Home Equity Loans & Line of Credit

Upon reviewing your income sources and documents, some lenders may take into account your total available credit to assess your creditworthiness when considering granting you additional loans or lines of credit. This means that having a substantial home equity line of credit, even if you do not carry any balance on your accounts, can make it harder for you to obtain other loans.

Instead of seeking approval for the highest possible credit line, it's better to assess and forecast precisely what you need the credit line for and set up the loan or line of credit accordingly for that amount. By doing so, you'll avoid the potential negative impact of having too much available credit and will make sure that you borrow only what you require.

Usually, the interest on a home equity loan or line of credit can be tax deductible, making it a popular choice over other loan options, such as credit cards. However, it's important to note that this may not always be the case. Therefore, instead of assuming that you will receive a tax deduction, it's highly recommended that you consult with a qualified tax advisor to understand how obtaining a home equity loan or HELOC can affect your tax situation.

• Copies of W-2s or tax returns for the previous 2 years
• If you own rental units, provide the most recent rental agreement and tax returns for previous 2 years
• Your last 3 bank statements along with the most recent statements for any mutual funds, IRA/401(k), or stock accounts
• Settlement agreement and divorce decree (if applicable).
• Non-U.S. citizens must present their Green Card or H-1 or L-1 visa.
• Recent paycheck stubs and proof of any other income, like tips, Social Security payments
• Your current mortgage note

These documents may not be all-inclusive, but by having these on hand, you will expedite the application.

Home equity lines of credit usually have a variable interest rate, rather than a fixed rate. This variable rate is determined by a publicly accessible index, such as the US Treasury Bill Rate or the Prime Rate, plus an added margin. It's crucial to comprehend the index used as the basis for the interest rate on your HELOC, the frequency of its fluctuations, and its performance over the last few years. Sometimes, lenders may offer an "introductory rate" that is lower than usual, but this rate is usually temporary and short-lived.

As home equity lines of credit are secured against your home, they are mandated by law to have a maximum interest rate limit over the course of the credit line. Additionally, some lenders may safeguard themselves against interest rate reductions when the index declines. It's crucial to carefully review the specific details of your plan to understand these nuances.

For approval, we must verify your credit, employment history, assets, property value, and anything else required by your particular circumstances.