Click Here
Home Equity Basics
House keys and a $1 bill in the background
home equity
Risks of high LTV loans

High loan-to-value products raise a borrower's debt level above the value of their home to as much as 125 percent.

For example, if you have a house worth $100,000, a first mortgage of $90,000, and a home equity loan of $35,000, you owe $25,000 more than your house is worth. That's crazy. It's an unsecured loan, like a credit card.

Imagine selling your home and having to pay off the mortgage, plus having to come up with $25,000 at closing to pay off the home equity loan. Also consider that the interest on the amount that exceeds your home's value is not tax-deductible.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
HOME EQUITY STRATEGIES & ADVICE NEWSLETTER

Advice for homeowners looking for options to use their home’s equity wisely. Delivered monthly.

advertisement

Ask Dr. Don

Too soon for home equity loan?

Dear Dr. Don, I was wondering if it is possible to take out a second mortgage on my house to pay for my student loans. I've owned my house for about one year now, but I don't have much equity in the home. My student loan... Read more

Partner Center
advertisement

Connect with us