Wisconsin Home Equity Loans

Home Equity Loans in Wisconsin

A home equity loan (HELOAN) allows homeowners to tap into their equity, making their investments in their properties liquid by turning them into cash without the need to sell the property. Equity is the portion of your home you own, which grows as you pay down your mortgage and as your property value increases.

How a home equity loan works is simple: you borrow against your tappable equity and receive a lump sum that you’ll repay over time with interest. This second Wisconsin mortgage uses your home as collateral, similar to your primary mortgage. This means you’ll be repaying two mortgages simultaneously if you’re still paying off the mortgage you used to purchase the home. However, this arrangement often results in more favorable interest rates than unsecured loans or credit cards.

Wisconsin residents choose home equity loans for various reasons, such as:

• Home improvements
• Debt consolidation
• Educational expenses
• Business ventures
• Emergency funds

Home Equity Loan vs HELOC

HELOANs and home equity lines of credit (HELOCs) are two main options for tapping into your home’s equity. Learning the differences between a HELOC and a home equity loan can help you make the right choice, depending on your specific financial needs.

The main difference between HELOANs and HELOCs is that a home equity loan gives you a one-time lump sum. Home equity loan rates in Wisconsin are fixed, providing a consistent monthly payment for easy budgeting. This option is most like a primary mortgage, but you can use the funds for anything you wish.

Conversely, a home equity line of credit in Wisconsin is exactly what it sounds like — a line of credit like a credit card. You get a maximum amount you can borrow when you’re approved for the loan, but you don’t have to use all of it. Instead, you can draw funds as needed during a set draw period. Once the draw period ends, you’ll begin repaying the amount you borrowed with interest. HELOC rates in Wisconsin are typically variable, so your mortgage payments can increase or decrease over time.

Choosing between these two options depends on your specific needs. A home equity loan might be best if you need a large one-time sum and prefer predictable payments. Meanwhile, a HELOC could be more suitable if you want the flexibility to borrow as needed and are comfortable with changing interest rates.

Pros and Cons of Wisconsin Home Equity Loan

Before you apply for a Wisconsin home equity loan, consider the pros and cons. The potential benefits of HELOANs are:

• Substantial funding: Depending on your equity, these loans give you access to a significant portion of your home’s value. If you have a lower outstanding mortgage balance, you can borrow more (depending on your home’s current market value).
• Fixed payments: Home equity loans have fixed interest rates, which can make budgeting easier.
• Competitive rates: Home equity loan rates in Madison, WI, and throughout the state are often low compared with other forms of debt. For example, personal loans and credit cards typically carry high interest rates and thus increase the cost of borrowing.
• Potential tax benefits: Interest may be tax-deductible when you use a home equity loan for home improvements.
• Flexibility: You can use the funds from a Wisconsin home equity loan for various purposes, including home renovations, debt consolidation, large purchases, and anything else.

Potential downsides of home equity loans in Wisconsin include:

• Property risk: Because your home is collateral for the loan, failure to meet payment obligations could result in foreclosure. This means that you could potentially lose your home, which is why it’s so important to understand your budget and ensure you can repay the loan.
• Additional costs: Home equity loans come with various fees, including closing costs, appraisal fees, and more. Calculate these costs ahead of time to make sure it makes sense for you to take out a home equity loan.
• Long-term commitment: Taking on a second mortgage means committing to another extended debt obligation, which can impact your financial flexibility in the future.

Home Equity Loan Requirements in Wisconsin

If you’re considering a home equity loan in Wisconsin, here are the key requirements you’ll need to meet:

• Equity: You must have at least 15-20% equity in your home. After the loan is disbursed, you should still retain between 5-15% equity. For example, if your home is worth $300,000, you should owe no more than $255,000 on your mortgage to qualify.
• Credit score: Credit score requirements may vary among lenders. Griffin Funding requires a minimum credit score of 640 to qualify for these loans. Remember, a higher score can help you secure better interest rates and terms.
• Debt-to-income ratio (DTI): Lenders prefer a DTI below 43%. This means your total monthly debts, including your new loan payment, shouldn’t exceed 43% of your gross monthly income.
• Income verification: You’ll need to provide proof of stable employment and sufficient income. For self-employed individuals, lenders like Griffin Funding offer bank statement home equity loans as an alternative way to verify income.
• Property appraisal: An up-to-date appraisal will determine your home’s market value when you apply for the loan.

Download the Griffin Gold app to help you keep track of these requirements and communicate directly with a loan expert.

Discover Competitive HELOAN and HELOC Rates in Wisconsin

Your home is a financial asset. As property values rise, many homeowners are sitting on a significant amount of equity.A home equity loan in Wisconsin allows you to turn that equity into cash without selling your home.

Griffin Funding is committed to helping Wisconsin homeowners make the most of their property’s potential. Our team of experts specializes in finding competitive HELOAN and HELOC rates Wisconsin residents can rely on. We understand that every homeowner’s situation is unique, which is why we offer personalized service and a range of options. Ready to learn how you can tap into your home’s equity? Apply now.