Equity Home Loans

Can a new home equity loan amount be larger than your mortgage balance?

We currently have a home equity loan and a mortgage, but want to pay off credit card debt. Can we take out a new home equity loan, paying off the current home equity loan and credit card debt which would result in the home equity loan balance being larger than the mortgage balance? There is ample equity in the home to support both. We do not want to refinance to a new mortgage because we are thinking of selling in the next few years and don't want the expense of closing costs on a new mortgage.

Public Comments

1. You should be able to technically do this as long as the new home equity loan + the 1st mortgage are not more than 85% of the home's total value. This is generally the cap. So if you have a home that's worth $200,000: 85% of that is 170,000. As long as the new home equity loan and the mortgage balance added together are less than that amount, you should be OK.