how much can she borrow in equity? would take be 120,000 minus 30,000? she is trying to get 150,000
her credit is a 760 and she makes over $50,000 a year
Frank: She can only borrow a percentage of the equity. So if she wanted to borrow $150K, and still owed $30K, but can only borrow 80% of equity, the home would have to be worth $217,500 (217,500-30,000=187,500*.8=150,000).
To check if this is even a good idea, I did a mortgage calculator on her income and the $180K total debt, not including car and credit card debt, and the monthly costs would be $1736 including escrow for taxes and insurance, which would be over 41% of her income. Bankers usually stick to a rule of thumb of 25%.
Borrowing is not always a good idea, and an equity loan is typically a financial disaster in large sums (payday loans, tax return loans, and credit card debt are the financial disasters in small sums). Dave Ramsey says always pay cash. The Bible says the borrower is the slave of the lender (Prov. 22:7). If you and your mom think you know better than God, Dave Ramsey, and the bankers, and still want to borrow the $150K, she should only borrow it against the collateral of what she is buying. If a banker says the basis of what is being bought, like a start-up business, is insufficient for the loan, then that is the final red flag she should need to not borrow the money in the first place.
If the $150K loan is for medical bills, they do not count against credit and usually do not charge interest whereas an equity loan will. If it is to pay education loans, the person who received their education should be responsible to stick to their plan or find some other way to eventually pay their debt. If that $150K represents some spending problem by some person, shifting the debt to your mother does not fix that person's spending problem, it just allows that person to repeat their mistakes while your mother pays the price with an eventual bankruptcy. If it is to avoid a bankruptcy of somebody else, then that person needs to learn how to cure it or file for bankruptcy rather than take down your mother too. If it is for a business, then the business plan should be reanalyzed with costs trimmed down to the point where it becomes credible to convince a banker to loan what is necessary. The business could start in a small, cramped, rented space. Equipment can be used or rented. Suppliers have terms of net 30 to sometimes several months to give the reseller time to sell enough of the merchandise to pay the invoices.
There is a good chance the house is worth more today. The house would need to be appraised and you can usually borrow up to 80% of the value. That being said, does she really need all the money at once? In any case she should talk to the loan officer about different borrowing options that may suit her needs best.
How much is it worth now?
Banks generally will lend up to about 80% of the house's value in total.
Value of the home x 80% Less the $30k that she already owes.
However, you didn't mention anything about her credit and income. Those are two big variables.
She can't get 150. The house isn't even worth 150. Equity is value minus what is owed.
they will not loan you a 100% of the value of the house. Depending upon her credit score and income she might get 30% of the value of the home NOW
the house may appraise for more than $150K but any new loan will pay off the old one(the $30K balance) meaning she is not going to get the full $150K she apparently wants