When looking for a 100 percent Home Equity Loan, all lenders establish a maximum loan-to-value (LTV) ratio. The LTV ratio is the sum of all outstanding loan amounts divided by the home's appraised value. For example, a lender that establishes a maximum LTV of 80 percent would allow $80,000 to be borrowed if the appraised home value is $100,000 (80,000/100,00 = 80% LTV).
With a 100 percent home equity loan, you actually borrow 100 percent of your home's value (e.g. $100,000/$100,000 = 100% LTV).
Under the above example with $80,000 in existing loan amounts, the borrower could access $20,000 of equity; the difference between the appraised home value and the amount of the outstanding loans.
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