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125% Home Equity Loan - A Great Option For Those With Little Equity

Have you only recently purchased your home and just haven't built up any equity in it yet? Are you needing a loan to make some home improvements, but don't know where to turn? A 125% home equity loan could very well be the solution to your needs.

As a second mortgage, a 125% home equity loan is designed to give the borrower up to 25% more of what your homes value is. As an example, let's say your home is valued at $150,000. The mortgage still has a balance of $150,000. You could get a loan for $42,500 with type of lending program.

The key in being approved for this type of home equity loan will be your credit score. Because of the structure of this type of loan, financial lenders are looking for well qualified borrowers.

You can find lenders on the internet who specialize in these loans. Each has their own criteria and rules. Some may require that you've owned your home at least 6 months, while others will use your credit score to determine the maximum amount they will loan you.

A 125% home equity loan shouldn't require any type of an appraisal on your property. Since you've only lived in your home a short amount of time they will base the loan amount on the sale price of your home.

If you have lived in your home more than 12 months, lenders may use a drive-by appraisal, a current tax assessment on the property, or an AVM. This is simply an estimation of what your home is worth based on what other home in your neighborhood have recently sold for.

So, if you don't have a great deal of equity built up in your home, don't give up. Look into a 125% home equity loan.