Mortgage Calculator Alabama

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Home Equity Loan Calculator

70% (Conservative) 75% 80% (Standard) 85% (High LTV) 90% (Premium)

Most lenders permit a maximum combined debt of 80% to 85% of the home value.

Estimated Loan Amount

$0
Total Home Equity: $0
New CLTV Ratio: 0%
function calculateHomeEquity() { var homeValue = parseFloat(document.getElementById('calcHomeValue').value); var mortgageBalance = parseFloat(document.getElementById('calcMortgageBalance').value); var cltvLimit = parseFloat(document.getElementById('calcCltvLimit').value); var resultArea = document.getElementById('equityResultArea'); if (isNaN(homeValue) || isNaN(mortgageBalance) || homeValue <= 0) { alert("Please enter valid positive numbers for home value and mortgage balance."); return; } var maxCombinedDebt = homeValue * (cltvLimit / 100); var loanAmount = maxCombinedDebt – mortgageBalance; var totalEquity = homeValue – mortgageBalance; if (loanAmount < 0) { loanAmount = 0; } document.getElementById('calcFinalLoanValue').innerText = "$" + loanAmount.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('calcTotalEquityValue').innerText = "$" + totalEquity.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}); document.getElementById('calcNewRatioValue').innerText = cltvLimit + "%"; resultArea.style.display = "block"; resultArea.style.backgroundColor = "#f0fff4"; resultArea.style.border = "1px solid #c6f6d5"; }

Understanding Your Home Equity Borrowing Power

A Home Equity Loan, often referred to as a "second mortgage," allows homeowners to borrow against the value of their property minus what is still owed on the primary mortgage. This calculator helps you determine the maximum amount a lender might allow you to borrow based on current industry standards.

How Home Equity is Calculated

To find your available equity, lenders use the Combined Loan-to-Value (CLTV) ratio. The formula follows these steps:

  1. Determine Home Value: The current market value of your property (usually determined via appraisal).
  2. Apply CLTV Limit: Lenders typically cap total debt at 80% to 90% of the home's value.
  3. Subtract Existing Liens: Deduct your current mortgage balance from the capped value.

Example Calculation

Suppose your home is worth $500,000 and you currently owe $300,000 on your mortgage. If a lender allows an 80% CLTV, the math works as follows:

  • Maximum Total Debt: $500,000 × 0.80 = $400,000
  • Existing Mortgage: -$300,000
  • Available Loan Amount: $100,000

Why Use a Home Equity Loan?

Home equity loans typically offer lower interest rates than personal loans or credit cards because the loan is secured by your property. Common uses include:

  • Debt Consolidation: Paying off high-interest credit cards.
  • Home Improvements: Investing in renovations that further increase property value.
  • Emergency Expenses: Covering significant medical bills or unexpected costs.
  • Education: Funding higher education costs with a structured repayment plan.

Note: Your actual loan amount will also depend on your credit score, debt-to-income (DTI) ratio, and verified income. Always consult with a financial advisor before taking on new debt secured by your primary residence.

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