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Finance a major purchase

Looking to finance a major purchase?

Wells Fargo has a variety of home equity financing options that may meet your needs

If you need to finance a major purchase, home repair, or unexpected expenses, using the equity in your home could be an alternative to using other higher-interest rate financing options.

What types of expenses can my home equity cover?

Sometimes, life presents you with situations and opportunities that you have prepared for. Other situations are completely unexpected. The equity in your home may help you finance:

  • Major purchases

    Myth

    Home equity financing can only be used for home improvements and repairs.

    Truth

    Financing can also be used for other purposes such as paying for large unexpected expenses.

  • Home maintenance and repair
  • Home renovations and upgrades
  • Priorities for your family
  • Unplanned events or expenses

Remember that you should carefully evaluate the decision to borrow on your home equity. While using the equity in your home can be the right decision depending on your situation, it is important to have a repayment plan and know that the interest charges can result in a larger expense than the amount borrowed.


How can I estimate my available home equity?

The amount you may be able to borrow is based on the available equity in your home, as well as other factors such as your credit history, loan characteristics, and property location.

To get a very general idea of your available equity for financing purposes, first make an estimate of your home’s current market value. You can find many resources on the internet to help you with your estimate. Or you may be able to request a comparative market analysis (CMA) from a real estate agent in your area.

  • Next, multiply your market value by 0.80
  • From that amount, subtract what you owe on the mortgage and any outstanding debt secured by the property

The result will give you an idea of the equity in your home that may be available for financing.

Example (for illustrative purposes only)
Your home’s current market value = $200,000
Total existing mortgage and any outstanding debt secured by your property = $120,000
$200,000 x .80 = $160,000
$160,000 - $120,000 = $40,000 estimated available equity

Other resources

  • Use our home equity calculator to get an estimate of your available equity and explore your home equity financing options.
  • A cash-out refinance can also be used to access your available equity. Keep in mind this option also refinances your existing mortgage.
  • Customize and compare loan scenarios based on your specific needs using our interactive tool.

How can I get started?

These tips can help you prepare to finance your major purchase:

List any costs associated with your purchase

  • Add up any known and anticipated expenses associated with the purchase.
  • Review all financing options available to you to ensure that using your home equity is the right choice for your long-term goals.
  • You can still apply for financing even if you are unsure of the exact amount needed.

Create a budget

  • Once you tap into the equity in your home, you’ll have to make monthly payments, which means an additional expense beyond your mortgage. Be sure you can manage the increased payments.
  • Calculate how much you can contribute from your personal savings and how much you may need to borrow.

Determine when you need the funds

  • Are there specific dates associated with your expenses or are the timeframes flexible?
  • Do you need a single lump sum or various amounts over time?

What are the benefits of obtaining home financing using the equity in my home?

Using the equity in your home may provide the following advantages:

Myth

There is no financial benefit to taking out a home equity line of credit.

Truth

The interest on your home equity line of credit may be tax deductible; consult your tax advisor.
 

Possible lower costs

  • Lower monthly payments. Interest rates on home equity financing are typically lower than credit cards or personal loans, which could mean lower monthly payments.
  • Potential tax benefits. Home equity interest payments are generally tax deductible. (Consult your tax advisor regarding the deductibility of interest.)
  • Fee payment options. Select the home equity closing cost option that meets your needs.

Convenience

  • Higher credit limits. Home equity financing typically has higher credit limits than credit cards or personal loans, giving you access to more funds.
  • Greater financial control. If you’re approved for a home equity line of credit, you can access your variable-rate line of credit during the draw period, paying interest and principal only on the funds you use.

If the equity in your home isn’t sufficient and you want to finance improvements, consider our Refinance & RenovateSM loan, which may allow you to borrow funds based on your home’s estimated value after improvements are made.

What should I consider before using the equity in my home?

Before you decide to borrow against the equity in your home, it is important to evaluate your present and future needs.

Myth

Hardly anyone can qualify for home equity financing.

Truth

Home equity financing can be a good option if you have good credit, sufficient equity in your home, and manageable debt.

Is the purchase an appropriate use of my home equity?

  • Assess your needs and financial situation, available cash or other financing options, and the value of the purchase to you.
  • Although interest rates for home equity financing are typically lower than other forms of credit, plan on setting a schedule to pay off balances so you can minimize your interest expense.
  • If you are looking for an alternative to using your home equity for financing, you could apply for a personal loan or a line of credit

Does my home have enough equity?

Your home equity is what’s available after subtracting what you owe on your mortgage plus any outstanding debt secured by the property, from your home’s market value.

To estimate your home’s market value, use any one of the many home valuation resources available on the internet or request a comparative market analysis (CMA) from a real estate agent in your area.

 

What home financing basics should I understand?

If you obtain home financing, you’ll repay more than the amount you borrowed. How much you repay is determined by several factors, including your interest rate and loan amount. Here are some terms you should understand.

Interest rate

  • The interest rate is the percentage of your loan amount we charge you to borrow money.
  • Interest rates are based on current market conditions, your credit score, down payment, and the type of mortgage you choose. Check today’s rates.

Discount points

  • One point equals 1% of your mortgage amount. If you qualify, you may be able to pay one or more points to lower your interest rate. A lower interest rate means lower monthly mortgage payments.
  • Points are usually tax deductible. Consult a tax advisor regarding tax deductibility. On refinances you may be able to finance points as part of your mortgage amount.

Origination charge

  • On a mortgage, this amount includes all charges (other than discount points) that all loan originators (lenders and brokers) involved will receive for originating the loan.
  • The origination charge covers items including fees, document preparation, and underwriting costs, and other expenses.
  • On refinances, if you qualify, you may be able to finance the origination charge as part of your loan amount.

Loan term

  • Your loan term is the amount of time you have to pay off your mortgage balance.
  • Shorter loan terms typically mean higher monthly mortgage payments, but often have lower interest rates.
  • If you pay off your mortgage balance within a shorter term, you may pay less in total interest than with a longer-term mortgage.

Remember that interest rates only tell part of the story. The total cost of a mortgage is reflected by the interest rate, discount points, fees, and origination charges. This total cost is known as the annual percentage rate (APR), which is typically higher than the interest rate. The APR lets you compare mortgages of the same dollar amount by considering their total annual cost.

Monthly mortgage payment

Your monthly mortgage payment is typically made up of four parts:

  • Principal. The part of your monthly payment that reduces the outstanding balance of your mortgage.
  • Interest. The part of your monthly payment that goes toward the cost of borrowing the money.
  • Taxes. The part of your monthly payment that goes toward property taxes charged by your local government. We typically collect a portion of these taxes in every mortgage payment and hold the funds in an escrow account for tax payments made on your behalf as they become due.
  • Insurance. The part of your monthly payment that pays for homeowners or hazard insurance, which provides protection against losses from property damage due to wind, fire, or other risks. Like taxes, insurance costs are usually collected and paid from an escrow account.

Depending upon your property location, property type, and loan amount, you may have other monthly or annual expenses such as mortgage insurance, flood insurance, or homeowner association fees.

Video - The components of a mortgage payment

Video: The components of a mortgage payment

Watch this video to understand what makes up a typical mortgage payment – principal, interest, taxes, and insurance – and how they can change over the life of the loan. 

Check today’s rates to see our current interest rates.

How will you evaluate my home financing application?

When you apply for home financing, we generally use these four main criteria to assess your application.

Income

Do you have a reliable, continuing source of income to make monthly payments?

  • Income can come from primary, second, and part-time jobs, as well as overtime, bonuses, and commissions.
  • You may use other sources of income if you want them considered for payment, provided they can be verified as stable, reliable, and likely to continue for at least three years. Some examples include retirement or veteran’s benefits, disability payments, alimony, child support, and rental or investment income.

Current debts and credit history

Do you pay your bills, loans, credit cards and other debts on time?

  • We examine your payment habits before deciding to loan you money.
  • We also review your credit history and credit score.

It's a good idea to check your credit history and correct any problems before applying. Wells Fargo also offers a series of online credit education videos.

Assets and available funds

Do you have enough funds for a down payment (if you're buying a home) and closing costs?

  • You may use funds from various accounts including savings accounts, certificates of deposit (CDs), investments, and retirement funds.
  • If you're buying a home, in some cases, you may be able to use gift funds toward closing costs and all or part of your down payment.
  • Generally, you’ll also need to show that you have additional funds in your accounts to cover several months of mortgage, tax, and insurance payments.

The property

What is the market value of the property you want to finance?

We will order a property appraisal to make sure the value of your property meets our underwriting requirements.

Responsible lending guidelines

We approve applications where we believe the borrower has the ability to repay according to the terms of the financing. We use two ratio-based guidelines to evaluate your ability to repay.

Debt-to-income ratio

Debt-to-income ratio is the percentage of your monthly income that is spent on monthly debt payments.What is debt-to-income ratio? Debt-to-income ratio is the percentage of your monthly income that is spent on monthly debt payments.

  • We compare your expected monthly mortgage payment (principal, interest, taxes, and insurance) plus other monthly debt obligations to your gross (pre-tax) monthly income.
  • Mortgage program guidelines vary, but a good rule of thumb is to keep your total debt level at or below 36% of your gross monthly income. 


Housing-expense-to-income ratio

Housing-to-income ratio is the percentage of your monthly income that is spent on monthly housing payments.

What is housing-to-income ratio? Housing-to-income ratio is the percentage of your monthly income that is spent on monthly housing payments.

  • We also compare just your expected monthly mortgage payment (including taxes and insurance) to your gross monthly income.
  • Mortgage program guidelines vary, but a good rule of thumb is to keep your housing expense level at or below 28%.

Even if you fall within the 28%/36% guidelines, make sure you’re comfortable making your monthly mortgage, insurance, and tax payments, in addition to all of your other monthly payments. Remember that homes have other costs — such as utilities, maintenance, and repairs — that may not exist if you rent.

How to calculate your ratios

Explore your loan options

We can help you get started learning about different home loans. Below are a few options you may want to consider based on features that may be important to you. To see additional home loans, visit our Loans & Programs area.

Loan options to consider Ongoing access to available equity
Access to available equity without refinancing
Fixed payments
Lower payments starting out

Home equity line of credit
View details

Yes
Yes

Yes

Home equity line of credit with fixed rate advance
View details

Yes
Yes
Yes

Fixed-rate mortgages (cash out refinance)
View details



Yes

Adjustable-rate-mortgages (cash-out refinance)
View details




Yes

 Find the Right Loan for You 

Customize and compare rates, payments, and estimated closing costs.

Get started

We focus on your mortgage and home equity needs with the goal of delivering a straightforward and convenient application experience. Let us show you how easy it is to apply for mortgage or home equity financing with Wells Fargo.

The home equity application process

How do I apply for home equity financing?

To apply for home equity financing, you must own a primary residence, investment property, or vacation home. If you don’t own property, please consider a personal loan or line of credit instead.

It's easy, fast, and secure to apply:

Gather essential information

Before you start, have the following information on hand:

  • Financial information. Income, asset, and expense information.
  • Property information. Estimate a realistic value of your home.
  • Funds needed. Carefully evaluate the line of credit amount you'll need.

 Tip 

You'll need to provide documentation to support the information on your application later on in the process, so it's a good idea to start gathering the documents now.
Review our home equity application checklist (PDF)* to learn more. 

Submit your application

It’s easy to get started. Choose to work with us whichever way is best for you:

  • Online. Fast, easy and secure and it will take about 10 minutes. Apply Online.
  • Over the phone. Speak with a home equity specialist at 1-888-667-1918.
  • In person. Find a Wells Fargo location near you.

Remember, if you have questions, our home equity specialists are ready to help. You can also track the status of your application 24 hours a day, 7 days a week with yourLoanTracker.

Do I need to pay a fee to submit my home equity application?

There is no fee to submit a home equity application. For closing cost fees, you can select the home equity closing cost option that meets your needs. If you’re a Wells Fargo customer, you may also benefit from additional discounts. 

What should I consider when applying for home equity financing?

  • Make sure your requested line of credit amount is between $10,000 and $500,000 (some state restrictions apply). For larger line amounts, please contact us.
  • Carefully evaluate how much you need. Your requested amount plus the existing mortgage balance and any other outstanding liens against your property should be less than 80% of your home’s current value.
  • Provide a conservative estimate of the value of your home.
  • Track the status of your application by signing up for yourLoanTracker.
  • Ask about special interest rate discounts for Wells Fargo customers.

The mortgage application process

How do I apply for a mortgage?

Gather essential information

When you apply for a mortgage you’ll need to provide financial and property information to complete the application. This includes:

  • Income, asset, and expense information
  • Estimated purchase price and down payment (if buying)
  • Estimated property value and loan amount (if refinancing)

Review our homebuying application checklist (PDF)* or refinance application checklist (PDF)* to learn more. 

 Tip 

You'll need to provide documentation to support the information on your application later on in the process, so it's a good idea to start gathering the documents now.
 

Video - The loan application process

Video: The loan application process Watch this video to learn how your loan application moves through the process.

Remember, your home mortgage consultant will be there to support and guide you every step of the way.



Begin your application

Get started through any of these convenient ways:

  • Call us at 1-877-937-9357, Monday – Friday, 7:00 am – 9:00 pm, and Saturday, 8:00 am – 4:30 pm Central Time.
  • Find a local consultant and start the application process by phone or in person.
  • Request a personal consultation to have a home mortgage consultant contact you.

Once you apply, you’ll receive important disclosures about your loan. If your loan is eligible to be tracked through yourLoanTracker, you’ll receive a notification from your home mortgage consultant.

Do I need to pay a fee to submit a mortgage application?

Yes, there is a fee to apply for a mortgage. Fees cover the cost of the credit check, verification of your financial information, and property appraisal. Fees vary by loan type and the location of the property. Your home mortgage consultant will provide specific fee details during the application process.

Is there an advantage to locking in my pricing?

If you want to avoid the possibility that interest rates will rise before you close on your home loan, you can lock in your loan pricing after your mortgage application is completed.

For more information, please refer to the Loan Pricing Disclosure.

Is the process different for some types of mortgage loans?

Yes, renovation and new construction mortgage applications involve some additional steps.

Renovation mortgages

If you're purchasing and renovating or refinancing and renovating, you'll need to estimate the post-improvement value of the property. The property appraisal obtained during the processing of your loan must support this estimate.

Visit our Home Improvement Lending Center for more information.

New construction mortgages

When you're purchasing a home from a builder, the new construction mortgage application process is very similar to the process for buying an existing home. However, on new construction loans, you also have the option of choosing our Builder Best® Extended Rate Lock program. 

Visit our Construction Lending Center for more information.

After you apply for your mortgage or home equity line of credit, we'll work with you to ensure that the process is a straightforward and satisfying experience.

After you apply for home equity financing

What happens after my home equity application is submitted?

We'll review your application and complete the following:

  • Let you know the status of your application within two business days.
  • Request additional information such as financial documentation and income verification.
  • Order appraisal, title insurance, flood certification, and other services as necessary.

You can also track the status of your application 24 hours a day, 7 days a week with yourLoanTracker.

How does the home equity closing process work?

Choose to close in a Wells Fargo bank store, or from the comfort of home by mail if available, or if eligible, through our virtual closing option (PDF)*.

  • To keep things moving, be sure to sign and return all requested documents as soon as possible. 
  • If additional documents are requested, you can learn more about them in our document library.
  • Your home equity specialist can help you understand what may be required.
  • We'll activate your account after we receive your signed documents and your right-to-cancel period, if any, has expired.

You’ll be able to access your available credit with your Enhanced Access® Visa® credit card, access checks, Wells Fargo Online® banking, or your ATM card.

After you close, you can manage your account online. Wells Fargo Online® gives you convenient access to account information, tax data, and payment options. Learn more about online payments or sign up for online banking.

How can I keep track of my home equity application status?

With yourLoanTracker you can:

  • Receive disclosures
  • Provide financial documents
  • Check the progress of your application
  • Receive status updates throughout the process

What can I do to help my home equity financing close on time?

  • Monitor yourLoanTracker to keep track of your progress.
  • Make sure you sign all relevant documents, get them notarized (as needed) and return them to us as soon as possible.

After you apply for a mortgage

What happens after my mortgage application is submitted?

We'll send you disclosures listing your loan terms as well as estimated payments, and your application will be reviewed by an underwriter.

During the financial and property review, we'll:

  • Verify your employment, income, and financial information
  • Order services such as an appraisal, title insurance, and flood certification.
  • Send you a list of conditions, upon loan approval, that have to be met before you can prepare to close your loan.

Learn more about the documents you may be asked to provide.

You'll need homeowners insurance to close your loan. Get competitive quotes from multiple insurance providers through Wells Fargo Insurance.  Call 1-877-260-7471, Monday through Friday, 7:30 am to 8:00 pm or Saturday from 9:00 am to 4:00 pm Central Time.

How does the mortgage closing process work?

Prepare to close

Once your application is approved, we'll work with you and your closing agent to complete the following steps:

  • Ensure all loan approval and closing conditions have been met.
  • Confirm or set a closing date to sign your loan documents.
  • Review the title insurance to make sure you have rights to the property.
  • Review your homeowners insurance policy to make sure you have adequate coverage.

Before your closing, you'll receive your final disclosures confirming the amount of money you'll need, so you can arrange to have funds available for your closing.

At closing

We'll send the closing documents to your closing agent. On your closing day, review the documents carefully with your agent, then sign and date them.

  • If you're buying a home, collect the keys and move in. Congratulations!
  • If you're refinancing, you have a three-day right-of-rescission to cancel the transaction.

After your loan closes, you can manage your account online. Wells Fargo Online® gives you convenient access to account information, tax data, and payment options. Learn more about online payments or sign up for online banking.

How can I keep track of my mortgage application?

Your home mortgage consultant can answer any questions regarding your application status. Also, if you're notified that your loan is eligible, you can use yourLoanTracker to:

  • Receive disclosures
  • Provide financial documents
  • Check the progress of your application
  • Receive status updates throughout the process

What can I do to help my mortgage close on time?

Here are a few important steps you can take to help your mortgage loan close on time:

  • Provide accurate information during your loan application interview. Discrepancies in your credit history, employment history, or current bank account balances could delay your loan process.
  • Help keep your application moving by submitting requested documents promptly. Learn more about documents we may request in our document library.
  • Do not make big purchases, take on additional debt, transfer large amounts or make large deposits unrelated to your loan, until after your closing.

Is the process different for other types of mortgage loans?

Yes, renovation mortgages and new construction mortgage loans involve some additional steps.

Renovation mortgages

  • For all renovation loans, we base the appraised value on the completed improvement value.
  • Wells Fargo must approve your contractors and close the loan before work can begin. Our funding department will assist you in making interim payments to your contractor(s).
  • If you have an FHA 203(k) loan, we must perform inspections of the work before we release funds.
  • Once the inspector is satisfied with the work quality, we release the funds from the escrow account. The checks are made out jointly to you and your contractor. Typically, we do not release funds until work is completed. Upon completion of the project, we perform a final inspection and we disburse the final funds.

Visit our Home Improvement Lending Center for more information.

New construction mortgages

  • You have additional rate lock options with our Builder Best® Extended Rate Lock program.
  • We'll work with you to get your permanent loan approved. We’ll also get the final plans and specs so that we can order an appraisal.
  • After we have the appraisal and a fully executed purchase contract, we’ll submit the entire package for final construction loan approval.

Visit our Construction Lending Center for more information.

After your mortgage or home equity financing closes we provide a variety of ways to manage your account online. View account activity, transfer funds, make payments, and more - anytime, anywhere and at your convenience.


Manage Your Mortgage Account

Manage Your Home Equity Account

Manage Your Finances

Apply for a home equity line of credit. Apply Online
Call  1-888-667-1772 or
find a location

If you are a servicemember on active duty, prior to seeking a refinance of your existing mortgage loan, please consult with your legal advisor regarding the loss of any benefits you are entitled to under the Servicemembers Civil Relief Act or applicable state law.

Market value
The most probable price which a ready, willing and able buyer would pay and a willing seller will accept, both being fully informed under no pressure to act. The market value may be different from the price a property can actually be sold for at a given time (market price).

Closing cost options
Most home equity financing offers two options:

Have us pay your closing costs:

Pay your closing costs:

For details, please call 1-888-421-4672.
Draw period
The length of time during which you can access funds from your account.

Appraised value

The home's estimated value — known as appraised value — is an important part of your financing. If you're purchasing, this value usually needs to be equal to or more than the home's purchase price. If refinancing, the appraised value helps to determine your maximum loan amount.

Title insurance
An insurance policy that protects a lender or homebuyer (if the homebuyer purchases a separate policy, called owner's coverage) against any loss resulting from a title error or dispute. On a refinance, if the property has had a recent title insurance policy, a homeowner may sometimes be eligible for a reduced rate on the title insurance (also known as the reissue or refinance rate).
Conditions
Standard conditions include our receipt of homeowner's insurance policy, flood insurance if necessary, and an acceptable title insurance binder.
Closing agent
This is the person or company that coordinates the execution of your closing documents. May be called by different titles in different states. Some common terms are attorney, title company, settlement agent, escrow company, notary, among others.