Determining home equity loan value

[Highlandr]

Zillow and realtor.com will also show you an estimated value for your property.

 

[EscapedSuburbia]

Zillow and realtor.com will also show you an estimated value for your property.

Which I've found to be wildly inaccurate. We sold our old place and bought a new place last Fall after a year of looking and Zillow estimates were laughable. Zillow doesn't know how old your roof is, when your master bath or kitchen was remodeled, the condition of the flooring, paint, etc.

 

[Highlandr]

Which I've found to be wildly inaccurate. We sold our old place and bought a new place last Fall after a year of looking and Zillow estimates were laughable. Zillow doesn't know how old your roof is, when your master bath or kitchen was remodeled, the condition of the flooring, paint, etc.

Can be. Just another data point.

 

[Sigarms]

Since you began this thread everything has changed with the housing market.
IMO it's time to start over with your questions.
New Day is running adds stating they offer equity loans of 100% of home value. Basically you're selling them your home.

FWIW, my wife and I are in this position; already in our forever home; BUT, now the reality of having to move to assisted living is upon us.
Don't count on both of you being able to function without assistance.
This is harsh reality.

Since I started this thread, my wife moved my 5 year plan up 4 years

That said, master bathroom is finally starting to see daylight.

The sad reality is I wish I can go out like my father. He lived with us for 4 years, took a fall on Sunday and died the next Tuesday morning with me by his side at age 90. We should all be so lucky not to have to die in a nursing home which is a harsh reality for those who outlive all their loved ones.

I drove a 89 year old woman back to her house today after Church. She lives across the street from her daughter on a rural road (very nice large house with her husband and kids). She's thinking of moving back to Florida to be with her other son who lives down there. Another girl from church is taking her to a doctors appointment this week as her eyesight is failing her and she can't drive herself anymore.

I told my son the same thing my mom asked me. Mom asked me pretty much on her deathbed at the hospital if anything happens to her, make sure I take care of dad. Took 15 years for him to move in with us, but I held up my promise to her, and really loved doing it, and am grateful I did it. Told my son I don't expect him to do anything right now if anything ever happens to me, but when my wife gets too old for herself, that he should take care of her the way we took care of his grandfather.

I guess my only point is I don't understand some family relationships where kids don't feel responsible to take care of their parents when the time comes. Perhaps because their parents never took care of them? No clue on my end.

 

[ultrarunner]

Can be. Just another data point.

Appraiser taught me recent sales are flawed but the best in most cases…

The reason flawed is those properties have been sold and no longer available…

It like going to buy steak and complaining the price was less yesterday…

Another method sometimes used is to calculate the cost to duplicate…

I’ve seen unique homes that are very hard to value and even if the buyer is willing the appraisal may come up short.

Cookie cutter nearby homes are relatively easy as there is a large pool to source data…

 

[ultrarunner]

Since I started this thread, my wife moved my 5 year plan up 4 years

That said, master bathroom is finally starting to see daylight.View attachment 5605267

The sad reality is I wish I can go out like my father. He lived with us for 4 years, took a fall on Sunday and died the next Tuesday morning with me by his side at age 90. We should all be so lucky not to have to die in a nursing home which is a harsh reality for those who outlive all their loved ones.

I drove a 89 year old woman back to her house today after Church. She lives across the street from her daughter on a rural road (very nice large house with her husband and kids). She's thinking of moving back to Florida to be with her other son who lives down there. Another girl from church is taking her to a doctors appointment this week as her eyesight is failing her and she can't drive herself anymore.

I told my son the same thing my mom asked me. Mom asked me pretty much on her deathbed at the hospital if anything happens to her, make sure I take care of dad. Took 15 years for him to move in with us, but I held up my promise to her, and really loved doing it, and am grateful I did it. Told my son I don't expect him to do anything right now if anything ever happens to me, but when my wife gets too old for herself, that he should take care of her the way we took care of his grandfather.

I guess my only point is I don't understand some family relationships where kids don't feel responsible to take care of their parents when the time comes. Perhaps because their parents never took care of them? No clue on my end.

Dad worked through Chemo and Dialysis until the last weeks when cancer took him… never retired.

In his hospital bed he asked me to look after mom and said if we are careful with finances she should be ok…

Mom did not want to leave her home and move in with me so I moved back to my bedroom from when I was 9 and visited my house to pick up mail and water… just knowing how much she appreciated me was worth any inconvenience.

Yesterday attended a funeral of a cheerful 78 year old widow… she passed from a heart attack in her home… she was always happy and good natured… not a bad way to go if it is your time…

I’ve seen too many miserable, suffering and even tortured by not understanding how they ended up in a facility with strangers…

I’ve also learned the spouse of a child is often make or break… many say it’s not what I signed up for… dumping or warehousing aging parents is too common in the west…

 

[sunandsand]

Before you start, pull your credit and make sure it is correct. There may be all kinds of errors on it, something like 20% of all credit reports have errors, some of them serious. If you have a common name like Smith or Jones, be especially careful, and moreso if you are Jr. or Sr. The credit bureaus often get you confused, and they don't really care about it because they get paid (by the lender) whether the information in the report is perfectly correct or patently absurd. They have ZERO motivation to fix it, you have to motivate them.

Even if your last name is something like Przynkowitz and not likely to be confused with anyone else, you still want to check for errors. I'll also guarantee they've spelled you name wrong in at least six places . . .

Lender will do an appraisal to determine value. Could be in person or could be a computer estimate, I've had both kinds. If you disagree with the number, you can have them or another lender do it again.

So lets say your appraisal comes in at $400,000, and you owe $130,000. Your equity is $270,000.

Some (a few) lenders will go to 100%, many will call it a day at 75% or 80% because they want to be sure you don't finance out, take the money and run ("selling it to the bank"). They want to make sure you have skin in the game and are not going to walk away.

So - Appraisal of $400K times .75 = $300K ("bank's safe lendable value number"), minus $130K (balance on the mortgage) leaves $170K in usable equity.

YMMV, but that's an overview of the way the lender looks at it. Good credit moves the lendable percentage up, bad credit moves it down. Income is important here, too, the lender wants to make sure you have sufficient capacity to pay the loan and still have enough money to live on. Total of your loan payments (mortgage and HELOC, car payments, credit cards, etc.) shouldn't exceed 40% of your income, for most banks, it is 36% or so.

On that 36% number, 32% is supposed to be housing, and the remaining 4% is supposed to be everything else - and that is just not realistic nowadays with the average car payment being $600+ (wow!).

Trick is if you plan to buy a car, wait till AFTER the HELOC closes, they won't be monitoring your income. Car dealers can finance anyone who has a pulse, and they don't check too closely for that.

Best Regards,
Mike/Florida

 

[ultrarunner]

Before you start, pull your credit and make sure it is correct. There may be all kinds of errors on it, something like 20% of all credit reports have errors, some of them serious. If you have a common name like Smith or Jones, be especially careful, and moreso if you are Jr. or Sr. The credit bureaus often get you confused, and they don't really care about it because they get paid (by the lender) whether the information in the report is perfectly correct or patently absurd. They have ZERO motivation to fix it, you have to motivate them.

Even if your last name is something like Przynkowitz and not likely to be confused with anyone else, you still want to check for errors. I'll also guarantee they've spelled you name wrong in at least six places . . .

Lender will do an appraisal to determine value. Could be in person or could be a computer estimate, I've had both kinds. If you disagree with the number, you can have them or another lender do it again.

So lets say your appraisal comes in at $400,000, and you owe $130,000. Your equity is $270,000.

Some (a few) lenders will go to 100%, many will call it a day at 75% or 80% because they want to be sure you don't finance out, take the money and run ("selling it to the bank"). They want to make sure you have skin in the game and are not going to walk away.

So - Appraisal of $400K times .75 = $300K ("bank's safe lendable value number"), minus $130K (balance on the mortgage) leaves $170K in usable equity.

YMMV, but that's an overview of the way the lender looks at it. Good credit moves the lendable percentage up, bad credit moves it down. Income is important here, too, the lender wants to make sure you have sufficient capacity to pay the loan and still have enough money to live on. Total of your loan payments (mortgage and HELOC, car payments, credit cards, etc.) shouldn't exceed 40% of your income, for most banks, it is 36% or so.

On that 36% number, 32% is supposed to be housing, and the remaining 4% is supposed to be everything else - and that is just not realistic nowadays with the average car payment being $600+ (wow!).

Trick is if you plan to buy a car, wait till AFTER the HELOC closes, they won't be monitoring your income. Car dealers can finance anyone who has a pulse, and they don't check too closely for that.

Best Regards,
Mike/Florida

I’ve seen lending collapse because buyer went out and bought new furniture using a credit card for the new house and it killed their loan just days from closing.

 

[Tinhack]

I’ve seen lending collapse because buyer went out and bought new furniture using a credit card for the new house and it killed their loan just days from closing.

I watch my credit score go up or down every month because I use credit cards. It's on my Discover Statement every month. I pay a CC off and the following month it goes back up. It's a see-saw game since I no longer have any long term notes of recent history. Even a $160 purchase at Home Depot cost me a few points.