What is a 125 Home Equity Loan?

In the past, fixed home equity loan rates enabled borrowers to get funds for debt consolidation and refinance loans to 125% to stop foreclosures. The no equity loan market has changed but there are still may be some opportunities to save money but you must consider the benefits and the risks.

Initially, the “125 home loan” was used primarily to consolidate high interest unsecured debt. Most mortgage lenders are not offering 125% loans but there are still high LTV HELOC and equity loans available if you meet the lending criteria.

For borrowers not looking to refinance their first mortgage, the most popular high LTV today is the fixed home equity loan which is a simple interest installment loan that provide cash out to 100%. The home affordable rate and term refinance loan for people with upside down mortgages has been suspended at this time.

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We provide several paths with our no equity home loans and our goal remains focused around reducing your monthly payments. Rates are incredible and our home equity loans could help you accomplish your financial goals. Discuss your needs with licensed finance consultants today and BD Nationwide will introduce you to the best home equity loan lenders available into today’s marketplace.

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For years, the 125 loan has helped people maximize homeownership, leverage debt and create wealth. It’s no secret that interest rates and terms change frequently with this program. It is imperative that when you are shopping for a home equity loan that you check with lenders and brokers to get their latest guidelines, standards, requirements and availability for the 125 home equity loan.

Amazing Features of this Popular Home Equity Program

  • Fixed Interest Rate and Simple Interest Loan
  • Borrow to 125% of Your House Value
  • Gain Access to Fund Home Improvement and Rehabilitation Projects
  • Use this Money to Consolidate High Interest Charge Cards
  • Pay-Off Student Debt and Loans
  • Refinance and Combine All Your Bills Into One Lower Payment.
  • No Mortgage Insurance and No Annual Fees
  • First Time Homebuyers Are Encourages to Apply

The 125 home equity program has unique guidelines compared to other 2nd liens and refinance loans. No equity loan programs require good credit scores and income that can be documented. At this time the 125 equity loan has been placed on hold. Many people have started migrating to FHA loans for debt consolidation. Refinancing with FHA is available with cash out from 85% to 95% and credit scores are not a qualifying factor! If no mortgage is available, then ask your loan professional about possible to help your credit card debt go away forever.

These high LTV loans are not hard-money loans, as the 125% loan requires borrowers to have excellent credit scores. When reorganizing your finances and managing debt, it is essential to work with professionals that specialize in home equity lending. Get a no credit check home equity loan and consider your options.

Review Offers and Compare 125 Loan Quotes on No Equity Loans

President Obama announced that he is extending the Home Affordable Refinance Program to help underwater borrowers. If you are looking for a 125% loan you will be excited because the HARP program now has no loan to value restrictions. That means that no matter how much greater your mortgage is than your property’s value, there are opportunities for mortgage refinance loans that are waiting for you. The HARP 3.0 does not even have any loan to value restrictions. Certain restrictions do apply, so talk with one of our consultants today if you are seeking a rate and term 125% equity loan or underwater mortgage refinance program. Learn more about the HARP refinance.

No Equity is required with loans for cash out financing home improvements and refinancing high rate bills. Home equity loans provide first time homebuyers a method to finance home improvements without waiting years for their home to naturally appreciate. These simple interest loans are very unique. 125 loans are legendary finance tools that have helped thousands of homeowners consolidate bills and refinance adjustable rate loans. However today the 125 loan is only used as a “rate and term” option for refinancing underwater mortgages owned by Fannie Mae and Freddie Mac.

Our 125 home equity loans also help create opportunities for homeowners to consolidate adjustable rate debts into a fixed rate mortgage for increased “hard-dollar” savings. The “125 loan” has a long history of helping homeowners find better financial options for their debt and high interest mortgages.

After the housing crisis erupted, our government decided to expand regulations on lenders that advertise equity loans beyond the property’s value. Under the 125% loan, a consumer can only deduct the interest up to 100% of the house’s value. The interest above the home’s value is not deductible.

If you can’t find a mortgage lender to refinance you because your credit scores are low or you do not have enough equity do not lose hope. Many lenders are accepting home loan modifications and many banks are even forgiving past due balances. The FHA refinance and the Hope for Homeowners are not easy for the average borrower to qualify for, so don’t give up and ask about our attorney backed loan modification options as alternative to refinancing or taking out a home equity loan to pay your bills. Debt settlement is another popular choice for credit card debt elimination if you are unable to get approved for a bad credit refinance loan.

Many new homeowners have incurred additional debt from charging new furniture to revolving credit cards. Credit card debt is the last thing that first time homebuyers need at a time when every dollar counts. No equity is needed to qualify for loans to 125%, but 700 credit scores are the minimum with the present secondary mortgage crisis.

The home refinance lenders we have partnered with are considering your credit as the collateral and more weight is put on your income to qualify for these high LTV 2nd mortgages. For example, if your 1st mortgage balance is $200,000, and your home is also worth $200,000, we can offer you a $50,000 home equity loan, even though you have no equity earned in your home. Home Equity Loans can help you get your finances back on track!

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Home Equity Loan Testimonial: The Dalton family bought a new home a few years ago in Fresno, California. After three months in the new home, they found themselves with $30,000 worth of credit card debt due to the need to make cosmetic home repairs and the cost of the purchasing new furniture. The Daltons found a great solution with the 125% home equity loan.

Since the housing market had been shaky in California they did not have enough equity to take out a traditional second mortgage, so they needed a loan that would enable them to exceed the value in their home and still offer enough cash to consolidate the variable interest that was compounding each month.

According to Mrs. Dalton, “the 125% loan gave us some breathing room because it took our four adjustable rate credit cards and rolled them into a fixed rate loan even though we had no equity. This loan helped us get control of our finances so the transition with our new home was eased significantly.”

Useful Loan Tips from the 125% Home Equity Experts
Are you trying to refinance a mortgage with bad credit? Gone are the days of qualifying for a 125% home loan with low credit scores.

  • 1st Time Home Equity Loans
  • Interest Only Home Equity
  • Stated Value Home Equity Loans
  • Loans for Bad Credit
  • Also consider our High LTV Second Mortgage Loan

What Are Today’s Home Equity Considerations?

“Loan to Value” is the term commonly used to describe the level of equity in your home. 125% LTV occurs when the 1st and 2nd mortgage exceed the home’s value. The amount of equity you have in your home is derived from the mortgage balances and your home’s appraised value.

Credit Scores play a crucial role in determining the interest rate you qualify for. The higher your credit score the more options you will have at the best possible mortgage rate. Unfortunately the lower your credit score, usually the higher the rate.

Consider the type of interest rate for your 1st or 2nd mortgage. If you are refinancing debt then a fixed interest rate is recommended.

If you are financing home improvements then a variable rate may work best for a short term. Do you ever consider home improvements, like adding a new deck?
Getting your roof replaced? Or remodeling the kitchen?

Defining a “125% Home Equity Loan” – (also called “No Equity Loan”)

The 125% Home Equity Loan is a secure 2nd mortgage that disperses a lump sum of money at the time escrow funds the loan. Like the traditional home equity loan, the money is borrowed against home, but unlike the traditional loan, no equity is required. Because equity is taken out of the equation, credit and debt to income ratio become the driving factors for lending considerations. 125% equity loans are liens recorded in 2nd position on the deed to the title securing your home.

Payments are due monthly with terms of a fixed simple interest rate with a fixed amortization schedule. No annual fees with fixed rate home equity loans.

Are Home Equity Loans to 125% Worthy Debt Consolidation Solutions?

Have you ever considered the possibility of borrowing more than the appraised value of your home through a second mortgage? Well, with a home equity loan of up to 125%, you have that option. Choosing a home equity loan up to 125% enables you to borrow an amount equivalent to 125% of your home’s value, providing additional funds that can be used to settle bills or consolidate debt. At this time, there are no HELOCs that allow you to borrower above your property’s appraised value.

Generally, home equity rates are linked to the Wall Street Journal Prime Rate, similar to Home Equity Lines of Credit up to 125%. The current rate can be found in the Money Rates section of the Wall Street Journal, which monitors the interest rates of the 30 largest banks. When three-fourths of these banks adjust their interest rates, the Wall Street Journal publishes the updated rate.

Banks and lending institutions may also consider alternative rates, such as the LIBOR Index, MTA Index, and Federal Reserve. The former chairman of the Federal Reserve, Alan Greenspan, has played a pivotal role in managing interest rates to prevent market crashes and housing bubbles.

At the end of the day, these 125% loans put your home at risk if you want to move or are unable to make your mortgage payments because of losing your job. The no equity loans can provide amazing results with refinancing personal loans a high interest credit cards, but they pose a significant risk as well. Talk to your respected financial advisor before signing any documentation. The article was written by Amber Smith.

Fixed or Adjustable?
When securing a 125% home equity loan, you have the flexibility to choose between a fixed or adjustable interest rate. Each option comes with its own advantages and disadvantages for “no equity loans,” depending on the prevailing rate and whether it is currently high or low.

Fixed rates lock you into a specific interest rate for the entire loan term. While this ensures clarity in your interest payments from the beginning, you may end up paying more if rates decrease. On the other hand, adjustable interest rate loans typically provide an initial fixed rate for 1 to 5 years before transitioning to the prevailing rate at that time

Linda’s Helpful Hints for people who have No Equity Loans

Individuals without any home equity used to feel left out when discussions turned to cash-out refinancing or home improvements. Now, even those without equity can access funds for home construction or bill consolidation through a 125% home equity loan.

Which home equity loan suits me best? Equity Line of Credit or Fixed Rate Home Equity Loan?

Homeowners now have a plethora of financing options, making it crucial to select the right home equity loan to reduce monthly expenses. It’s essential to find the optimal second mortgage that combines the lowest rates with the most effective long-term solution.

Many are enticed by the lower payments associated with home equity lines of credit, where only minimum payments covering the interest are required. However, none of the minimum monthly payments contribute to reducing the loan principal. Opting for just the minimum interest payment could lead to a balance increase, resembling the growth of credit card debt. For those aiming at debt consolidation, we recommend considering a fixed-rate home equity loan.

Getting Ready for Refinancing a No Equity Home Loan

If you’re preparing to refinance your home equity loan, ensure you have the necessary documents before commencing the process. Firstly, determine whether you are opting for a “Stated Income” second mortgage or a Full Documentation loan. For a 125% home equity loan, full documentation is mandatory, including 2 years of income records, current pay-stubs, notes, mortgage statements, and homeowners insurance details.

For a “Stated Income” loan, income documentation or pay-stubs may not be required, but certain loan programs may necessitate documenting 3-6 months’ worth of reserves. Reserves are calculated monthly, covering the mortgage payment, property taxes, and hazard insurance. Consult your loan officer about potential rate variations with the “Stated Income” option.

Home equity loans through Nationwide Mortgage Loans typically close within 2-3 weeks. It’s advisable to prepare your documentation promptly and fax it to your loan officer. Additionally, review your loan disclosures with a trusted advisor, asking your loan officer for clarification on any queries you may have (last 2 pay-stubs, last 2 years of W2’s or 1099, mortgage statement, note, and homeowners insurance info).

Learn more about the 125% Mortgage
How do I figure out how much I can borrow?
To Calculate how much you can borrower follow this simple formula for figuring out combined loan to value (cltv).

Existing Mortgage Balance___ + proposed 2nd mortgage ____ (divided the sum by property value) = Combined Loan to Value

For Example: $200,000 mortgage + $50,000 2nd mortgage = $250,000 (Divide by $200,000 ) = 125% cltv

What are my home equity financing options if our appraisal indicates that we have no equity?
If you have no equity in the home, your loan options will be limited. However, Nationwide lenders offer home equity loans up to 125% cltv of your home’s appraised value. Credit score, mortgage history and debt to income ratio will also be factors in qualifying for a 125% home equity loan.