Arkansas Home Equity Loans

Before jumping in, you should know exactly how a home equity loan works in Arkansas. To start, a home equity loan (HELOAN) is a traditional secured loan that is secured by your home’s accrued equity. The amount of equity you have is typically calculated by subtracting the remaining amount of your mortgage from the home’s current market value. For example, if you still owe $200,000 on your mortgage and your home is currently worth $500,000, you have $300,000 in home equity.

Your tappable equity is the amount of equity you can borrow against, and is typically up to 90% of the total equity. This buffer is there to ensure that you still retain at least 5-15% equity in your home after the loan has been funded.

Home equity loan rates in Arkansas can be locked in to a fixed rate, which is typically still competitive when compared to your primary mortgage loan. This rate, together with long-term contracts of up to 40 years, offer relatively low monthly payments that allow you to attain your financial goals without straining our budget.

Both the home equity loan (HELOAN) and the home equity line of credit (HELOC) are helpful methods for homeowners to utilize their home’s equity; the choice comes down to the borrower’s unique needs.

• Home equity loan: Think of the HELOAN as a traditional secured loan, where the home’s equity is your collateral. These loans offer competitive, fixed interest rates and longer repayment terms. They are best used for larger purchases and one-time expenses, such as college tuition, medical bills, debt consolidation, and home renovations. HELOAN funds are issued as a lump sum and can be used as you wish, with very few restrictions.

• Home equity line of credit: More similar to a credit card, home equity lines of credit in Arkansas offer a flexible spending option for recurring expenses or smaller purchases that can be made as needed over a period of time. The maximum credit line is determined by your home’s equity. HELOC rates in Arkansas will vary according to market conditions, however they are still typically lower than credit cards or other high-interest loans.

When deciding between a HELOC vs HELOAN, it is important to know your intended use of the funds before applying. If you are borrowing the money for a specific or expensive purchase, a HELOAN may be a good fit. If you are looking for a more flexible option that allows you to make smaller purchases over time as needed, you may want to look into a home equity line of credit in Arkansas. When applying, the knowledgeable loan agents at Griffin Funding will walk you through the process to ensure you’re choosing a product that fits your needs.

Though leveraging your home’s equity to secure a home equity loan in Arkansas has several benefits, it’s also important to know the potential drawbacks, as well. Here are some of the more important pros and cons of Arkansas HELOANs:

Pros:

• Competitive interest rates and up to 40-year contract terms can provide a low, predictable monthly payment.
• Lump-sum disbursement means you have the freedom to make large purchases quickly.
• Virtually no restrictions on how you may spend the funds.
• You can keep your existing low-rate, primary mortgage in Arkansas intact.
• Any home renovations you complete may increase your overall property value.
• The interest from your HELOAN may be tax deductible.

Cons:

• Though home equity loan rates in Arkansas are still very competitive, they may not be as low as your first mortgage.
• Home equity loans in Arkansas can increase your total debt burden.
• Because your home equity is used as collateral, you risk losing your home if you default on the loan.

When applying for an Arkansas HELOAN, your personal credit, income, and tappable home equity will all be taken into consideration. Here are the three biggest factors that contribute to getting a good approval:

• Equity: Generally, lenders want to see that you have at least 15%-20% equity in your home. For a well-qualified borrower, the maximum loan amount will typically be no more than 90% of your total home equity.

• Credit: Maintaining clean credit is crucial to a competitive approval. You should strive to have a credit score of at least 640 when applying. Debt-to-income (DTI) ratio is also important, and should be below 43% for the best chance of approval. You can download the Griffin Gold app to monitor your credit score and finances to help put your best foot forward when applying.

• Income: You will need to prove employment and income stability by providing tax returns, pay stubs, W-2s, or other documents to prove your ability to repay the loan without stressing your monthly budget. If you are self-employed, Griffin Funding offers a bank statement HELOAN that allows you to qualify using your bank statements instead of pay stubs.

An Arkansas home equity loan can be a smart alternative to personal loans when you’ve accrued equity in your home. Competitive interest rates, predictable monthly payments, and large lump-sum cash availability make them a great option for consolidating high-interest credit cards, paying for school, buying a new car, or finally upgrading your home with exciting renovations.

Griffin Funding is proud to specialize in Arkansas HELOANs, and our team of professional loan agents is standing by to help you attain your financial goals with fantastic service and competitive rates.

Apply now using our quick and easy online application to see what an Arkansas home equity loan can do for you.