As a homeowner in Connecticut, you may have been diligently watching your home equity balance increase over the years. Your home equity was initially established when you made a down payment on your home at the time of purchase, and it may have grown over the years through property value appreciation and regular monthly mortgage payment. Now that you are sitting on a substantial nest egg, you may be wondering if you can take out some of that equity for strategic and beneficial plans that you may have. Many homeowners are able to take equity out of their home, and one option to consider is to apply for a home equity line of credit in Connecticut.
A home equity line of credit is similar to a home equity loan in many ways. Both allow you to tap into your home's equity, and both have a similar loan application process that you must follow. However, with a home equity loan, you will receive the full amount of the loan in a lump sum amount. With a line of credit, you can use checks or a debit card to draw from the line as needed. Typically, there is an open period when you can make these draws. After this period expires, you will need to start repaying the amount you borrowed. A line of credit is commonly used for home renovation projects, to make additional investments, to consolidate debts and more.
Before you apply for a home equity line of credit in Connecticut, you may be wondering how much money you can borrow. After all, if you cannot access the full amount you need, this may not be the right source to consider. Generally, the total debt on the property cannot exceed 70 to 75 percent. The first lien may remain in place, but you often need to repay the second lien if you currently have one. Therefore, you can calculate your current property value and take 70 to 75 percent of this figure. Then, reduce this total by your total outstanding first lien loan balance. This is amount you have access to as a second line home equity line of credit.
Who Offers Home Equity Lines of Credit in Connecticut?
If you determine that a home equity line of credit may be the right financial option for you to consider, you may be wondering what it takes to get approved and who offers lines of credit in Connecticut. The loan process is similar to that of a full home mortgage, so you may need to provide tax returns, bank statements, an appraisal and other similar documentation. You can learn more about anticipated loan terms by visiting websites of some of the top lenders in the state. This includes Third Federal, Flagstar Bank, TD Bank, Sovereign Bank, Wells Fargo and others. While you can learn a lot by visiting the websites, it is also wise to get full pre-qualifications and to receive firm quotes before you decide which lender to use.
If you have worked hard to establish significant equity in your Connecticut home and you currently need cash, applying for a home equity line of credit may be a great solution. You can typically expect low interest rates and great terms, and the interest may be tax deductible. If you are ready to learn more about your ability to qualify for a line of credit and what the estimated loan terms may be, take time to visit the websites of some of these lenders as a starting point.