like personal loans or credit cards. HELOAN’s provide long, comfortable repayment timelines up to 30 years.
What are the requirements of a HELOAN?
The requirements of a HELOAN are similar to other types of mortgages. The lender will typically review your credit score, income, and the equity in your home. Some common HELOAN requirements are:
- A credit score of at least 620
- A debt to income ratio of less than 50%
- An appraisal or Automatic Valuation Model of the property
- A loan to value ratio of 80% or less
- Proof of qualifying income.
It is important to understand all of the requirements and benefits of a HELOAN before applying to ensure that it is the right product for you. Contact M&M Mortgage, LLC today to see if you qualify for a HELOAN.
