Home Equity Loans are Back

Home equity loans provide homeowners with the opportunity to tap into the equity they have accumulated in their property, while taking advantage of long loan terms and competitive interest rates. Funds are then free for consolidating debt or repaying it, home improvements, upgrades and more. Home equity loans fell off the radar the past few years due to declining home values, having had a negative impact on home equity. Now that real estate values are rising again, tapping into home equity is becoming a popular option for homeowners.


As a lender, you may be seeing a considerable upswing in the number of home equity loan applications that pass over your desk. Finding efficient best practices to screen applicants can help you to improve competency and close more loans.


One significant challenge is untruthful or inaccurate information provided by loan applicants. Whether intentional or not, it may be represented in their income, assets and other information relevant to the underwriting decision. The good news is that the emergence of advanced technology streamlines the process and improves results. A single report generated by the tri-merge credit companies, displays data that provides a complete picture of the borrower’s risk. In the lieu of full appraisals, automated valuation mechanisms produce quicker outcomes with lower costs for home equity loans that are $250,000 or less.


It is important to verify income through the Internal Revenue Service. The IRS maintains a complete set business and personal tax records and wage statements. Ensure a borrower completes IRS form 4506-T to enable third-party access to tax transcripts and records. The electronic transfer of information makes certain data from buyers is valid and minimizes any fraud and paperwork.


The best technology is designed to adapt easily to changing underwriting guidelines, and can continue to grow with your company regardless of how lenient or strict underwriting guidelines become.


Rising home prices means an increase in home equity. This increase in home equity, combined with low-interest rates, makes home equity loans an attractive option for many homeowners. Advanced technology can help ensure best practices and provide for a better user experience and simple implementation.


Settlements, Ltd. is an expert team dedicated to ensuring that the buying and selling of your home proceeds smoothly. Want a smooth Pennsylvania closing? Call 412-922-6095.