Things you should know before a 125% Home Equity Loan
A 125% home equity loan is a loan that exceeds the value of the property that it is borrowed against. In the case of most home equity loans, a person can only borrow against a percentage of a home’s total market value. For instance, even a person has completely paid off the mortgage on a home worth $200,000 he will only be able to take out a loan for a set limit (usually 80 percent to 90 percent) of the $200,000. If that same homeowner secured a 125 home equity loan, he would be able to borrow against $250,000, or 125 percent of the house’s property value. In most cases, a person’s home is his greatest financial asset. Having the ability to borrow against 125 percent gives a person the chance to receive a loan that matches, or even far exceeds his net worth. The loan money is often substantial enough to help the borrower pay off other loans, entirely refurbish his home, or take care of the majority of his other debts.
Getting Approval for a 125% Home Equity Loan
Home equity loans are highly sought after by many people. However, a large portion of those who apply will notqualify for a loan, or will not be able to make monthly payments on loans they are approved for. Credit history plays a major part in the approval process, and a person’s annual income is usually considered, as well.
An Important Caveat: Getting approval for a 125% loan is even more difficult than normal. Monthly payments are generally high, and a loan of this magnitude can actually put the lender at risk. Before applying for a 125% loan, a person should have a firm understanding of his credit score and his monthly obligations.
“I still want to pursue a 125% loan–what’s the best strategy?”
Taking the time to work with a professional credit service can make applying for a 125 loan much easier, and it might even increase a person’s chance of being approved. The right professional help will make all the difference when a homeowner is treading in unfamiliar financial territory. There is an enormous number of loan brokers available to select from–doing a little research into one’s options now will make the path ahead much simpler.