QandAs: Loans

How soon after I buy a Home can I get a Home Equity Loan?

Answer:
Home equity loans or second mortgages are loans

that involve a second lien on your property. Qualifying for a home equity loans is easier than a personal loan because a piece of property secures the funds. A home equity loan and HELOC are very similar.

However, home equity lines of credit are structured like a credit card, whereas a home equity loan involves a one-time payout. Home equity loan approvals are easy, and many lenders qualify borrowers with poor credit. Consequently, the main requirement for a second mortgage is equity.

Equity is the difference between a property's value and the mortgage loan balance. There are two ways to gain equity. Homeowners can either pay down the mortgage balance or wait for their home to appreciate. Since homes appreciate at a slow rate, and early mortgage payments barely reduce the balance, it can take several years to build equity. For this reason, getting a home equity loan immediately after buying a home is tricky. Homeowners who qualify for an instant equity loan likely put a large down payment on the new property, or bought a wholesale property. If you have little or no equity and need money for home improvements or debt consolidation, consider a 125% home equity loans. Although risky, borrowers can receive a loan for up to 125% of their home's value. The main requirement for a 125% home equity loan is a high credit score.


	more Q&A sessions like this
	What is a second mortgage? Is Interest on a Home Equity Line of Credit Tax Deductible? What Does Borrowing Against my Equity Mean? What is Home Equity Refinancing? What is a Home Equity Loan? What is a Second Mortgage? What is a Home Improvement Loan? Can you convert a Home Equity Loan into a Second Mortgage? What is the difference between a Home Equity Loan and a Second Mortgage? Is a home equity loan considered refinancing? Where can I get cash for a remodeling project? What is a Leaseback? What is Home Equity Fraud?