The Home Equity Loan Calculator will help you to decide whether or not you should refinance your current mortgage at a lower interest rate. Not only will this calculator calculate the monthly payment and net interest savings, but it will also calculate how many months it will take to break even on the closing costs.  Your principal balance could also be a current equity loan balance so you can also use this equity loan calculator to estimate how much you could save if you refinance you current home equity loan.  Estimate how much heloc payments will be based on a loan amount.

A hone equity loan or home equity line of credit (HELOC) allow you to borrow against your ownership stake in your home. The interest rates are competitive with other types of loans, and the terms are often flexible.

Tapping home equity can be a smart way to borrow cash to pay for home improvement projects or pay off high-interest debt. If you have substantial equity in your home because you’ve either paid down your mortgage or the home’s value has spiked, you might be able to snag a sizable loan.

Before you apply for a loan, you should:

• Have at least 15 to 20 percent equity in your home.
• Have a credit score of 620 or higher for higher likelihood of approval.
• Have a debt-to-income ratio between 43 to 50 percent.

Equity is the difference between how much you owe and how much your home is worth. Lenders use this number to calculate your loan-to-value ratio, or LTV, a factor used to determine whether you qualify for a loan. To get your LTV, divide your current loan balance by the current appraised value.

Having equity is not enough to secure a loan from most banks. A favorable credit score also is essential in order to meet most banks’ requirements for a HELOC.

Your debt-to-income-ratio, or DTI, is also a factor lenders consider with home equity loan applications. The lower the percentage, the better. The qualifying DTI ratio varies from lender to lender, but some require that your monthly debts eat up less than 36 percent of your gross monthly income. Other lenders are willing to go as high as 43 percent for your DTI.

Lenders will add up the total monthly payment for the house, which includes mortgage principal, interest, taxes, homeowners insurance, direct liens and homeowners association dues, along with any other outstanding debt that is a legal liability.

The debt total is divided by the borrower’s gross monthly income — which includes base salary, commissions and bonuses, as well as other income sources such as rental income and spousal support — to come up with the DTI ratio.

You can improve your DTI by earning more money, lowering your debt or both.