You may see a lot of articles when you search for the term 100 percent LTV home equity loan (HEL). But, when you click through, you find that they just say you can’t get one. This article explains that there are ways to get the financing you need, and where to look.<\/p>\n
LTV stands for loan\u2013to\u2013value ratio. That’s the percentage of the current market value of the property you wish to finance. So a 100 percent LTV loan is one that allows you to borrow a total of 100 percent of your property value.<\/p>\n
When you already have a mortgage against your home, and you want to borrow additional cash, you might take out a home equity loan. It’s also called a \u201csecond mortgage\u201d because you still have your first mortgage.<\/p>\n
Suppose that your home is worth $150,000, and your mortgage balance is $100,000. A 100 LTV home equity loan would give you $50,000 in cash. Your loan balances would equal your property value.<\/p>\n
To know how much you can borrow and the LTV that represents, you first need to know how much your home is worth. You can get an idea in various ways:<\/p>\n
Understand that this is a rough estimate. Your lender will almost certainly require an appraisal to come up with your property value. Also, understand that most lenders will not lend against more than 80 or 90 percent of your property value.<\/p>\n
You may think your chances of finding a 100 LTV home equity loan are roughly similar to your glimpsing a unicorn or a squadron of flying pigs. But they’re a bit better than that. Not much, but a bit.<\/p>\n
When, in , The Mortgage Reports did a search for lenders that were offering a 100 LTV home equity loan, we found two within a few minutes. KeyBank and Bank of Oklahoma. Both are in the Federal Deposit Insurance Corporation’s database of banks.<\/p>\n
And one of them says it offers its product with \u201cno closing costs.\u201d (Those two links worked at the time of writing but the lenders may have changed the offers or discontinued them by the time you click through. Search for alternatives.)<\/p>\n
Two swallows do not a summer make. And the Federal Trade Commission advises, \u201cThe amount that you can borrow usually is limited to 85 percent of the equity in your home.\u201d<\/p>\n
Just because a bank advertises a product, that doesn’t necessarily mean many consumers will qualify. From a lender’s point of view, a 100 LTV home equity loan represents a pile of risk. If home prices fall even a bit, the lender is likely to lose if it has to foreclose on the loan.<\/p>\n
If you can’t get approved for a 100 LTV home equity loan, or the deal you’re offered is too expensive, don’t give up. Depending on your needs and circumstances, and what you’ll spend the money on, there may be alternatives:<\/p>\n
Personal loans \u2013 Personal loans are great because they are not tied to the property at all. That means you can have very little equity in the home \u2013 or no equity at all \u2013 and still be approved. Loan amounts go up to $100,000, and approval happens much faster than with home equity loans.<\/p>\n
FHA 203(k) program for home improvements \u2013 This refinance uses the projected value of your home after you’ve made improvements as the basis for your LTV<\/p>\n