Many Phoenix homeowners are eligible for a home equity loan with a very competitive interest rate. Thousands of residents have found that taking out a Phoenix home equity loan is an effective way to pay fund home improvement projects, cover tuition charges, pay medical bills, create a downpayment for a second property, or have money available for emergencies.
Phoenix Home Equity Loan Basics
There are several ways you can use your property as collateral for a loan: taking out a home equity loan, taking out a home equity line of credit, or refinancing your original mortgage.
A Phoenix home equity loan gives the borrower a one-time, lump-sum payment based on the equity in their home. Almost all home equity loans have a fixed interest rate so borrowers know much their monthly bill will be in advance.
A Phoenix home equity line of credit (HELOC) is a revolving credit line not unlike a credit card. HELOC borrowers are generally awarded a large credit limit based on their home’s equity. They use their HELOC to draw money whenever they want; the lender charges interest only when money is withdrawn from the line. Almost all HELOCs have variable interest rates, so interest payments can vary from month to month.
A refinance pays off the borrower’s first mortgage and gives them a completely new home loan – with new rates and terms. If the borrower’s home is worth more than they owe, he may be able to take money out by refinancing.
Qualifying for a Phoenix Home Equity Loan
Borrowers are generally required to meet several qualifications to be approved for a Phoenix home equity loan. In most cases, lenders want to make sure that you have a high credit score, a low debt-to-income ratio, steady employment, and a significant amount of equity in your property.
The Phoenix Real Estate Market
Since your Phoenix home equity loan will be based on the value of your property compared to the amount you owe, it’s important to keep track of the current real estate market in your area. During the recent housing boom, the Phoenix area expanded and home prices increased significantly. Although current prices have been on a slight decline, many homeowners still have tens of thousands of dollars in equity. If you purchased your home several years ago, chances are high that you’ll meet the equity requirements for a Phoenix home equity loan. The greater your property’s equity, the more the lender will be willing to give you.
Finding a Phoenix San Diego Lender
Finding a lender for your Phoenix home equity loan can be a challenge. There are several places that you should look before making your final decision.
First, check out the Arizona HELOC lender directory. They list local lenders and mortgage brokers along with websites, phone numbers, and a map to their offices.
Second, take a look at national banks. Lenders such as Countrywide and Chase offer home equity loans all over the country. You can visit a local office or call their hotline numbers. Much of the necessary paperwork can be completed via mail or the internet.
Third, check out Phoenix credit unions. Since these financial institutions are run by members rather than large corporations, they may be able to give you a better interest rate on a Phoenix home equity loan.
Fourth, visit local Phoenix mortgage brokers. A mortgage broker usually has access to rates for multiple lenders. They can help you compare Phoenix home equity loans and find the best deal for your situation.
Phoenix Home Equity Loan Rates and Terms
Carefully read over your Phoenix home equity loan paperwork. If there are any points, fees, or issues that you do not understand, speak with your lender. (See: How to Get the Best HELOC Rates and Terms).
Taking out a Phoenix home equity loan is a smart way to borrow money at a low interest rate, but it’s also a big financial decision. Research the facts before deciding on a lender or signing any paperwork.