About Home Equity Loan Rules

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The rules of home equity loans include not extracting all of the equity on a house, getting the home to appraise well and being able to repay the debt with a healthy income. Work with a financial institution to understand the rules of home equity loans using information from a registered financial consultant in this free video on home equity.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

This is financial adviser Patrick Munro talking about some of the home equity loan rules. There are rules to making any loan and home equity loans are no different. Basically, what an individual should be aware of is that their home and the equity their in is subject to rules by the financial institution. You can never extract all of your equity out of the house, because then you wouldn't have any. So, this is subject to an appraisal of the property. One of the most paramount rules is that your home certainly appraise well, for the amount of money that you're asking for. And, it's important that you work with a financial institution and know their rules ahead of time, before you go off and spend valuable dollars for an appraisal that may come under the benchmark for what the bank is looking to give you. The other home equity loan rule that you must be aware of is that your income must be sufficient enough to retire the debt or repay the debt, and make sure that your income is healthy, that your credit score is also good and these are some of the key rules that you should know regarding home equity loans. It's Patrick Munro, financial adviser.

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