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The 125 Home Equity Loan - Is it Right for You?

By Edited Apr 22, 2016 0 0

To most people their home is the most important asset that they have. For many, it is also the primary and largest source of savings, the equity in their home. So, when financial times get tough it is only natural to look to your savings (your home) for help. When money is tight, it can sometimes be hard to pay all of the debt that you owe to various creditors, and it may be necessary to take out a loan. A 125 home equity loan is a loan that you can take out against your house and it will exceed the value of the house that is borrowed against. There are some things that you should know about 125 home equity loans if you are planning to borrow money against your home.

When you are looking around at your options for home equity loans you will find that certain loans will only allow you to borrow a percentage of the equity that is built up in it. This means that if you have a home that is worth $200,000 some lenders will only allow you to borrow a certain percentage usually around 80 or 90 percent. This is a fairly standard type of loan that most banks and credit unions will offer. If you need more money than that a 125 percent home equity loan will give you more. Let's say you are borrowing against the same home and you go with a 125 second mortgage; you will be able to borrow against the equity in your home valued at 125 percent of what the house is actually worth, so you will be able to borrow against $250,000. This is a great benefit because you will be able to borrow more money and use it to pay off more of your debts than you would be able to borrow with another type of home equity loan.

Getting approved for a 125 home equity loan and second mortgage is generally a little harder than getting approved for another type of loan. If the bank or credit union is going to loan you money against your home valued at more than it is worth then they want to make sure that all other aspects of your financial situation warrant the risk that they are taking. Your credit report, credit score, annual income, and other financial obligations will play a huge part of you getting approved for 125 home equity. This has got to be rock solid and you have to be able to show that you can make the payments you agree to without financial hardship. This is the type of loan that homeowners look for the most because homeowners can get a larger loan.. A lot of people do not get approved because lenders fear they will not be able to make the payments on the loan because of a changing financial situation like losing a job.

The payments on a 125 home equity loan are usually higher than other types of loans. This is because the lender is taking a bigger risk by lending you more than your house is worth. This means that if you default on the loan the lender will be at a loss if you have not paid back at least the 25% that they let you borrow over what your house is worth. This is the reason that the payments are usually so high. Higher risk for the financial institution means a higher rate for your 125 loan. It just makes sense.

If you want the best chance of being approved for a 125 LTV home equity loan you will need to shop around and compare the rates of several different lenders. You definitely want to talk with the bank or credit union where you already have your first mortgage, but they may not offer this type of second mortgage or the rate they offer may not be competitive. You will also want to make sure that you credit is in great shape and that the annual income you make is enough to afford the loan payments for this loan and any other debts that you may have.

If you do not want to show all of the documentation that is required then you might want to consider getting a no doc home equity loan. If you already have a good amount of savings and a good credit history but do not want to have to break out all of your financial paper work and have it combed through in order to be approved for the home equity loan that you need this is a great option to consider. This type of loan is very popular so you may have to check around to be sure who is offering it. Due to the demand some lenders will not make any no doc loans because they are already carrying too many.

If you are finding it difficult to be approved for a 125 home equity loan you may want to consider trying to get approved for a 100 home equity loan. These two types of loans are very similar. 100 home equity loans will allow you to borrow up to 100% of your home's appraised value. This means that if your home is appraised at $200,000 you will be able to borrow up to $200,000 if you are approved. This is a great alternative way to get the money that you are looking for.

A 125 home equity loan will help you to pay off debts, remodel your home, or do anything else that you may need the money for. Remember that these types of loans are secured by your home so you will need to keep up with the payments in order to keep your home from being foreclosed on and sold. Be sure that your credit is in good shape and you have enough annual income to get approved. Be sure to check out several different lenders before you make the decision to go with one of them. By working with lenders that specialize in doing 125 home equity loans you will increase your chance of approval and have the cash needed for the expenses that you need to pay for.



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