Devora Witts is a certified loan consultant with several years of experience in the credit area who instructs people regarding credit recovery and approval for personal loans, home loans, consolidation loans, car loans, student loans, unsecured loans and many other types of loans. If you want to understand Loans for Bad Credit People and Guaranteed Credit Cards thoroughly you can visit her site http://www.badcreditloanservices.com. If the link doesn't work, just copy and paste www.badcreditloanservices.com in your browser’s address bar.
It is possible to obtain financing up to 100% of your property’s market value with your mortgage balance and a home equity loan for home improvements combined. With this money you can start that long postponed home improvement project and turn your home into your dreamed home within a short period of time.
The highly competitive loan market has made available home equity loans that added to the outstanding mortgages can provide funds up to the total value of the property securing the loan. These high amounts make home equity loans the best source for funds to undertake a home improvement project that you will find on the loan market.
Home Equity Loans
Home equity loans work in a rather simple way, they use part of the remaining value of a property to secure another loan (apart from the mortgage) thus obtaining finance with very competitive terms compared to unsecured personal loans. Also, this provides high loan amounts that can easily fund any home improvement project.
Equity is the difference between the value of a property and the outstanding debt that this property guarantees. For example: if you have a property worth $120,000 in the real estate market and you owe $60,000 on your mortgage balance, you have got $60,000 of remaining equity and you can obtain a loan by securing the money borrowed with that remaining equity.
100% Financing: How Is It Possible?
Usually, the amount of money you can request on a home equity loan is limited. The combination of your home loan and your home equity loan can not reach up more than 85% of the home market value. In the above example, you could not be able to obtain a home equity loan for more than $42,000 due to this 85% limit (a total of $102,000).
However, there are lenders offering 100% financing on your home equity provided that you destine the money to make home improvements. These home improvement loans provide further financing because the 85% limit is eliminated on condition that the money is used solely for home improvement projects. You may wonder how this can be possible and what the catch is:
The answer is simple, these lenders analyze your home improvement project and see how it will raise the value of your property. Thus, by lending to you the money to undertake a home improvement project they know exactly that they are lending money for you to raise the value of the property used as collateral for protecting their investment and they will have an idea of the percentage of value increased.
Thus, though it may be 100% financing for you, it is actually not 100% for them but a lower percentage that can sometimes be even lower than 85%. Nevertheless, with this procedure, you can obtain all the money you want for your home improvement project in the form of a home equity loan or a home equity line of credit but you will be restricted as regards to the purpose you can give to the money you borrow since your home improvement project needs to be approved by the bank or financial institution.
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