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Home Equity Loan Calculator

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Results Summary

Total Home Equity

Max Borrowing Limit

Monthly Payment

Remaining Home Equity

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Understanding Home Equity Loans

A home equity loan, often referred to as a "second mortgage," allows homeowners to borrow against the value of their property. Unlike a Home Equity Line of Credit (HELOC), which works like a credit card, a home equity loan provides a lump sum of cash upfront with a fixed interest rate and a set repayment schedule.

How is Your Borrowing Power Calculated?

Lenders don't let you borrow 100% of your home's value. Instead, they use a metric called the Loan-to-Value (LTV) Ratio. Most lenders cap the combined LTV (your current mortgage plus the new loan) at 80% to 85%.

Example Calculation:
If your home is worth $500,000 and your lender allows an 80% LTV, your total borrowing limit is $400,000. If you still owe $250,000 on your primary mortgage, you could potentially borrow up to $150,000 in a home equity loan ($400,000 – $250,000).

Key Benefits of Home Equity Loans

• Fixed Interest Rates: Your monthly payments stay the same throughout the life of the loan.
• Lower Rates: Generally offer lower interest rates compared to personal loans or credit cards because the loan is secured by your home.
• Tax Deductibility: In some cases, interest may be tax-deductible if the funds are used to "buy, build, or substantially improve" the home that secures the loan (consult a tax professional).

Common Uses for Home Equity

Many homeowners utilize these loans for major expenses, such as:

1. Home Renovations: Adding value back into the property.
2. Debt Consolidation: Paying off high-interest credit card debt with a lower-interest loan.
3. Education Costs: Funding college tuition for children.
4. Emergency Expenses: Covering significant medical bills or urgent repairs.

function calculateHomeEquity() { var homeVal = parseFloat(document.getElementById("homeValue").value); var mortgageBal = parseFloat(document.getElementById("currentMortgage").value); var ltv = parseFloat(document.getElementById("ltvLimit").value) / 100; var rate = parseFloat(document.getElementById("equityInterestRate").value) / 100 / 12; var years = parseFloat(document.getElementById("equityTerm").value); var months = years * 12; if (isNaN(homeVal) || isNaN(mortgageBal) || homeVal <= 0) { alert("Please enter valid numbers for home value and mortgage balance."); return; } // Calculations var totalEquity = homeVal – mortgageBal; var maxBorrowingLimit = (homeVal * ltv) – mortgageBal; if (maxBorrowingLimit 0 && !isNaN(rate) && !isNaN(months) && months > 0) { if (rate === 0) { monthlyPayment = maxBorrowingLimit / months; } else { monthlyPayment = maxBorrowingLimit * (rate * Math.pow(1 + rate, months)) / (Math.pow(1 + rate, months) – 1); } } var remainingEquity = homeVal – mortgageBal – maxBorrowingLimit; // Formatting var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 }); var monthlyFormatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 2 }); // Display Results document.getElementById("resTotalEquity").innerText = formatter.format(totalEquity); document.getElementById("resBorrowLimit").innerText = formatter.format(maxBorrowingLimit); document.getElementById("resMonthlyPayment").innerText = monthlyPayment > 0 ? monthlyFormatter.format(monthlyPayment) : "$0.00"; document.getElementById("resRemaining").innerText = formatter.format(remainingEquity); document.getElementById("equityResult").style.display = "block"; // Scroll to results document.getElementById("equityResult").scrollIntoView({ behavior: 'smooth', block: 'nearest' }); }