When we receive an application for a Home Equity Line of Credit (HELOC), we have to determine the value for the property. This, in turn, allows us to determine the amount that can be borrowed. However most times with a HELOC, a full appraisal is not required. Here's why.
We have a number of resources that can give us an accurate valuation of a home. One is an automated valuation based on the data about your home kept on public records. Other times, a simple drive by from an appraiser will suffice. As long as the public record data on your home is accurate, these types of appraisals are quite accurate.
Why do we require a valuation or appraisal for HELOCs?
A real estate appraiser interprets the market to estimate a property's value. The goal of an appraiser is to supply a realistic judgment about a property's actual worth at the time of the appraisal. Appraisers compile data about the site of the property and the stability of the neighborhood, amenities such as special kitchens or baths, and the physical condition of the property. Appraisers generally have real estate or lending experience and, in most states, are licensed.
The appraisal protects both the borrower and the lender. By getting an accurate value of the equity in the home, it protects you from borrowing too much against the value of the home and risking getting into financial trouble. It likewise protects the membership of the credit union from lending you too much against the value of the home.
You can get an estimated value of your home here. Type in the property address in the appropriate field and click Submit. You will instantly receive an estimated value range for the property.
Calculate the Potential Equity in Your Home
Subtract the outstanding balance on your mortgage from 75 percent of the value of the home to approximate your potential line of credit or home loan amount.
Example:
A home appraises for $300,000. The owner still owes $150,000 on the mortgage.
|
Appraised value of home |
$300,000 |
|
Percentage |
X75% |
|
Percentage of appraised value = |
$225,000 |
|
Less balance owed on mortgage - |
$150,000 |
|
Potential line of credit |
$75,000 |
What Are Our Specific Requirements?
For Home Equity requests up to $250,000 an automated valuation can be used. For requests up to $250,000 with a Combined Loan to Value (CLTV) greater than 75%, a Property Condition Report (PCR) will also be required.
For amounts in excess of $250,000, a full appraisal must be completed.
Hanscom FCU's 3-in-1 Home Equity Advantage Plan combines the convenience of an equity line of credit with options for fixed-rate advances and a credit card. There are no application fees, no minimum draw requirements, and no closing costs.*
Expert Guidance
Our home equity and mortgage experts are happy to answer your questions and help you understand your available options. We understand your unique financial needs and have the tools and expertise to help you achieve your goals. Let our dedicated home equity team find the perfect solution to make your financial dreams a reality.
Learn more about Hanscom FCU's home equity products.
* If you terminate your line within the first 24 months after closing, you will be responsible for closing costs.
Learn more about home equity by downloading our free Equity Edge eBook. This eBook will introduce you to current remodeling trends, affordability, the difference between a home equity loan and a home equity line of credit (HELOC), and includes tip sheets on going green and quick home improvement projects to spruce up your home in a pinch.
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