Indiana Home Equity Loans

A home equity loan can be a great solution for those seeking to improve cash flow and fund big expenses. With that being said, it’s important to understand how a home equity loan works in Indiana before pursuing this financing option.

As you make your monthly mortgage payment, you are slowly building equity in your home. Over several years, you can accrue substantial equity, which can be used to attain a large secured loan. Because this loan is leveraging your equity, it is completely separate from your first mortgage, so your original payment and interest rate will remain untouched.

Equity is calculated by subtracting the amount of your existing mortgage from the current market value of the home. Of that total equity, your tappable equity is the amount you can actually borrow against while still leaving a 5-15% equity buffer that you retain.

Well-qualified borrowers can often receive a loan for up to 90% of the home’s equity. Fixed interest rates are very competitive, and long repayment terms — which can last up to 40 years — lead to a predictable monthly payment for the life of the loan.

The choice of applying for a HELOC vs HELOAN can be confusing if you aren’t aware of how they work. While both loan varieties leverage our home equity as collateral, they serve different purposes and are used in different ways:

• Home equity loan: A home equity loan in Indiana is structured similarly to a conventional personal loan, except your home’s equity is the collateral. Cash is dispersed in a single lump sum, and the maximum amount is generally up to 90% of your home’s equity. The structure has the option of a fixed interest rate that tends to be higher than your first Indiana mortgage and a long repayment term of up to 40 years.

• Home equity line of credit: A home equity line of credit in Indiana works more like a traditional credit card, except your credit limit is determined by your available home equity and the interest rates are generally better. HELOCs allow you to carry a revolving balance and pay down the debt as you go, giving more flexibility than a HELOAN. You only pay interest on the amounts you borrow, however the rates will fluctuate with varying market conditions. Home equity line of credit rates in Indiana are usually lower than credit card and personal loan rates.

When deciding between the two options, consider your use of funds. Are you making a single specific or large purchase but want the ability to pay it off slowly over time? A HELOAN would be a great option. If you are looking for a flexible spending solution that offers a high credit limit you can tap into as needed over time, then a HELOC is probably a smart choice.

Using your home’s equity to secure a loan offers many benefits over traditional personal loans. But you should also be aware of the potential downsides as well. Here are some of the most important points to keep in mind:

Pros:

• Competitive interest rates, terms of up to 40 years, and fixed payments make for a low, predictable monthly payment that’s easy to budget for.
• Financing home improvements and renovations can potentially increase your home’s market value.
• Lump-sum disbursement means you’ll be able to make large purchases quickly, and there are virtually no restrictions on how you apply the funds.
• Your first mortgage will stay intact, allowing you to keep its low rate and monthly payment.
• The interest from your HELOAN can potentially be written off on your taxes.

Cons:

• Home equity loan rates in Indiana are very competitive, but they may not be as low as with your first mortgage.
• A home equity loan can increase your total debt burden.
• Because you’re leveraging your home equity as collateral, you risk foreclosure if you default on the loan.

Whether you’re looking for the best home equity loan rates in Indianapolis or Bloomington, you will need to meet certain criteria to qualify. Here are some of the most important metrics to consider prior to applying anywhere within Indiana:

• Income: Your tax returns, pay stubs, W-2s, etc. will be requested to help prove your steady employment and ability to repay the loan without causing undue stress on your budget. If you are self-employed, consider a bank statement HELOAN through Griffin Funding which allows you to qualify using your deep cash reserves instead of traditional pay stubs.

• Equity: Most lenders will require you have accrued at least 15-20% equity in your home before being considered for approval. The final approval amount will ensure that you still retain at least 5-15% equity in your home after funds are disbursed.

• Credit: Your credit score should be at 640 or higher at time of application – and higher is always better. Good payment history and responsible revolving utilization is also very important. Aim to have your debt-to-income ratio (DTI) no higher than 43%. We suggest downloading the Griffin Gold app to keep track of your credit score, monitor your finances, and begin building an action plan to take advantage of a HELOAN.

Home equity loan rates in Indiana can be very competitive. So whether you’re looking to capitalize on Indianapolis home equity loans or get a home equity line of credit in Muncie, Griffin Funding provides sensible financing and competitive programs throughout the entire state.

Apply now using our easy online application to quickly get the ball rolling and connect with a knowledgeable Griffin Funding loan agent. See how your home’s equity can help get you approved for a competitive fixed-rate HELOAN and achieve your financial goals.