--By Priya Jestin, Staff Writer
Taking a loan against your home’s equity is not a simple and easy decision. It is one that has to be mulled over, you need to examine the various lenders available, check their offers and decide on the loan that offers you maximum benefits. Now, before offering you that loan, the loan officer will assess you on various fronts and only if you match up to their criteria, will you get a great loan.
One of the most important things here is your creditworthiness. The lending institution considers your creditworthiness when deciding whether to extend a loan and how much of an interest rate you will pay. Your creditworthiness involves three things: your credit history, your income and the loan-to-value ratio. Lenders want to know how much you make and how long you've been at your job, as well as how long you have been working in your particular field.
They will look at your total debt-to-income ratio: How much of your monthly income goes toward paying the mortgage, credit card bills, car payment and other obligations, including the payments on the equity debt for which you are applying. Most lenders want to keep that ratio under 36 percent.
