The Home Buyer's Korner

Information presented should be used for educational purposes only.

June 7th, 2015

Guy looking up in color

GREATER KANEOHE HAWAII

The Home Buyer’s Korner

Google+ RE Community

Google+ Mortgage Lender Community

Google+ General Contractor Communities

Home Equity Loan of 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 KANEOHE AREA

HOMES FOR SALE LISTINGS

Livingston Homes for Sale

FIND HOMES THROUGHOUT KANEOHE HAWAII

HUD FORECLOSED HOMES IN & AROUND THE GREATER KANEOHE HI AREA

USDA FORECLOSED HOMES IN & AROUND THE GREATER KANEOHE HI AREA

FNMA HOMEPATH FORECLOSED HOMES IN & AROUND KANEOHE HI

FIND MORE FORECLOSURES IN & AROUND HANEOHE 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-Ops Townhomes 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 Ahaolelo Ahuimanu Ahuimanu Hills Ahuimanu Knolls Alii Bluffs Alii Shores Bay View Estates Bay View Garden Bayview Golf Course Castle Hill Club View Estate Country Club Crown Terrace Haiku Knolls Haiku Park Haiku Plantation Haiku Village Hakipuu Halekauwila Hale Kou Halepuu Hauula Heeia Kea Heeia View Kaaawa Kaalaea Kahaluu Kahana Kahanahou Kam Hwy Makai Kamooalii Kaneohe Bay Kaneohe Heights Kaneohe Town Kaneohe Woods Kapuna Hala Keaahala Keapuka Kokokahi Kualoa Kualoa Beach Lilipuna Lulani Ocean Mahalani Mahinui Matson Point Mikiola Miomio Mokulele Nohanani Tract Parkway Pikoiloa Puahuula Punaluu Puohala Village Puualii Temple Valley Valley Estates Waihee Waihole Waikalua Waikane Windward Estates Windward Mall Woodridge KAMEHAMEHA HWY KAM HWY KAMAKOI RD Kamakoi Pl Kamakoi Rd Kamalani Pl Keneke Pl Keneke St Kenela St Kamau Pl Waiahole Homestead Rd KAMEHAMEHA HWY Kamehameha Hwy Kamooalii St Kinana Way Kanai Pl Kanaka Pl Kanaka St MAPELE Mapele Pl Mapele Rd Mapele Way Haamaile Pl Haamaile St Haanopu Way Kaimalu Pl KANEOHE BAY DR Kaneohe Bay Dr Hoonani Pl Hoopala St Miha St Kamehameha Hwy Holio Pl Hui Aeko Pl Hui Aeko St Hui Aeko Way HUI AKEPA HUI AKIKIKI PL HUI ALAIAHA PL Hui Alala St Hui Aukuu Pl Hui Io Pl Hui Io St HUI IWA Hui Iwa Pl HUI IWA ST HUI KELU ST Hui Kelu Pl Hui Kelu St HUI KOLOA PL Hui Nene St Hui Oo Pl Hui Oo Way Hui Palila Pl Hui Ulili St Miki Pl Huinawai Pl Mikihilina St Mikiola Dr MIKIOLA DR HULAKAI PL Kapalai Pl KAPALAI RD Kupale St Lilipuna Rd Kapea Pl Kapea St Kapehe St Hulinuu Pl Peninsula Pl AULOA RD Kapoo St AUMOANA PL Aumoana Way Aumoku St Auna Pl Auna St Kapunahala Rd Yacht Club Pl Lilipuna Rd Lilipuna Rd HALEKOU RD KEAAHALA RD Hulupala Pl Hulupala Way Mahalani Pl Hui Iwa St NAHEWAI ST Miomio Loop MIOMIO RD Kapoo St Heno Pl Henoheno Pl Henoheno St Liula Pl Liula St Uakea Pl Uakoko Pl Ualani Pl HAELE PL Uapoaihala Pl Aliikane Pl Emepela Pl Konohiki St Emepela Way Haiku Rd Noweo Pl Ehehene Way Uhilehua Pl Uhilehua St MAIHUA PL Paaila Pl KANEOHE Duncan Dr Ko Pl Ko St Humu Pl Humu St Koa Kahiko Pl Koa Kahiko St Hunaahi St Hunalepo St Koaena Pl Koaena St Hololio St Koaie Pl Anoi Pl Anoi Rd Poliahu Pl Luana Pl Nilu St AHUIMANU Ahuimanu Rd Haiku Plantations Dr Haiku Plantations Pl Haiku Rd HAIKU RD Haiku Rd Unahe Pl Nukoki Pl Nukumomi Pl NUKUPUU ST Nukupuu Pl NUKUPUU ST NUKUWAI PL KAMEHAMEHA HWY Pouhanuu Pl Pouhanuu Way Kohina St Ekepuu Pl AHUIMANU HLS KALANIANAOLE HWY STREAM APUAPU ST Koiawe Way Iuiu St Kam Hwy Hako St Hakuhale St Kokokahi Pl WILLIAM HENRY RD Halaulani St Kolani Pl Aeloa St Weleweka Pl Aliianela Pl ALIIKANE PL Aliipapa Pl Alina Pl Kolokio Pl Kolokio St Kolopao Pl Maka St Makahinu St Makahio St Lipalu Pl Lipalu St Makalani St Makaleha St Konale Pl Makamae St Konane Pl POMAIKAI PL Konohiki St MAKENA PL Makena St Koolau Hale Pl Koolau View Dr Halekou Pl Halekou Rd Halelo Pl Haleloke Pl HALEMANU PL Halemanu St Halemuku Pl HALEMUKU ST Halemuku Way Halenani Pl Lanipola Pl Laniwela Way Kopili Pl Malae Pl WAIAHOLE VALLEY RD Lehuuila Pl Lehuuila St LAENANI DR Ponaha Pl Neemua Pl Neepapa Pl Neepu Pl KOU PL Paepuu St Paewalani Pl LIHIKAI LIHIKAI DR LIKEKE PL LIKELIKE HWY Kauhaa Pl Kauinohea Pl Emepela Way AHAOLELO AHAOLELO PL AHAOLELO RD AHAOLELO ST AHILAMA AHILAMA PL Ahilama Rd Malio Pl Muku Pl Grote Pl Grote Rd Luhiehu Way AHUI NANI PL Ahui Nani Pl Ahui Nani Pl AHUIMANU RD AHUIMANU LOOP Ahuimanu Pl Seabury Pl AHUIMANU RD AHUIMANU ST Ahulimanu Pl Ahulimanu Way Keoe Pl KEOE WAY Keohapa Pl Aiai Pl Aialii Pl Aialii St Keole Pl Keole St PAHIA RD Pahikaua Pl Pahikaua St Pahikoli Pl Paholei St Pahuwai Pl Nahewai Pl Nahewai St Nahiku Pl Nahiku St MAWAENA ST Lulani Pl Lulani St AINA MOI PL AINA MOI PL Nakao Pl Pailaka Pl Nakuluai Pl Nakuluai St Nakumanu Pl Lile Pl Luluku Pl Luluku Rd Hui Kelu St Naliiko Pl Holokaa Street HALEKOU RD Meakaua St Mealele St Lilipuna Rd LILIPUNA PL LILIPUNA RD Lilipuna Rd Lilipuna Street Leleua Loop Leleua Pl Leleua Way Melekula Rd Namoku Pl Namoku St NANA PL Nanamoana Pl Nanamoana St KANEOHE BAY DR Kahinani Way KALENAKAI PL WAIKALUALOKO LOOP WAILELE RD WILLIAM HENRY RD KANEOHE BAY DR Kaneohe Bay KAMEHAMEHA HWY Keaahala Pl HUI IWA ST KEAAHALA RD Keaahala Rd E HUI IWA ST HUI IWA ST HUI IWA ST HUI IWA ST KEAAHALA RD HUI IWA ST HUI KELU ST Keaalau Pl Hui Kelu St HUI KELU ST MUI PL HUI KELU ST HUI IWA ST HUI KELU ST AHUIMANU RD DUNCAN DR HOENE PL AHUIMANU RD KAHUHIPA ST Kamehameha Hwy KAPEHE ST LAUMAULA RD LILIPUNA RD MOKULELE DR PUAHUULA PL Waiahole Valley N Branch Rd Waiahole Valley Rd KAMEHAMEHA HWY KAMEHAMEHA HWY WAIAHOLE VALLEY RD LAHA ST Hoene Pl KAMEHAMEHA HWY LAHA ST NILU ST OLINA ST HUI AKIKIKI PL HUI IWA ST LAHA ST KOU PL MUI PL OLINA ST HUI AKIKIKI PL HUI IWA ST EMEPELA ST Haiku Rd Keana Rd LAHA ST KOU PL OLINA ST HUI AKIKIKI PL HUI IWA ST KOU PL MUI PL OLINA ST HUI ALAIAHA PL HUI IWA ST Halliday Pl LAHA ST KOU PL LAHA ST OLINA ST NILU ST HUI ALAIAHA PL HUI AKIKIKI PL HUI IWA ST Hui Iwa St HUI IWA ST HAIKU LAHA ST KOU PL KOU PL LAHA ST OLINA ST Nilu St NILU ST OLINA ST Hui Alaiaha Pl HUI ALAIAHA PL WENA ST HUI AKIKIKI PL WENA PL HUI AKIKIKI PL Wena St HUI AKIKIKI PL HUI IWA ST HUI IWA ST  HUI AKIKIKI PL HUI IWA ST HUI IWA ST HUI IWA ST LAHA ST MUI PL MALOLO RD OLINA ST NILU ST NILU ST Yacht Club Pl HUI ALAIAHA PL HUI AKIKIKI PL HUI IWA ST HUI IWA ST HUI IWA ST Yacht Club St MUI PL LAHA ST OLINA ST NILU ST LAHA ST HUI AKIKIKI PL HUI IWA ST HUI AKIKIKI PL HUI IWA ST LAHA ST KOU PL LAHA ST KOU PL KOU PL LAHA ST OLINA ST NILU ST HUI ALAIAHA PL HUI IWA ST Nenehiwa Pl Pakai Pl Laha St KOU PL MUI PL LAHA ST KOU PL OLINA ST HUI ALAIAHA PL HUI AKIKIKI PL HUI IWA ST Pakiko Pl Pakiko Way PAKU PL Pakualua Pl Apapane Pl APAPANE ST Mauli Pl Apau Loop Apau Pl Kuahulu Pl Kuahulu Way Kuakoa Pl Kuakua Pl Apiki St Kuapuiwi Pl Nani Pl Kuaua Way Nanihoku Way Nanilani Way Naniwahine Way Pikoiloa Pl WILLIAM HENRY William Henry Rd Waiahole Valley Rd Lupo St KUHONU PL AKA PL Akakoa Pl Kukane St Kukia St Akapane Pl PALEKA DR Paleka Pl Paleka Rd MALUKAI PL Malulani Pl Malulani St Malumalu Pl Luluku Rd  Nihina Pl Kulauli St Kulauli St Na Holoanai Way Holokaa Pl Holokaa St Holokuku Pl Hololio Pl Hololio St Akimala Pl Akimala St Holomakani Pl Holomakani St Pilina Pl Pilina Way Holonui Pl Pilipaa St Apoalewa Pl Holopeki St Holopu Pl Holouka Pl HOLOWAI PL HOLOWAI ST PUAAE RD Kulukeoe Pl Kulukeoe St KUMAKUA PL Haukaekae Pl Mapumapu Rd Kumoo Loop KUMOO PL HAUNANI Haunani Pl Halualani Pl Haupoa St Mawaena St Mawaena St Paliiki Pl KUNEKI PL Kuneki St Kuneki Way KUONO PL Kupale St Kupohu St Poohala Pl Seabury Pl Pookela Pl Pookela St Nilu St Haiku Rd Kuu Home Pl Kuuipo Pl WAIAHOLE HMSTD WAIAHOLE HOMESTEAD RD WAIAHOLE HOMESTEAD RD WAIAHOLE VALLEY RD Waiahole Valley Rd WAIAHOLE VALLEY RD WAIAPE PL Poomau St Waiawi St WAIHEE Waihee Pl WAIHEE RD WAIHEE ST Waikalua Pl WAIKALUA RD WAIKALUA WAY WAIKALUALOKO LOOP Waikane Valley Rd Waikapoki Rd Onekai St Nana Pl WAILEHUA RD Wailehua Pl Wailehua Rd WAILELE Wailele Rd Emepela Pl Kiowai St Wainana St HINALANI PL Hinalani St Keikikane Loop Keikikane Pl Hinamoe Loop Hinamoe Pl Hinapu St Kipawale Pl Moakaka Pl Moakaka Way Moamahi Way Aeloa St Waiohia Pl Waiohia St Waipaipai St Waipua Pl Konane Pl Alakai St Alaloa Pl Alaloa St Meheanu Loop Meheanu Pl Ka Hanahou Cir BAYSIDE PL Emepela Pl Oha Pl OOPUHUE PL Cobb Adams Rd Ohaha Pl Ohaha St Ohala Pl Ohala St Pua Alowalo St Pua Inia St Pua Makahala St Puaae Pl Puaae Rd Puahuula Pl Hio Pl Puali Koa Pl Puali St LAENANI DR Laenani Dr Puamohala St Puapoo Pl Alokahi Pl Alokahi St JOHNSON RD Heeia St A Ahuimanu Pl Bayview Haven Pl Kialua St Kamehameha Hwy Heumiki Pl Heupueo Pl Kiani St Emepela Pl Emepela Way Melekua Rd Iole Pl Iole St Meli Pl Alawiki St Iouli Pl Mahakea Rd MAHALANI Mahalani Cir Mahalani Pl Mahalani St Hiwalani Pl Laha Street Iakopo Pl Okana Rd Mahinui Pl MAHINUI RD Konale Pl OKANA PL Okana Pl Okana Rd OKANO RD Hoaahi Pl Lamalama Pl Ipuka Pl Ipuka Pl IPUKA ST PULAMA Ipulepo Way Pulama Pl PULAMA RD Hiipoi St Hikiwale Pl Hikiwale St Hololio St Hoauna Pl Hoauna St Kamehameha Hwy MUI PL SPRINGER PL LAMAULA RD Lamaula Pl Lamaula Rd Maiapilo Way Maiaponi Pl JOHNSON RD Olakino Pl Pulu Pl Hilinai St Hilinama St Popoki Pl Popoki St Waliwali Pl Hua Pl Hualukini Pl Huawaina Pl Maihua Pl Punalei Pl Punawai St Kaneohe Bay Drive Iris Pl KA HANAHOU CIR KA HANAHOU PL Lohiehu Pl Lohiehu St Puohala St Puoni Pl Loihi Pl Loihi Pl Loihi St Kaalaea Rd Kaaluna Pl Kaaohua Way Honekoa St Hoene Pl KAELEPULU Keluka Pl Lokea Pl Alii Anela Pl Kahekili Hwy Aneko Pl Apuakea Pl Apuakea St Apuapu St Kahiko St Mokulele Dr Mokulele Pl Kahinani Way Kahinani Pl KAHINANI Lolii Pl Lolii St Kahowaa Pl KAHUHIPA ST KAHUHIPA ST Kahuhipa St Lolopua Pl Lolopua St Nohea Pl NOHOKAI PL Nohomalu Pl Nohonani Pl Noii Pl Ihilani St Lilipuna Rd B Oceanview Kailiwai Pl Mimo Pl Kaimalolo Pl KAIMALU PL KAIMALU WAY WILLIAM HENRY RD Ikeanani Dr Ikeanani Dr Paleka Rd Ikenakai St Ikiiki St Mololani Pl Nawahine Loop Laulea Pl Laumiki Pl Kaku St Awanene Pl Awanene Way Awapapa Pl Kalali Pl Kalali St Awele Pl Kalamalo Pl KAHINANI WAY Hui Oo Pl Malae Pl Hololio St Kalaua Pl Nona Loop Kalenakai Pl Lomi Pl Kalimaloa St PUULAU PL Puulena St Puuloko Pl Puuluna Pl Puuohalai Pl Puupele Pl Puupele St

Join us at Real Estate Social

Comments are closed.