At American Momentum Bank, our goal is to help you create and sustain financial momentum. In a new series called Banking 101, we would like to touch on some of the more commonly asked questions we receive from our customers.

One frequently asked question is, "What is the difference between a home improvement loan and a home equity loan?"
A Home Equity Loan (HEL) may be used to advance up to 80% of the current market value of your home.
For example:
Current Market Value $200,000
X 80% $160,000
Current Mortgage $100,000
Amount Available for HEL $60,000

A HEL may only be used for a 1-unit, primary residence. The funds can be used for any purpose, including home improvements, but the market value of the home is based on the 'as is' value, prior to the improvements being completed. This is an excellent option for those individuals with significant equity in their home.

In a Home Improvement Loan, a lender can use the "as completed" value when determining the current market value of the home. This enables the Lender to add the value of the improvements, creating a potentially higher loan amount availability. Unlike the home equity loan, however, all the funds must be used for improvements to the home.

There are different regulations for each type of loan, so contact American Momentum Bank to discuss your options.

American Momentum Bank
"Official Bank of TexAgs"
Frank Varisco '82, NMLS ID 815190
fvarisco@americanmomentumbank.com
Market President Bryan/College Station
979.599.9348

The only thing anyone needs to know about home equity loans:

DONT USE THEM

I agree. Hate to say it about a sponsor, but they are begging for debt and it's not the first time they did it.

If other threads get deleted or moved for not pertaining to Texas A&M Football then wouldn't that policy apply to all threads? Not to stir the pot but I don't think this is football related Might be a better board for this.

Yea Sure....Give them the rights to the title to your home !!

We know Logan, just messing around! Killing time before Saturday Appreciate all the sponsors out there funding my TexAgs addiction!

Why not work with a local bank to arrange a construction loan for your borrower and use those fund ONLY for the home improvement, then refinance the first and second (i.e., the construction loan) into one NON-EQUITY loan and get them a lower interest rate.

Once a Home Equity, always a Home Equity -- Stay away from Home Equity Loans.

friscokid is a tool & a moron. How do you think 95% of real estate is purchased in this nation?

How do you think the vast majority of home improvements are paid for, that provide a much higher sales price for profit, or an even more beautiful home to enjoy? First lien position is done on a home, car, construction or anything else of significant value. Learning a little bit about the responsible use of debt could serve you well.

Anyone could see what this thread was about from the title. Thank you for the educational information.

quote:

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friscokid is a tool & a moron. How do you think 95% of real estate is purchased in this nation?

How do you think the vast majority of home improvements are paid for, that provide a much higher sales price for profit, or an even more beautiful home to enjoy? First lien position is done on a home, car, construction or anything else of significant value. Learning a little bit about the responsible use of debt could serve you well.

Anyone could see what this thread was about from the title. Thank you for the educational information.

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But, maybe it's a good deal for some people.