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Before You Apply

Follow these 3 steps to make sure you're ready

Step 1: Check your credit

Graph illustrating ratings assigned to credit score ranges: “excellent” is 760+, “good” is 700-759, “fair” is 621-699, “poor” is 620 and below.A good credit score usually makes it easier to qualify for home equity financing. Find out how you can check your credit. Wells Fargo has established the following standards for credit scores:

  • Excellent: 760+: You should generally be able to qualify for the best rates, depending on your debt and income levels and the amount of equity you have in any collateral.
  • Good: 700-759: You should typically be able to qualify for credit, depending on your debt and income levels and collateral value (but you may not get the best rates).
  • Fair: 621-699: You may have more difficulty obtaining credit, and will likely pay higher rates for it.
  • Poor: 620 and below: You may have difficulty obtaining unsecured credit.
  • No credit score: Typically, you have not built up enough of a credit file at the credit bureau to calculate your score, or your credit file has not had activity for some time.

These ranges are for general guidance and may vary by financing type. Explore ways to build strong credit.

Step 2: Check your available equity

Graphic illustrating if the total of the amount you want to borrow and the amount you already owe on your home isn’t more than 85% of your home’s value, you may be able to access some of your home’s equity.Add the amount you want to borrow to the amount you already owe on your home, and make sure the total isn’t more than 85% of your home’s value.

For example, if your home is worth $200,000 and your mortgage balance is $120,000, that means you have $80,000 in total equity. You may be able to borrow up to $50,000 of that equity before reaching 85% of your home’s value.

Step 3: Check your debt

Graphic illustrating that your debt-to-income ratio (the percentage of your monthly income that is spent on monthly debt payments) should be 43% or less.Calculate how much you pay each month on your current debts—such as mortgage, credit card, and student loan payments—and make sure the total isn’t more than 43% of your monthly pre-tax income. If you need help, here are some tips on reducing your debt.


 

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