myUSFinance

1. Enter your Current Home Value ($) — This value represents your current home value
2. Enter your Outstanding Mortgage Balance ($) — This value represents your outstanding mortgage balance
3. Enter your Desired Loan Amount ($) — This value represents your desired loan amount
4. Enter your Interest Rate (%) — This value represents your interest rate
5. Enter your Loan Term (years) — This value represents your loan term (years
6. Click Calculate — Review your results in the output section below the form. The calculator instantly computes all values based on your inputs.
7. Adjust and Compare — Modify any input to see how changes affect the result. Try different scenarios to find the optimal approach for your situation.

All calculations are performed instantly in your browser. Your data is never sent to any server or stored anywhere — your financial information remains completely private.

Where:

• Home Value — Current market value of your home
• Max LTV — Maximum loan-to-value ratio allowed by the lender (typically 80-85%)
• Mortgage Balance — Remaining balance on your primary mortgage
• r — Monthly interest rate of the home equity loan
• n — Number of monthly payments in the loan term

Worked Example

Home value: $400,000. Mortgage balance: $250,000. Max LTV: 80%. Available equity = ($400,000 × 0.80) - $250,000 = $70,000. Borrowing $50,000 at 8% for 15 years: Monthly payment = $478. Total interest: $36,040.

Limitations and Assumptions

Home equity loans have fixed rates and fixed payments, while HELOCs have variable rates with a draw period. Interest may be tax-deductible if used for home improvements (consult a tax professional). Your home serves as collateral — defaulting could result in foreclosure. Combined LTV (first mortgage + equity loan) typically cannot exceed 80-85%.

Understanding the following key concepts will help you interpret your results and make better financial decisions:

• Principal — The initial amount of money involved in the calculation, whether it is a starting balance, loan amount, or investment.
• Interest Rate — The percentage charged or earned on the principal amount, typically expressed as an annual rate (APR). This rate determines how quickly your money grows or how much borrowing costs.
• Compounding — The process of earning interest on previously earned interest. More frequent compounding (daily vs. monthly vs. annually) results in higher effective returns or costs.
• Time Horizon — The length of time over which the calculation applies. Longer time horizons amplify the effects of compounding and small differences in rates.
• Present Value vs. Future Value — Present value is what money is worth today; future value is what it will be worth at a specific point in the future, accounting for growth or inflation.

These concepts form the foundation of virtually all financial calculations. Understanding how they interact helps you evaluate any financial product or decision with confidence.

Let's walk through a practical example using this calculator.

Scenario: Sarah is considering a $25,000 personal loan to consolidate credit card debt. She has received offers from two lenders:

• Lender A: 8.5% APR, 36-month term — Monthly payment: $789, Total interest: $3,404
• Lender B: 7.2% APR, 48-month term — Monthly payment: $601, Total interest: $3,848

While Lender B offers a lower monthly payment ($188 less per month), Sarah would pay $444 more in total interest over the life of the loan. If her budget can handle the higher payment, Lender A saves money overall. However, if cash flow is tight, Lender B provides more breathing room.

Sarah decides to go with Lender A's rate but asks about a 48-month option: 8.5% APR for 48 months gives her a $615 monthly payment with $4,520 in total interest. She settles on the 36-month term and plans to apply the $188 monthly savings compared to Lender B toward her emergency fund.

1. Compare Multiple Lender Offers

Get quotes from at least 3-5 lenders including banks, credit unions, and online lenders. Rates can vary by 2-5 percentage points for the same borrower, potentially saving thousands over the loan term.

2. Check Your Credit Score First

Review your credit report and score before applying. Correct any errors and take steps to improve your score if possible. A higher credit score directly translates to lower interest rates on virtually all types of loans.

3. Choose the Shortest Affordable Term

While longer terms mean lower monthly payments, they result in significantly more total interest paid. Choose the shortest term with payments that fit comfortably in your budget, leaving room for emergencies.

4. Read the Fine Print on Fees

Look beyond the interest rate to understand origination fees, prepayment penalties, late payment fees, and other charges. These can add hundreds or thousands to your total borrowing cost.

5. Consider Making Extra Payments

Even small additional payments toward principal can dramatically reduce total interest and shorten your loan term. Use this calculator to see the impact of adding just $50-100 extra per month to your payment.