Why property type matters
A home equity loan is a second mortgage. It sits behind your first mortgage, so the lender takes on more risk. Because of that, lenders set firm rules about which homes they will lend on.
Townhomes can be a gray area. They share walls with neighbors, often come with an HOA, and can be set up in different legal ways. Those details can change how a lender views the home.
Where CapCenter's home equity loan stands
CapCenter's fixed-rate home equity loan is available on one-unit single-family homes used as a primary residence or a second home. Condominiums, 2 to 4 unit properties and manufactured homes aren't eligible.
For a townhome, the deciding question is usually how it is owned. A loan consultant can review your property and tell you whether it fits.
Know how you own your townhome
Some townhomes are owned fee simple. That means you own the home and the land under it, much like a detached house. A fee-simple townhome may be treated as a one-unit single-family home.
Others are set up as condominiums, where you own the unit and share ownership of the land and common areas. A townhome set up this way is treated as a condo, so it isn't eligible for CapCenter's home equity loan. Your deed or HOA documents will usually show which one you have.
A cash-out refinance as an alternative
With a cash-out refinance, you replace your current mortgage with a new, larger one and take the difference in cash. CapCenter finances townhouses on first mortgages, so this route may be open to you either way.
The trade-off is your rate. A cash-out refinance resets the rate on your whole balance. If your current rate is low, compare the new payment carefully. CapCenter's cash-out refinances come with ZERO Closing Costs (restrictions apply; see Offer details), which keeps the upfront cost down.
Other options to compare
- A home equity loan or line of credit from a lender that lends on your property type
- A personal loan for a smaller, shorter-term need
- Savings, if the project can wait a little
- A smaller project now and the rest later
Questions to ask before you borrow
- How much do I actually need, and for how long?
- Can my budget handle the new payment along with HOA dues?
- Is a special assessment coming that I should plan for?
- How does my current mortgage rate compare with today's rates?
