How this number is made
A home equity loan is a lump sum with a fixed payment, usually sitting behind the first mortgage. A HELOC that you draw and repay is a different page. Closing costs are included only if you added them to the amount borrowed.
- The amount is what you will owe on day one, not the equity you have.
- The rate is the note rate. A variable second mortgage is not this page.
Formula
Payment = P × r(1+r)^n ÷ ((1+r)^n − 1), with r = APR ÷ 12 and n = years × 12.
Worked example
With the figures already in the form, monthly payment is $393.90.
Questions
How is this different from the HELOC page?
The HELOC page is interest on a balance you can redraw. This one pays the balance off on a schedule.
Can the lender take the house?
It is secured by the house and is usually second in line. This page only prices the payment.