Equity Lending Programs for Getting a Mortgage

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Hi everyone, how are you? It's Leah Coss with The Mortgage Centre. I wanted to talk about equity programs. Now, what is an equity program? Well, much like new immigrant programs, self employed stated income programs, equity programs is another product that some banks, not all banks, offer. So what an equity program is and why it's somewhat beneficial to get into one is it alleviates a lot of paperwork hassles.
So especially if you make income in a complicated fashion, maybe you are a contractor who just gets contract jobs, maybe you're a singer songwriter and you just get money where you can or maybe you're self employed and you don't declare a lot of income. Equity programs, essentially what they are, is they loan to you based on the equity that you have in the home.
Now, why would a lender create this program? Well, like with anything, if you give me something your only thought in your mind is, what is the risk of you not giving that back to me? What are the chances? And one of the ways that banks evaluate their chance is by how much skin you have in the game. So, for example, who's probably going to be more likely to default on their loan, someone with only five percent of equity, or skin in the game in that house, or someone with 50 percent or even 35 percent.
Well, chances are the people who have 35 percent or 50 percent of their money, of the percentage of the value of that home, that's their money of 35 percent in there, they're not going to default on that loan, because if they do they risk losing a lot of their own money. So when banks are evaluating risk, definitely loan to value, or skin in the game, or equity in that home is coming into a huge part of their evaluation on whether they want to give you the loan. And what kind of rate they're going to give you and what kind of paperwork they're going to require from you to prove that you can, in fact, afford this loan.
So equity programs are essentially where some bank have 25 percent loan to value or rather 75 percent loan to value, but 25 percent of down payment. Some have 30 percent, 35 percent it goes on and on and on. But basically you're going to need a lot more than 20 percent to get into any kind of equity program. Not all lenders offer them, not all of them have the same perks.
So if you are interested in getting into an equity program, maybe you already own a home, you've got a lot of equity and you're about to sell your home and upgrade or downgrade. And so therefore you've got a lot of money that you can put into that property, definitely ask about an equity program. You're not going to have to declare what your income is or have job letters or any of those headaches, the banks just want to know where that money is coming from for that down payment and, in a lot of cases, that's about it. They do want to make sure that your credit score is decent, but paperwork hassle is definitely minimized.
So Leah Coss with The Mortgage Centre. If I can help you out in answering questions about equity programs or any other programs and products that different lenders offer, or if you want to know if you do qualify for an equity program, definitely give me a call. I'd be happy to help you out. Thanks so much.

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