I bought a house. When can I apply for a
home equity loan?
First things first: What is a home equity loan? This is the
amount of money you can borrow from the equity of your home.
The larger the amount, the bigger the sum is.
In essence the amount you can borrow can be calculated by
subtracting the still owed part of your mortgage from the
value of your home.
Needless to say you first need to build up this home equity
before you can borrow it. In most cases the value of a house
increases greatly with time.
When can you go ahead and release your home equity? There
are no fixed time frames for this. Basically the more money
you pay back and the faster you do that, the sooner you can
borrow and the bigger the borrowed amount of money can be.
It is absolutely essential to keep in mind that the home
equity loan is not just a big sum of cash that you can take
and spend however you please. This is borrowed money and you
would have to pay it back. Typically you will be given 5 to
25 years to repay. Therefore the less you borrow, the quicker
you will be able to get rid of this debt.
After you buy your house it is recommended to wait a couple
of years before applying for a home equity loan. During this
time your home will increase in value and part of it will
be paid off.
An important fact to consider is that if your house market
value is more than what you originally paid for it you might
be able to get a home equity loan at the same time when you
buy your home. Get your house appraised, so you can have a
good solid information to base on before you go ahead and
borrow.
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