Apply for HELOC Loans

What is HELOC Loan or Home Equity Line of Credit?

A HELOC loan is a second mortgage on your home that allows you to take a portion of your equity in cash. HELOC interest rates are variable and usually are a more affordable choice than credit cards and personal loans. In 2024, typical HELOC rates for well-qualified homeowners remain competitive to current mortgage rates

BD Nationwide Mortgage can help you shop and find premier second mortgage broker who offers HELOC’ loans, home equity lines of credit, home equity loans, home improvement loans, interest only 2nd mortgages, and home equity line of credit for people seeking prime interest rates for life.

Why Homeowners choose the Low Rate HELOC to Finance Home Improvements 

Consider taking out a low rate HELOC and keep the funds available for future construction, or utilize your home equity with cash out for home improvements, debt consolidation or investment purposes. The HELOC loan is a unique type of home equity loan, but unlike traditional loans it revolves like a credit card and can be very useful when managing all of the contractors and projects associated with home remodeling and construction.

HELOC’s are powerful financing vehicles that enable homeowners to access cash quicker and easier than ever. Once you set up a home equity account, you have the ability to draw against the equity in your home any time. It’s very helpful to have access to a flexible HELOC line of credit to use when you need it.

Low Rate Home Equity Lines for Quick Cash

Unlike the fixed rate home equity loans, the line of credit only charges you interest on the actual amount of money you access. HELOC’s are a great hedge against depreciation, because your line of credit stays the same whether your home value goes up or down.

So, in a declining home value market, it is important to set up your home equity account when your home value is peaking so you qualify for the maximum credit line. Call the home equity line experts at BD Nationwide to learn how easy it is to set up a home equity account today.

If you have low fico scores, consider a bad credit home equity loan or HELOC.

Variable Rate HELOC Equity Credit Line

• Turn Home Equity into Construction
• Second Mortgages Lines
• Variable Rate Line of credit
• Cash Out for Debt Consolidation
• Home Improvement Credit Lines
• Low Interest Only Payments
• No Mortgage Insurance Required!
• Credit Line with Prime Rates for Life

Learn more about Home Equity Loans

Find the Best HELOC Lenders with loan officers that understand the power of home equity lines of credit and flexibility of HELOCS.

If you want to have access to money, but you’re not sure how much you need, or when you will actually need it then, a home equity line of credit is the second mortgage for you. These secured loans can be a powerful source of credit. Interest is only charged on the amount of funds you actually access.

BD Nationwide offers a path for consumers to review many competitive home equity lines of credit to 100% combined loan to value (cltv). Every now and then we will find lenders that offer home equity lines up to 125% combined loan to value.

This loan is for people who need flexibility and do not want to borrow a fixed lump sum, like a home equity loan.

Start Saving & Apply Online with the Best HELOC Lenders

Loan Highlights

• Variable Rate Second Mortgage
• Up to 100% CLTV
• First Time Home-buyers OK
• HELOC Refinance

Credit Rating: Fair, Good or Excellent.
Key Qualifiers: Property value, credit score,
Income Documentation: Full Doc or No stated Income.

HELOC Qualifications for 2024 (What Do I Need to Qualify for a Home Equity Line of Credit?) 

Many homeowners have large expenses that they’d like to borrow money to pay for. Fortunately, many property owners have seen large equity increases in their properties in the last several years.

If you have at least 20% equity in your property, getting a home equity line of credit or HELOC could be the ticket for paying for home renovations, paying down debt, or other large expenses.

Learn everything you need to know about HELOC qualifications for 2024 below. Have questions or want to apply for a HELOC? Our loan professionals can help you now determine your eligibility with 2024 HELOC requirements. 

 

How Does a HELOC Loan Work?

• The home equity line of credit is a variable-rate financial product enabling homeowners to leverage the equity in their property.
• HELOC loans operate as a revolving line of credit, similar to a credit card. During the designated HELOC draw period, you can borrow funds as needed, repay them, and then borrow again.
• While HELOCs are frequently utilized for home remolding or covering the down-payment on a second home, the funds can be allocated to various expenses as per the borrower’s discretion.

   

  Today’s HELOC rates for well-qualified homeowners range between 8% to 10%.

  This rate is easily half of what you may pay on credit cards.

  The interest rate on a HELOC is variable, so if you don’t mind additional risk, a HELOC can be a good choice.

  If you prefer a fixed rate, a home equity loan may be better.

How to Qualify For a HELOC In 2024

Every lender has its own lending standards for HELOCs; some are stricter than others. Below are the typical qualifications for a HELOC in 2024, but your terms could be more or less stringent:

• Minimum credit score between 640 and 680
• Maximum loan to value: 85% (you need to have at least 15% or 20% equity in the home)
• Steady employment and income
• Debt-to-income ratio should be 43% or lower

Credit Scores For HELOC Loans

Most lenders for HELOCs want to see at least a 680 credit score, but a few may offer loans at 620. However, the best rates are at 700 and above. If you have a credit score in the low 600s, it may be harder to be approved, and you may need more equity and other qualifications to be approved. Or, you may only be approved to borrow a lower amount of equity than you wanted. If you have a fico score below 600, we suggest you consider a bad credit HELOC that may be an option if you have compensating factors.

How Much Equity Is Needed for a HELOC?

Qualifying for a HELOC line of credit requires you to have enough equity so you can borrow while still leaving some in the property. Lenders no longer will allow owners to borrow 100% of their equity because of the high risk. You typically can only borrow up to 85% of the home’s equity, so you may need 20% or more equity in the home to qualify.

Lenders may allow you to borrow 85% of the home’s value, when the first and second mortgages are combined.

Suppose your home is worth $400,000 and you owe $250,000 on the first mortgage. If the maximum LTV is 85%, the most you can borrow is $340,000 (85% of $400k). With an existing $250,000 mortgage, the most you can borrow is $90,000.

A few lenders will allow the homeowner to borrow 90% and others may top out at 80%. So, you should ask what the lender’s standards are when you shop for a HELOC.

Keep in mind that the equity in the home is based on the property’s current appraised value. So, you don’t know how much you can borrow for certain until you have a new appraisal. But if you have a rough idea what the home is worth by checking  Zillow or Redfin, you can approximate the equity that may be available.

What Are Income Requirements For a HELOC?

With any mortgage application, the lender will need to check that you have the means to make the monthly payments, so they will verify income. You usually need a reliable source of income to qualify for a HELOC. But they also will look at your debts and how much disposable income is available.

This is done through checking your debt-to-income ratio, also called DTI.

DTI standards are different with every lender. Some want a DTI of no more than 36%, while others are fine with 43% or lower. There may be a few lenders that let you borrow with 50% DTI, but with a higher rate.

To know your DTI, divide your monthly debt payments by your gross monthly income. You should include car payments, student loans, mortgages, credit cards, alimony, and child support. So, if your gross income is $6,000 and your debt payments are $2,000, your DTI is 33%.

How Long Does it Take to Be Approved For A HELOC?

It can take between two weeks and six weeks to be approved, from the time you apply until you get the money. But how long closing is varies widely by lender.

It most depends on how complex your application is and how busy the lender is.

If you have self-employment income or an otherwise more complex application, it can extend the loan closing date.

Also, you can get faster response by having all of the necessary financial documentation ready at the start of the process.

If you give the lender your financials and tax statements right away, the entire approval process will speed up.

If you are looking to get a HELOC on a rental property the approval process may take a few more days.

What Do You Need For A HELOC Approval In 2024?

When you apply for a HELOC loan, you will need similar documentation and information as you did for your first mortgage, such as:

• Personal information: Name, current address, and past addresses for last 24 months.
• Job: Paystubs and employer for last two years.
• Value of home: You can estimate the home value with Zillow or Redfin for application purposes. The home will be appraised later.
• Current mortgage information: Give them your current mortgage statement so the lender sees your current payment and balance.
• Income: You will need two years of tax returns for all borrowers.
• Asset information: Give statements for your bank accounts and all investment accounts and retirement funds.
• Debts: The lender will see most of your debt obligations on your credit report.

You also may have to provide additional information if your application is unusual. If you are self-employed or have unstable income, you may need to offer a profit and loss statement for the last year.

Can You Refinance a HELOC?

Do you currently have a home equity line of credit (HELOC) or are thinking about getting one? Many homeowners have taken advantage of the rising equity in their properties by taking out a HELOC for the money they need.

Whether you want to renovate your home, pay down debt, or cover college tuition, a HELOC can get you the thousands of dollars you need quickly.

In this article, learn about whether you can refinance your HELOC and other important loan information. If you’re ready to get a HELOC or refinance, our loan professionals have you covered!

Benefits if Refinancing HELOC Loans

Yes, most people can refinance their home equity line of credit if they want better terms, such as a lower rate or higher loan amount. Before you shop for another loan, check with your current lender if you can refinance your HELOC; they may help you refinance the loan with fewer fees, such as a waived application fee.

Common eligibility requirements to refinance a HELOC are:

• Home equity: You generally need to have at least 15% or 20% equity to get a HELOC. The FTC states that you can borrow up to 85% of the home’s value, minus what you owe on the first mortgage. But some lenders may only allow you to take out 80%.

• Debt-to-income ratio: DTI is all monthly payment for your debts, divided by your gross monthly income. Many HELOC lenders require borrowers to have no higher than a 43% DTI, but lower may qualify you for a lower rate.

• Credit history: The lender will review your credit history and credit score. Generally, you should have at least a 640 credit score to qualify, but a 680 score is better. People with 700 or higher scores usually get the best interest rates.

• Home value: You may need to have a new home appraisal to refinance your HELOC, which could cost up to $400. However, some lenders may just do a drive-by appraisal, taking exterior photos to get what they need.

Why Refinance a Home Equity Line of Credit

There are several reasons homeowners think about refinancing their HELOC:

• Lower payments: You may save money by refinancing a current HELOC to a lower rate:
• More cash: If the home value has gone up or your equity has risen, you may qualify for a bigger loan.
• Delay making payments on loan principal: Doing a refinance on a HELOC will restart the draw period, meaning you pay only interest every month.

There are good reasons to refinance a HELOC in certain situations. So, speak to one of our loan professionals today to find out if you can get a better HELOC. Keep in mind that HELOC rates may drop in 2024, so now is the time to consider refinancing a home equity line of credit.

HELOCs and Home Appraisals

Most lenders require a current home appraisal. They want to be sure what the home is worth in case you default on the loan; this ensures that they can get most of their money back. They also want to know its value so they know how much equity to approve you for.

Fortunately, many HELOC appraisals are done online today by relying on comps in your area. However, some lenders may require you to have an appraiser do a walk-through for a traditional appraisal.

Most lenders will charge for the appraisal but we suggest you request a no closing cost home equity loan. There are still lenders offering no annual fee and no cost HELOCs to a select group of borrowers.

Being Turned Down For A HELOC

You could be turned down for a HELOC for several reasons. You may have too low of a credit score, too little equity in the property, or your DTI is too high. You can improve your chances of approval by raising your credit score and reducing debt before you apply.

Should I Choose a HELOC or a Home Equity Loan?

The HELOC is a Home Equity Line of Credit which works as a flexible, revolving line of credit similar to a credit card. Borrowers can draw funds as needed, repay them, and access the credit again within a specified term set by the lender. This HELOC draw period, typically lasting five to 10 years, is succeeded by a repayment phase of 10 to 20 years when further draws are restricted. The HELOC loan enables the borrowers to make an interest only payment which is great for cash flow. Although HELOCs commonly come with variable interest rates, some lenders offer fixed-rate alternatives. Learn more on the specifics so you can choose between a home equity loan, HELOC and cash out refinance.

• Only Pay Interest On What You Borrow
• Low Interest Only Payment Loan
• Write Checks with HELOC Loan

On the other hand, home equity loans provide borrowers with a lump-sum payment, which is repaid over a predetermined period, typically ranging from 15 to 30 years, at a fixed interest rate. The monthly payment amount and interest rate remain constant throughout the loan’s lifespan. If the underlying property is sold, the entire loan amount must be settled.

• Fixed Monthly Payments
• Hedge Against Inflation

The interest on home equity loans and lines of credit might be eligible for deduction if the borrowed funds are utilized to purchase, construct, or significantly enhance the secured home. To determine eligibility, consult with a tax professional.

A HELOC lender can assist in evaluating the differences between a HELOC and home equity loan. They will assess your circumstances and guide you through the pros and cons of HELOCs and home equity loans.

They will also address alternative funding choices, including a cash-out refinance, fixed 2nd mortgage, a personal loan, securities-based line of credit or an interest only home equity line of credit. Read the facts on home equity interest deductions from the IRS website.

Summary on HELOC Loan Opportunities

A HELOC is a great choice for getting funds in the current economic environment. Interest rates are higher than three years ago, but a HELOC has a lower, variable rate than any secured loan. Speak to one of our lending professionals today to see if you qualify.