You must have equity for a home equity loan, correct?! (payments, rate)

[Fields of Green]

Sorry if this is a ridiculous question, but... if your house is currently worth a little less than what you owe, you cannot obtain a home equity loan, riiight? Thanks in advance.

[MrRational]

Originally Posted by Fields of Green

Sorry if this is a ridiculous question, but...

Even if it was in balance that wouldn't be enough.
The appraisal has to EXCEED the mortgage (and by a fair bit) to get a loan against the difference.

[Karianne]

During the housing bubble some lenders would loan 125% of the value of the home for a home equity loan, but this ended with the crash. Now in order to get a home equity loan you have to have equity available, and they still require you to keep some untapped equity in the home.

If you owe more than the value of the home and are current on your payments, it may be possible to refinance to a lower interest rate with your current mortgage company through the HARP program. That would have the potential to lower your payments although they wouldn't give you any cash out.