The first step in any home equity loan decision is to learn about the amount and type of interest rates you’ll be charged. In order to provide you with a better understanding, we’ve created this calculator that lets you know what your cost will be for a cash advance from most lenders. It also lets you know how long it takes to break even on your loan, which is really important for people who are considering taking out anything longer than a typical payday loan.
This calculator is aimed at helping those who fall into loans with high annual percentage rates or have bad credit scores who might not understand the real cost of their cash advance before signing an agreement.
This calculator is by no means a comprehensive guide or completes the analysis. It’s simply meant to be helpful information for those considering taking out a cash advance from a lender. But it does give you an idea of how much you can expect to pay in interest fees, the length of time it will take to break even on the cash advance, and how much of the cost is the actual interest rate rather than fees and other hidden costs that are added on top of your APR. It also provides you with some insight into how you might get lower rates on other types of loans with better credit scores.
What is the monthly payment on a $100 000 home equity loan?
Some of these lenders may offer different scenarios or options to choose from, so we’ve provided the two most common payment scenarios to give you some idea of how your loan will impact your actual borrowing cost.
Let’s say taking out a $100 000 home equity loan would cost you approximately $2 205.00 in interest fees and has an APR of 14%
The total borrowing cost of your loan is $101 965.00 plus the down payment of $10 900.00 =
Net borrowing cost: $102 595.00
Total interest to be paid: $2 207.
How much can I borrow?
The amount you can borrow with a home equity loan depends on your credit score and the type of loan you’re applying for.
Your credit score is the calculation of the total of all your outstanding debt, unpaid bills, and how much of your overall financial obligations are being paid off in full. The higher your credit score the smaller the cash advance you can get.
The average home equity loan size is $100 000, but there can be a wide range from as low as $25 000 to up to $500 000.
The amount you can borrow will vary from lender to lender because of different options and other criteria.
And the following are a few examples of what you can borrow.
$25 000 – $35 000 – home equity line loan.
$50 000 – $65 000 – home equity loan.
$90 000 – $110 000 – home equity cash advance.
$200 000 – $250 000 – home equity line of credit.
How will it impact my finances?
The best way to understand the overpay is first to understand your own financial situation and then use this calculator as a guide when you’re thinking about applying for a cash advance from any lender. The first thing you need to do is figure out how much you can afford to pay every month for your cash advance, including any other extra fees that may be added on top of the APR.
The total of your obligations is the first thing you need to figure out and how much you can actually borrow to cover those obligations.
Your cash advance will become larger due to the interest fees and other charges being added on top of the APR.
When you’re comparing different lenders’ loans, also consider how your cash advance will impact your finances at different points in time, including upfront costs for closing and tax refunds for seniors, families, and small businesses.
There’s also an interest rate gap between fixed-rate types of loans and variable rate types of loans. It’s also important to consider how much more you might have to pay if you take out a longer-term cash advance. It’s even more important to understand the true cost of your cash advance because these loans are usually unsecured, which means the lender has no collateral and has no obligation to help you out if you can’t pay it back.
It’s also vital to know that a high APR will often lead to extra fees and penalties, which are hidden costs that don’t show up until after you’ve signed an agreement. Some lenders may also require upfront insurance premiums or a credit life insurance policy that backstops the loan in case you pass away or become disabled before paying off your balance.
The total of your obligations:
- Debt.
- Mortgage (home equity).
- Credit card debt.
- Payday loans.
- Memberships.
- Overdrafts.
- Unsecured personal loans.
- Auto loan.
- Vehicle title loan.
The total amount you can borrow is of the utmost importance because these cash advances are unsecured and have no obligation to help you out if you encounter any financial difficulties. Lenders may charge a larger fee for a longer-term loan, which will add more interest expense to your overpay.
How long will it take for me to break even?
You should consider the monthly payment on a home equity loan as your monthly expenses. It’s important to know that the longer you take to pay off your cash advance, the larger your overpay will become.
It’s also important to know how much you’re borrowing and how long it will take for you to break even on the cash advance. So using this calculator will help you determine if a cash advance is right for you and properly analyze the terms and conditions.
Understanding your financial situation is the key to knowing if a home equity loan is a good solution or a less expensive alternative.
You should calculate you’re monthly overpaying by comparing interest rates of different types of loans available in your area with the same repayment period, including fixed-rate and variable-rate loans.
3% to 9% – Variable rate loans have a higher interest rate because they’re considered adjustable-rate loans.
Fixed-rate types of loans are repaid at the same rate from beginning to end.
You also need to consider the amount you can afford to borrow and if an extra fee or penalty is required for you to qualify for a cash advance of your choice or for you to get a lower interest rate.
Finally, it’s important to know that one of the most significant overpayments may occur once your cash advance has matured and you’re still paying interest on it. At this point, any unused portion will grow exponentially since there is no way for you to avoid these penalties.