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Barrister
Barrister, Attorney
Category: General
Satisfied Customers: 35872
Experience:  16 years practicing attorney, Realtor, 26 years landlord
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how hard is it to qualify for a home equity loan? If I have

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how hard is it to qualify for a home equity loan? If I have over 100k in equity and want to borrow 25k what kind of credit do I need?
Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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Typically lenders will require a credit score of at least 600 before they will consider making a loan to someone. For a home equity loan, equity is just one of the factors that a lender considers. The also consider credit scores and history as well as the income of the applicant and any outstanding debts. They want to make sure that the applicant has enough income to repay the loan without the lender having to resort to foreclosure on the home in the event of a default.
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Typically the lower the debt to income ratio, the more likely that a lender will consider making a loan. For example if someone earns $5000 per month and has recurring expenses (like rent, car payment, mortgage, student loans, other loans, etc.) in the amount of $3,000 then they have a DTI of 60% and a lender may consider you a poor credit risk. Typically a DTI of 20-30% is what lenders consider prime loaning range.
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Barrister
Customer: replied 3 years ago.

ok....this is for my mom and I believe her dti ratio is only about 15% but she only makes about 30k a year...she has a place worth at MIN 130k and only owes 12k...she wants to borrow about 25k....what are her chances? she has excellent payment history on her mortgage

With those numbers, I would opine that a lender would find her an excellent credit risk and she should qualify for Tier 1 financing which would give her the best loan rates available to borrowers.
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If she took out a $25K loan at 4.5% amortized over 30 years, then her payment with principle and interest would be about $127 per month...
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Barrister
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