How a 100 LTV Home Equity Loan Works

A 100% loan to value home equity loan is a second mortgage that allows a homeowner to borrow up to 100% the value of his home. The amount that can be borrowed is subject to any existing loans. If the home equity loan or credit line combined with the current mortgage totals 100% of the home's value, the borrower will end up with more than one loan. If a home is worth $100,000 but has an $80,000 existing loan, then the borrower can access $20,000 in equity.

How the 100% LTV Home Equity Loan Works

In simple terms, this type of loan accesses 100% of the home's value. There are two types of home equity loans:

A closed-end home equity loan allows the borrower to receive  a lump sum at the time of closing. This loan will have a fixed rate for either 15 or 30 years or can be amortized.

The open-end home equity loan is more flexible. It allows the borrower to choose when and how often to access the equity amount. This type will typically carry a variable interest rate. The amount of time the credit can be accessed will vary with lenders, and the loan can be as long as 30 years.

Closing costs can vary between institutions, many offering low or no closing costs if an appraisal is not required. It is important to check with the financial institution to see what they require for a 100% home equity loan.

Uses for 100% LTV Home Equity Loans

There are many uses for a 100% ltv home equity loan such as debt consolidation, personal or medical expenses, large purchases, home remodeling, college tuition or vacations. The benefit is that the interest paid can be 100% tax deductible, and should be discussed with an accountant.