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| Home Equity 101 - What You Need To Know
If you own a home, you may be able to take advantage of the equity it in to pay for various expenses. But before you decided to pursue this option, here's a few things you need to know.
What is home equity?
According to Investopedia.com, home equity is "the value of ownership built up in a home or property that represents the current market value of the house less any outstanding mortgage loan balance."
Here's a simple example. A house is valued for $125,000 and the home owner owes $100,000. The difference between the two is $25,000, the amount of equity available.
What is Combined Loan to Value Ratio (CLTV) and why does it matter?
Let's answer the second part of the question first. Lenders use CLTV to determine the amount of potential risk associated with a loan - the higher the CLTV, the higher the potential risk, which can mean a higher rate. CLTV is normally expressed as a ratio and is calculated by dividing the total amount owed by the appraised value of the property..
Using our example above, let's say the home owner wants to borrow the full amount of equity available, or $25,000. The amount of the home equity loan must be considered in addition to the outstanding mortgage balance, hence the term combined loan to value ratio.
Here's how the CLTV is calculated:
100,000+25,000/125,000 = 100% CLTV.
What loan options are available?
There are two main options. A home equity loan is usually a fixed-rate loan with a set term that gives you access to all the funds at once. A home equity line of credit is usually a variable-rate loan that allows to you draw on the line as you need, much like a credit card. Those who know they need a specific amount of funds and want a fixed payment and term may find a home equity loan more appealing. Borrowers who need more flexibility may want to explore a home equity line of credit.
First South Financial offers home equity lines of credit with no closing costs, no floor rates, fast turn around times, and limits up to $500,000*. To find out more, please call us at 901.380.7400 or stop by any banking center. If you're ready to apply, click here. |
| *Loans are subject to approval criteria, not all applicants will qualify. Offers are subject to change or withdrawal without notice, please see us for complete details. Equal Housing Lender. |
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Serra of Jackson offers quality new Cadillac, Chevrolet, Buick, GMC and Kia vehicles in addition to a wide selection of used vehicles. To check out their complete inventory of new and used vehicles, visit them online, call them at 888.380.6149 or stop by the dealership located at 189 Stonebridge Blvd, Jackson, TN 38305.
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Contact us today for a no-cost, no-obligation appointment.
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Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution.
FR-1765228.1-0417-0519
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The information contained in this email (the “Content”) is provided for informational and educational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Content is not intended to be and does not constitute financial, investment, tax or accounting advice or a solicitation to buy or sell securities. The Content is necessarily general in nature and is not specific to you or anyone else. YOU SHOULD CONSULT YOUR OWN INVESTMENT, TAX OR ACCOUNTING ADVISORS BEFORE IMPLEMENTING ANY ADVICE INCLUDED IN THE CONTENT. By viewing or utilizing the Content, you agree that you will not hold Marquis Software Solutions, Inc, First South Financial or their affiliates or agents responsible for loss or damages resulting from the Content.
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