Step 1: Gather your numbers
You need two things: what your home is worth and what you owe on it.
- Balance: use your latest mortgage statement, or ask your servicer for a payoff amount.
- Other loans: add any second mortgage, home equity loan or home equity line of credit.
- Value: use a recent home value estimate, or recent sales of similar homes nearby.
Step 2: Do the math
Subtract all your balances from your home's value. What's left is your equity.
Then divide your balances by the value. That's your loan-to-value. When more than one loan is secured by the home, the same math is called combined loan-to-value, or CLTV.
Example: a $400,000 home with $240,000 owed has $160,000 in equity. $240,000 divided by $400,000 is 0.6, so your loans equal 60 cents of each dollar the home is worth.
What lenders will lend
Lenders don't lend against all of your equity. They set a maximum for the total of all loans on the home, which leaves some equity in place as a cushion.
At CapCenter, the maximum depends on the loan type and purpose, and a loan consultant can tell you yours. The two main ways to borrow work differently:
- Cash-out refinance: replaces your current mortgage with one larger loan and pays you the difference.
- Home equity loan: keeps your first mortgage as it is and adds a second fixed-rate loan from $50,000 to $250,000.
Worked example
Your home is worth $500,000 and your first mortgage balance is $280,000, with no second loan. Your equity is $500,000 minus $280,000, or $220,000. Your loan-to-value is $280,000 divided by $500,000, or 0.56, a little over half the home's value.
Now say a lender's limit allowed total loans on this home of up to $400,000. That's a made-up figure for the math, not a CapCenter maximum. Subtract the $280,000 you owe, and about $120,000 is the most you could borrow before costs. Hypothetical example only.
Why the value matters
Your result is only as good as the value behind it. A lender's value can come from an appraisal or an automated valuation model. For CapCenter home equity loans, an appraisal isn't required in most cases; we typically use automated valuation models. If the lender's value comes in lower than your estimate, the amount you can borrow goes down too.
Tips for an accurate number
- Use a recent value estimate, not what you paid.
- Include all loans secured by your home.
- For a home equity line of credit, some lenders count the full credit limit, not just what you've drawn.
- Home improvements may add value, but often not dollar for dollar.
- Recheck before you apply, since values and balances change.
Which homes qualify
CapCenter home equity loans are for single-family primary residences and second homes. Investment properties, condos, 2-4 unit homes and manufactured homes aren't eligible. Other limits apply; see our Offer details.
