What You Need to Know About a Home Equity Loan

If you own your home, you might, at some point think about taking out a home equity loan. In Monroe, financial institutions such as Century Next Bank, offer this type of service. Before you decide to arrange for this type of loan, you should understand as much as you can about it.

What Are Home Equity Loans?

A home equity loan also goes by several other names. These include:

  • Equity loan
  • Home equity installment loan

The amount you can borrow relies on the equity. You receive this money based on the existing difference between what your home or other structure is worth in today’s market and the amount you have paid on your mortgage or, conversely, the amount of the mortgage still due. However, whether you obtain a loan is not solely based on this combined loan-to-value (CLTV). Other criteria focus on:

  • Credit score
  • Debt-to-income ratio

The financial institution will also request a detailed and authenticated indication of your competence to repay this fixed rate loan.

Choosing Home Equity Loans

If you are considering what a home equity loan can do for you, talk to a professional first. They can clarify whether it is the right route to take. Century Next Bank is a Member FDIC and Equal Housing Lender.