Residential Financing

You may be able to borrow money secured against your home equity. Typically, interest rates on loans secured against home equity can be much lower than other types of loans.

Not all financial institutions offer home equity financing options. Ask your financial institution which financing options they offer.

You must go through an approval process before you can borrow against your home equity. If you’re approved, your lender may deposit the full amount you borrow in your bank account at once.

Refinancing your home

You can borrow up to 80% of the appraised value of your home.

From that amount, you must deduct the following:

• the balance on your mortgage
• your total HELOC amount, if you have one
• any other loans secured against your home

Your lender may agree to refinance your home with the following options:

• a second mortgage
• a HELOC
• a loan or line of credit secured with your home

Getting a second mortgage

A second mortgage is a second loan that you take on your home. You can borrow up to 80% of the appraised value of your home, minus the balance on your first mortgage.

The loan is secured against your home equity. While you pay off your second mortgage, you also need continue to pay off your first mortgage.

If you can’t make your payments and your loan goes into default, you may lose your home. If that’s the case, your home will be sold to pay off both your first and second mortgages. Your first mortgage lender would be paid first.

Getting a reverse mortgage

A reverse mortgage allows you to borrow up to 55% of the value of your home. You must be a homeowner and at least 55 years old to qualify for a reverse mortgage.

Interest rates and fees on second mortgages

Interest rates on a reverse mortgage are usually higher than on a regular mortgage. They may by fixed or variable.

You may have to pay administrative fees such as:

• an appraisal fees
• title search
• title insurance
• legal fees