Gross Monthly Income
Auto Loan $ 100
Other Debts $ 400
Monthly Debt Payments $2000
The Debt-to-Income Ratio is 33 percent. ($2000 is 33% of $6000.)
Evidence from studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments.
What is a Home Equity Line of Credit? (HELOC)
If you are in the market for credit, a home equity plan is one of several options that might be right for you. Before making a decision, however, you should weigh carefully the costs of a home equity line of credit against the benefits
Shop for the credit terms that best meet your borrowing needs without posing undue financial risks. And remember, failure to repay the amounts you’ve borrowed, plus interest, could mean the loss of your home.
A home equity line of credit is a form of revolving credit in which your home serves as collateral. Many homeowners use home equity credit lines only for major items, such as education, home improvements, or medical bills, and choose not to use them for day-to-day expenses.
With a home equity line, you will be approved for a specific amount of credit. Many lenders set the credit limit on a home equity line by taking a percentage (say, 75%) of the home’s appraised value and subtracting from that the balance owed on the existing mortgage. For example:
Appraised Value of Home$100,000
Percentage of Appraised Value= $ 75,000
Less Balance Owed on Mortgage– $ 40,000
Potential Line of Credit$ 35,000
In determining your actual credit limit, the lender will also consider your ability to repay the loan (principal and interest) by looking at your income, debts, and other financial obligations as well as your credit history.
KH Credit Union (NMLS ID 615329), in full compliance with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), employs the following persons within our Mortgage Loan Department
Sherrie Perkins 446098
Lindsay Sharp 1624650
Stephanie Etienne 1624667
Ileana Poteet 681911