Mortgage / Equity

Equity
Home Equity
Mortgage
Real Estate Line of Credit

It is possible to get an equity line of credit on any piece of real estate that you own not just your home. 

You should be able to get a line of credit on any piece of real estate in which you have equity. You have equity when the value of your real estate exceeds the value of a mortgage on it. If you had a piece of property worth $500,000 that was mortgaged for $300,000, you would have $200,000 worth of equity.

Lenders will give you a line of credit on any piece of real estate you own including a home, second home, business property, investment property, farm land and rental property. All you will need to qualify for the line of credit will be equity in the property.

How Big a Real Estate Line of Credit Can You Get?

There are many lenders that will grant a line of credit on real estate equity. Banks, mortgage lenders, direct lenders and internet lenders all make lines of credit available everyday.

The amount of credit that you can get will be determined by the amount of equity that you have in your real estate. The more equity you have the more credit you will be able to get.

Generally, the amount of credit available in a real estate equity line of credit is a percentage of the equity. This is usually around 80% so if you have $100,000 worth of equity you would be eligible for a line of credit worth about $80,000.

Those who have bad credit ratings will be able to get real estate lines of credit but they will have to pay a higher interest rate. The worse your credit the higher the interest rate you’ll have to pay.

How to Get a Real Estate Equity Line of Credit

There are many websites that let you compare real estate equity lines of credit. Sites like bankrate.com and Lending Tree have calculator features that can show up to a dozen lines of credit.

All the average person has to do is go to one of these sites, type in the amount of credit they want, their geographic location and their credit rating. The calculator will then create a list of lenders that a person can compare.

Once this is done, you should choose the real estate equity line of credit that gives you the best interest rate. The best interest rate is usually the lowest interest rate which gives you lower payments.

You should also try to get a real estate equity line of credit with a fixed rate. A fixed rate guarantees that the lender can’t raise your interest rate.

Real Estate Equity Line of Credit Drawbacks

There are some serious potential drawbacks to real estate equity lines of credit. The biggest is that by increasing the debt on your real estate these lines of credit can increase your possibility of foreclosure.

Taking out too many real estate lines of credit can also hurt your credit rating. Lenders may run a credit report on you when you apply for a line of credit. Running a credit report can lower your credit rating.

Always be careful when applying for a real estate equity line of credit. Abusing this kind of finance can lead to foreclosure and a bad credit rating.