Mobile Navigation

Close Mobile MenuOpen Site Search

The Power of Home Equity Loans in Florida

Main Blog Article Content


Home equity loans are a great way to finance large projects or consolidate debt. Floridians have even more reason to seriously consider this option since homeowners enjoyed the highest annual equity growth in the country in the last quarter of 2022. That means they’re in excellent shape to borrow against a home equity loan or line of credit (called a HELOC). Read on to learn how to use home equity loans in Florida and the benefits of these loans.

How to Qualify
You’re likely wondering how to qualify for a home equity line of credit, but first, let’s do a quick primer on how this type of loan works. Essentially, you’re borrowing money against the value of your home. The amount you can borrow varies by lender, but it’s typically up to 80% of your home’s value minus what you currently owe. For example, if your home is worth $300,000 and you owe $100,000 on your mortgage, you would be eligible to borrow approximately $140,000.
Guidelines will vary among lenders, but generally, you will need the following to qualify for a HELOC in Florida:
  • Enough equity in your home
  • Good credit score
  • Low debt-to-income ratio
  • Employment history and job security
  • On-time payment history
What happens if you have a lower credit score? You might still qualify for a home equity loan but will likely pay a higher interest rate. Lenders will also generally require more home equity to mitigate their risk.

It might be helpful to work with a financial institution and improve your credit before applying. If too much debt is the issue, paying it off and lowering your debt-to-income ratio will help improve the terms of your loan.

Benefits of a Home Equity Line of Credit
In addition to offering potentially lower interest rates and costs compared to credit cards or other loans, home equity lines of credit offer some unique advantages.
For example, the interest you pay on a home equity line could be tax deductible if you use the money to improve your home.

Home equity lines are also flexible. You can use the funds for whatever you wish. Do some home renovations, pay for a child’s college tuition, consolidate high interest debt or whatever else you need the money for.

In addition, unlike a personal loan, when you make your monthly payments, the funds become available again without submitting another application and paying fees again.

How to Apply in Florida

If you are a homeowner in Florida, you’re uniquely positioned for a good home equity line of credit. Florida has seen the most significant price gains in the U.S., increasing the amount of money you can borrow.
Before you apply, you’ll first want to compare your options. Several lenders offer home equity loans in Florida, and you’ll like to inquire about their fees and underwriting requirements. Also, be sure to investigate hometown options, such as credit unions. Credit unions typically offer more personalized service with lower rates and less fees than big banks.  
Next, you should get pre-approved for the loan. You’ll need to provide information about your current debts, income, employment status, and the equity in your home. Lenders will also look at your credit score and debt-to-income ratio. Once pre-approved, you’ll see the loan terms and the estimated closing costs.
Finally, before you sign on the dotted line, you should understand the risks involved. Home equity loans are an excellent idea to help pay for home improvements or significant expenses, but only when you plan to pay them off. If fees and interest stack up, the negatives will outweigh the positives. Also, it’s essential to understand that you are using your home as collateral on a home equity line of credit, so keeping up with payments is vital.
When applying for a home equity loan in Florida, comparing different options and shopping around for the best rates is essential. Additionally, getting pre-approved for the loan is crucial before you start shopping for a project or consolidating debt.
We can give you a better idea of how much you can borrow and will also make it easier to compare different loan options. Contact the experts at Power Financial Credit Union today to learn how we can help make your financial dreams a reality.