The Home Buyer's Korner

Information presented should be used for educational purposes only.

June 7th, 2015

Guy looking up in color

GREATER KAILUA HAWAII

The Home Buyer’s Korner

Google+ RE Community

Google+ Mortgage Lender Community

Google+ General Contractor Communities

Home Equity Loan or HELOC

images (3)After being nearly shut down with the collapse of housing prices during the Great Recession, lenders are once again offering attractive second lien/home equity loans against the value of your home.

While still only a fraction of its pre-crash levels—the latest estimates for home-equity lending is estimated at $60 billion, compared with its peak of $430 billion in 2006. Rising home values in recent years are putting more equity in borrowers’ hands, while a gradually stabilizing economy is giving lenders more confidence to lend.

If you’re thinking about securing one, here are a few other things you’ll need to know.

You’ll need equity, of course. Equity is the percentage of a home’s value, less any current mortgage or liens. So, if your home is valued at $650,000 and you still owe $570,000 on your mortgage, you have $130,000 in equity, or 20 percent and more commonly known as a loan-to-value ratio.

Generally speaking, lenders today want you to have at least an 80 percent loan-to-value remaining after the home-equity loan. That means you’ll need to own more than 20 percent in equity before most lenders are willing to offer a home equity/second lien mortgage.

There are two main types of home-equity loans. The first is the standard home-equity loan, where you borrow a single lump sum. The second is a home equity line of credit, or HELOC, where the lender authorizes you to borrow smaller sums as needed, up to a certain fixed amount. The type you choose depends on why you need the money.

If you’re looking at a single, major expense—such as replacing the roof on your home—a standard home-equity loan is usually the best way to go. You can get these in either as fixed or adjustable-rate terms and repaid over a predetermined length of time, generally they come in 15, 20, 25 and even 30 year amortization schedules. You’ll also be required to pay some closing costs, like an appraisal fee, doc preparation fees and title search, but they’re much less than you would see on a first lien mortgage.

If you need to access various amounts of money over time, such as if you’re doing a home improvement project over a few months, for example, or to support a small business you’re starting—a home equity line of credit (HELOC) may be more suitable to your needs.

With a HELOC, you’re given a predetermined limit to borrow against as you wish. You only pay interest on what you actually borrow and you don’t have to begin repaying the loan until a certain period of time, known as the draw, which is typically after 10 years has elapsed. With HELOC’s there are seldom any closing costs, although you may be required to pay an annual fee. Interest rates are offered as adjustable rate terms and you don’t get the predictability offered as with a fixed-rate home-equity loan, though many lenders often conversion option to a fixed rate once the draw period ends.

Home Equity loans aren’t particularly useful for borrowing small amounts of money. Lenders typically don’t want to be bothered with making small loans and $10,000 is about the smallest you can get, but more commonly lenders will required a minimum of $25,000.

If you don’t need quite that much, opt for a HELOC and only borrow what you need. Remember however, you still may be charged an annual fee for the duration of the draw period.

Even if you plan to use only a fraction of your line of credit, say $5,000 out of a $20,000 HELOC, you’ll still need to have enough equity in your home to cover the full amount. So if the smallest home-equity loan or line of credit your lender will allow is $20,000, you’ll need to have at least $20,000 in home equity over and above the 20 percent equity you’ll need left after taking out the loan.

It’s easy to forget sometimes, but a home-equity loan or line of credit is a type of mortgage, just like the primary home loan you used to fund the purchase of your home. And as a mortgage, it offers certain advantages and disadvantages.

One of the advantages is that the interest you pay is usually tax-deductible for those who itemize deductions, the same as regular mortgage interest. Federal tax law allows you to deduct mortgage interest on up to $100,000 in home equity debt or $50,000 apiece for married persons filing separately. There are certain limitations though, so check with a tax adviser to determine your own eligibility.

Additionally, because it is a mortgage secured by your home, the rates tend to be lower than you’d pay on credit cards or other unsecured loans. They do tend to be somewhat higher than what you’d currently pay for a full mortgage, however.

Remember that you’re borrowing against your home and you’re putting your home at risk if you fail to make the payments, just like a first lien mortgage. The difference is that in a foreclosure, the primary mortgage lender is paid off first, and then the home-equity lender is paid off out of whatever is left. So, you want to treat a home-equity loan with the same care you do with first lien mortgage.

VISIT OUR GREATER KAILUA AREA

HOMES FOR SALE LISTINGS

Livingston Homes for Sale

FIND HOMES THROUGHOUT KAILUA HAWAII

HUD FORECLOSED HOMES IN & AROUND THE GREATER KAILUA HI AREA

USDA FORECLOSED HOMES IN & AROUND THE GREATER KAILUA HI AREA

FNMA HOMEPATH FORECLOSED HOMES IN & AROUND KAILUA HI

FIND MORE FORECLOSURES IN & AROUND KAILUA HI

HAWAII HOME OWNERSHIP TOOLS

Your Home Purchasing or Refinancing & Renovation Tools,

Home Improvements, Home Renovations,

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase.

Here are just a few of the home improvements

you might consider with any Home Renovation loan

Repair or replace a roof

Install, replace or repair gutters and downspouts

Replace, repair or upgrade your HVAC system

Repair or replace plumbing

Install, repair or replace electrical systems

Kitchen remodeling (including the purchase and installation of appliances)

Bathroom remodeling, Full interior painting, Total exterior painting

Repair or replace a septic system and/or well

Disability access (wheelchair ramp, elevator, widen doorways)

Build, repair or replace deck, patio or porch

Basement waterproofing and finishing

Abatement/Stabilization of lead-based paint hazards

Replace old windows, Room additions, Finish an attic

Add a second story to your home

Replace a termite damaged sill plate (a water-damaged sill plate also)

Possible landscaping items such as correction of grading & drainage problems,

tree removal, repair a driveway and sidewalks

FHA 203K

Your Home Purchasing or Refinancing & Renovation Tool

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

FANNIE MAE HOMESTYLE

The Conventional Alternative to FHA 203K

Great for Real Estate Investors and Second Home Renovations

Mortgage Loan Officers, Real Estate Agents & General Contractors

are ready to assist you with your home purchase

USDA RURAL DEVELOPMENT

Up to $10K for Home Improvements, Renovations or a Simple Remodel

Mortgage Loan Officers, Real Estate Agents & General Contractors are ready to assist you

A SIMPLE HOME SHOPPING INSPECTION TOOL

Organizing your home shopping experience affords a wise decision-making process.

This simple home inspection tool makes your ultimate buying decision a smart one.

To print this document click on “Open in New Window” located at the lower right corner;

click on “File”; then click on “Print”. In the center of the screen you will

have the option to “Create A Printable PDF of the Presentation”.

START YOUR PATH TO HOME OWNERSHIP TODAY

FNMA HomeStyle FNMA My Community Mortgage FHA One-Time Close Construction Portfolio or VA home loan Homes for Sale REO Short Sales FNMA HomePath Properties HUD Homes USDA Homes Condominiums Co-OpsTown homes Manufactured Homes Modular Homes Mobile Homes Log Homes Second Homes Investment Property 2-4 Family Custom Home Builders Custom Built Homes Luxury Homes General Contractors Home Improvement Experts Kitchen & Bathroom Renovations Real Estate Brokers & Agents Mortgage Lenders Federal Credit Unions Community Bankers Real Estate Listings Jumbo Investor Hard Money HARP HECM Equity Zero 3% 3.5% Portfolio Non-Warrantable Down Payment Assistance Keolu Hills Lanikai Maunawili Pohakupu Waimanalo Waimanalo Beach Aikahi-Kaimalino Coconut Grove-Kalama Country Club Knolls Enchanted Lake Enchanted Lakes Hillcrest Kailua- Kawainui Vista Kalaheo Kalaheo Hillside Kukanono Kuulei Lanikai Olomana Oneawa Canal Neighbors Pohakupu Aikahi-Park Beachside Bluestone Kaiilua Bluffs Kailua Estates Kailua Town Kaopa Kawailoa Keolu Hills Kukilakila Kuulei Tract Maunawili Kaluamoo St Kaluli St Manulani St KAM HWY Kamahele Pl Kamahele St Panekai Pl Kamani Kai Pl Kaikaina St Paumakua Pl Kina Srtreet Kina St Kanaha St KANAPUU KANAPUU DR Kanapuu Pl Paulele St Kaneapu Pl Aleka Pl Kaneohe Bay Dr Kaneohe Bay Dr KANEOHE BAY DR Hoolea Pl Paokano Loop Paokano Pl Paopua Loop Paopua Pl Hoopuni Dr Paumakua Pl Paumakua Way Papalani St Hui St Hooulu St Kapaa St Aukele St Aulepe St Aulike St Aulima Loop AULOA RD Aumoe Rd Aunauna St Aupapaohe St Aupula Pl Aupupu Pl Aupupu St Mowai St Aulike Street Nowela Pl Pokole Way Uilama St Paakiki Pl Paako St Haokea Dr Humuula Pl Humuula St Humuwili Pl Noninui Pl Ulualana Pl Uluamahi Pl Ulueki Pl Ulueo St Uluhaku Pl Uluhaku St Uluhala Pl Uluhala St Uluhao Pl Uluhao St Ulukahiki St Ulukanu St Ulukou St Ululani St Ulumalu St Ulumanu Dr Ulumawao St Ulumu St Ulunahele St Uluniu St Uluoa St Uluopihi Loop ULUPA Ulupa St Ulupaina St Ulupalakua St Ulupii Pl Ulupii St Ulupuni St Holoholo St. Holoholo Hale Kainalu Dr Kalaheo Ave Kalaheo Ave Pouli Rd KAHAIAKA Kalaheo Ave Kailua Hi MOKAPU RD MOKAPU ROAD KMCAS Dune Cir Hepaki Pl Nunu St Alihi Pl White Sands Pl Makalii Pl POMAHINA PL Makawao St Koohoo Pl Kooku Pl HALELA PL Halela St Makua St Lanipo Dr Wilikoki Pl Maleko St Lihiwai Rd Liku St HALIA ST Halia St Kaulani Way Kaumana Pl Auwai St Auwaiku St Auwina Pl Auwina St Auwinala Rd Olomana St OLOMANA ST KAIL Kawailoa Rd Kawailoa Rd Kawainui St Old Kalanianaole Rd Luika Pl Keolu Dr Aikahi Loop Aikahi Pl Aikane Pl Aikane St Aikapa Pl Aikapa St Pahumele Pl Pahumele Way Lekeona St Lapa Pl Aimikana St Ainoni St HAHANI ST Aoloa Pl Aoloa St 641 Auwina St Aiokoa St Namala Pl Nanaloko Pl Wanaao Pl Wanaao Rd Nanawale Pl Nanawale Way Omao St MOKAPU BLVD AKUMU ST Lorange Pl Makalii Pl Kaneapu Kealahou Pl Lunaai Pl Lunaai St Lunaanela Pl Lunaanela St Lunaapono Pl Lunaawa Pl Lunahai Pl Lunahana Pl Lunahaneli Pl Lunahelu Pl Lunahelu St Lunahooia Pl Lunahooko Pl Keaniani Pl Keaniani St NAPUAHANI RD Laiki Pl Kuaaina Way Kuailima Dr Maunawili Cir Maunawili Loop Maunawili Rd Kupau St Kuau St Nanialii St Nanialii St Molo St Ponopono Pl Palapu St Akipola St Paako St Palawiki St Akaakaawa St Akaakoa Pl Akaakoa St Akahai St Akahele Pl Akaiki St Akake Pl Akake Way Akaki Way Akalani Loop Kukana Pl Akalani Pl Kukana Way Akalei Pl Akamai Pl Akamai Pl Akamai St Akanahe Pl Akea Pl Akeke Pl Akekeke Pl Akele St MALUNIU Maluniu Ave MALUNIU ST Holoholo St Akiahala Pl Akiahala St Akialoa Pl Akialoa Way Akiikii Pl Pilipu Pl Onaona Pl Apokula Pl Apokula St Kuloaa Pl Akiohala Pl Mapuana Pl Akiohala St AKIPOHE PL Akipohe St Akipola St Mapuana St Akiu Pl Old Mokapu Rd Akoakoa Pl Akoakoa St Hauoli St Halula Pl Palione Pl Akuila Pl Akuleana Pl Akumu Pl AKUMU ST Akupa Pl Akupa St Mookua St Kupau Pl KUPAU ST Hamakua Dr Hamakua Pl Poo Pl Oneawa Kai Pl Oneawa Pl Oneawa St Manae St Kuuala St Kuuhale St Kuuhoa Pl Kuukama St Kuulei Rd Kuumele Pl Kuuna Pl Kuuna St Kuupua St Poopoo Pl Aalapapa Dr Onekea Dr Kehaulani Dr Wailepo Place Onioni St Wailepo Pl Wailepo St Lopaka Pl Lopaka Way Hinano Way Alahaki St Kailuana Pl Alala Pl Alala Rd Kipuka Pl Pinana St Mei Pl Ilimalia Loop Kelewina Pl Kelewina St Ohana St Puako Way Aloha Oe Dr Ohiki Pl Poopoo Pl Kuulei Road Main House Iopono Loop Pueohala Pl Alahaki St Mahealani Pl Iana Pl Iana St Mahiloa Pl Lala Pl LALE ST Lale St Lama Pl Kihapai Pl Kihapai St Aoloa Pl Pukoa St Kika Pl Kika St Hekili St Kalaheo Ave Hele St Tbd Lopaka Way Mokapu Rd OKO ST Akipola street Popoia Rd Hualani St Punaa St Punaa St Punana Loop Manono St Ka Awakea Pl Ka Awakea Rd Kiukee Pl Punua Pl Punua Way Loho St Aala Dr Aalapapa Dr Aalapapa Pl Aalapapa Way Kaanua Pl Milokai Pl Milokai St Kaapuni Dr Kainalu Dr Kalaheo Ave KAELEPULU Kaelepulu Dr Kaha Pl Kaha St Lokelau Pl Kahako Pl Kahako St Mokapu Blvd Mokapu Rd Mokolea Dr Kahili Pl Kahili St Mokulua Dr Lola Pl Mokulua Dr Mokumanu Dr Lola Way Kahoa Dr Auauki St Kai Nani Pl Kai One Pl Kaapuni Dr Lanae Way Kaiemi St NOKE ST Kaiholu Pl Kaiholu St Kaihone Way Kaikaina St Kaikea Pl KAILUA RD Kailuana Loop Kailuana Pl Kailulu Way Kaimake LoopKaimalino Pl Kaimalino St Kaimi St Kaimoani Way Kihapai St Ikemaka Pl KAINALU DR KAINALU ST Kainui Dr Kainui Pl Kaiolena Dr Kaiolino Way Kaipiha St Kaipii St Kaipii St Kai One Pl MOLO MOLO ST Pamaele St Kakahiaka St Lauloa St Launa Aloha Pl AWAKEA RD Iliaina Pl Iliaina St Kalaheo Ave Kalaka Pl Ilihau St Ilikaa Pl Ilikai St Ilikala Pl Ilikea Pl Ilikupono St Ililani St Ilimalia Loop Ilimalia Pl Ilimano Pl Ilimano St Kalama St Ilipilo St Iliwahi Loop Kalanianaole Hwy KALANIANAOLE HWY Kalawai Pl Hanale Pl Puualoha St Puukani Pl Noke St PUWA PL Pauahilani Pl Pauahilani Way Paukiki St Pauku St Manu Aloha St Manu Laiki St Manu Mele St Manu Oo St Kalolina Pl Kalolina St Aoloa St Aoloa St HIHIMANU ST Kawahine Pl Makaainana St Poalima Pl POALIMA ST Kuhimana Pl Kuhimana St ALAIHI ST Makakalo St Paloa Pl Mooiki St Kekumu Pl Moole St Hekiliiki Pl Kaulukanu St Hekilinui Pl Nonokio St Laumilo St Laukalo St Ahiki St Kanehunamoku Pl Laulii Way Laumilo St Waikaloa St Kulaiwi St Waikupanaha Pl Waikupanaha St WAILEA Kakaina Pl Kakaina St PIOHIA PL Kumauna Pl WAILEA ST Ilauhole St Kumuhau St Kumuula St 9TH Kaulukanu Pl KALANIANAOLE HWY Nenue St ROADWAY-KALANIANAOLE Bell St Kalau Pl MANANA ST Waiokeola St Wailea St Mahiku Pl Inoa St Inoaole St Kalanianaole Hwy ALOILOI ST Hoopulapula St Mahailua St Koa Moali Pl Manawaiola St Haunaukoi St Oluolu St Kaaiai St Mokulama St Flamingo St Mahiku Pl Kaauiki Pl Kaaumana Pl Kaaumana Pl Kaaumoana Pl Humuka Loop Humuna Pl Humuniki Pl Humuniki St Humupaa Pl Humupaa St HULI ST Kalanianaole Hwy Haleiki Pl HAUNAUKOI ST KUMUHAU ST NAKINI ST Hanalulu Pl ALA KOA Ala Koa St Saddle City Rd Lupe St Kamanaaina Pl Kamanaoio Pl Malolo St Paupahapaha Pl PUUONE ST EHUKAI ST Mekia St HILU ST Kalanianaole Hwy Nakini Pl Nakini St Kauholokahiki Pl Kauholokahiki St Poliala St HINALEA ST Maiaeka Pl KAULU ST Kaulukanu St Laumilo St Kalanianaole Hwy Kualau Pl Kumuniu Pl Kumuniu St Lukanela St Nalu St

Join us at Real Estate Social

Comments are closed.