How do I leverage my Home's Equity?

Getting a home-equity loan or line of credit is much easier than refinancing or taking out a mortgage. It also takes less time, and usually costs less as well.

Before you get a home equity loan, it's important that you're as comfortable as possible with the process.

1. Prepare for the refinance process.

You may find that gathering some of the information below is helpful before applying for a home equity loan. The list may change depending on the type of loan and the lender, but before you close on your mortgage, many lenders will want to see copies of the following:

• The settlement statement from your current mortgage
• Proof of property and hazard insurance
• Income documentation, such as W2s for the past two years and pay stubs for the past 30 days
• Other documents that pertain to your specific situation (e.g., child support or alimony payments, a divorce decree, or pension papers)
  
  

2. Have your home appraised.

A home appraisal is an important part of the home equity loan process. The home appraisal provides the current market value of your home, which plays a critical role in determining your loan amount. Before your loan can be processed, an appraiser will come to your home and assess its market value. This process takes only a few minutes and involves estimating your home's value based upon:

• General condition and age of the home
• Size of home and property
• Location of the home
• How long you have been in your home
• Features of the home (i.e., 3 bedrooms, 2 baths, etc.)
• Major structural improvements, such as additions and remodeled rooms
• Sought-after architectural features, such as skylights and fireplaces
• Comparable properties in the neighborhood that have sold recently and their sales prices (usually the most important factor in determining the value of a home)
  
  

3. Researching and Applying for a loan

Your maximum loan amount/credit limit will be based on your current income, your credit history, your property's appraised value, and the amount still owed on your mortgage. Typically, you can borrow up to 80% of your home's appraised value, minus the balance on your mortgage.

You can protect yourself against paying inflated rates on home-equity loans if you check the rates at a number of lenders before signing a loan, especially if you are looking for a loan while under financial pressures.

4. Prepare for the closing

Once you are approved for the loan you will need to agree to a closing date and location, and review the closing documentation prepared by your Mortgage Advisor.

5. Attend the closing

• This meeting generally takes less than one hour. You will need to provide any outstanding documentation and sign your loan papers. If there are any closing costs that are your responsibility outside of the total loan amount, be sure to bring a certified or cashier's check.
• If you're receiving cash at closing, this is when your check will be released.
  
  

6. Congratulations! Now you can relax and enjoy the benefits of your new loan.

At Allpointe Mortgage, we pride ourselves in facilitating the refinancing process and providing our customers with a loan program customized to their specific circumstances.

An Allpointe Mortgage Advisor would be happy to tell you more about the benefits of home-equity borrowing. Call us now at 866-255-3535 to find out more about different loans that are available.