Escalating home values in Louisiana have made it easy for homeowners to build equity. Perhaps this is why there has been such a significant increase in the number of home equity applications across the state. If you are thinking about getting a home equity loan of your own, but are worried that you may not qualify, read through this list of items that show what lenders will be looking at when they peruse your application:
Credit History
Just like with any other loan, your credit history affects whether or not you will qualify for a Louisiana home equity loan. Obviously, the better your credit is, the better your chances will be of getting approved. Good credit will also mean that you qualify for the best interest rates.
Your Income
When it comes to getting a loan, income is important. If you have no money coming in, lenders worry that you will not be able to make loan payments. You don’t necessarily need a high income to qualify, but you do need to show that you have the ability to pay back any money you borrow. Expect your lender to ask you for concrete proof of income, such as W-2s, tax returns, or other earnings statements.
Loan to Value Ratio
As important as credit history and income are, the real kicker when it comes to qualifying for a Louisiana home equity loan involves the loan to value ratio (LTV). This ratio identifies what you owe on the home and what the home is actually worth. To get the LTV, lenders will require an appraisal or estimate of your home’s current market value. Though some lenders are flexible, most will want your LTV at 80 percent or less.