What percentage of the appraised value can generally be accessed in an equity loan?

In an equity loan, the percentage of the appraised value that can typically be accessed is around 80%. This percentage is derived from a common lending practice known as the loan-to-value (LTV) ratio. The LTV ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. In the case of an equity loan, lenders often allow borrowing up to 80% of the appraised value of the property.

This means that if a property is appraised at $100,000, a borrower could generally access up to $80,000 through an equity loan, assuming they have sufficient equity in the home and meet other lending criteria. The rationale behind this is to mitigate risk for lenders; by not allowing borrowers to borrow more than 80% of the appraised value, lenders can maintain a buffer to cover potential declines in property value.

The other percentages represent stricter or more lenient lending practices that are less common for equity loans. For example, 50% may be too conservative for typical equity lending and could limit the borrower’s options significantly, while percentages like 90% are typically reserved for specific situations or loan products that might carry additional risks for the lender. Hence,