Home Borrowing Power
Home borrowing power is one of the standout features of Chimney's platform. It provides homeowners with an accurate estimate of how much they can borrow from their financial institution based on the equity in their home. This helps users unlock the borrowing potential of their homes, making it easier to access financing options like HELOCs or home equity loans.
Home Borrowing Power Overview
What is Home Borrowing Power?
Home borrowing power gives homeowners an estimate of the amount they can borrow against their home’s equity, based on your institution’s lending criteria. This feature is highly actionable for account holders, especially those who may not realize they have untapped equity available to pay off higher-interest debts, such as credit cards. It empowers users to understand how much they can borrow and take advantage of lower interest rates for debt consolidation or other financial needs.
Where does Home Borrowing Power appear?
Home borrowing power is integrated into several key areas of the homeowner’s digital banking experience:
- Home banking tile: Displayed within the property summary, providing a quick view of borrowing potential.
- Dashboard: Listed as one of the main actionable data points within the user’s dashboard.
- Offers tab: Often tied to relevant financial offers, such as home equity loans or HELOCs, encouraging users to take advantage of their available borrowing power.
How does Home Borrowing Power benefit account holders?
Home borrowing power is particularly useful for homeowners who may not be aware of their home’s value or the equity they’ve built up. It provides a clear path to accessing financing with potentially lower interest rates, which is especially valuable for:
- Debt consolidation: Users can leverage home equity to consolidate high-interest debts, such as credit card balances.
- Renovations or large purchases: Homeowners can tap into their borrowing power for home improvements or major financial needs.
Configuring Home Borrowing Power
1. Global settings
To ensure accurate estimates of borrowing power, financial institutions can configure home borrowing power settings based on their lending policies. These global settings define how much equity homeowners can borrow and which account holders are eligible to see their borrowing power.
1. Max loan-to-value (LTV)
- This setting defines the maximum loan-to-value ratio your institution will lend against. LTV determines how much of the home's value can be borrowed as a percentage.
- Typical values range from 80% to 95%, depending on your institution's risk tolerance and loan offerings.
2. Exclusions
Exclusions allow you to refine which account holders see borrowing power based on certain criteria:
- Confidence score: If the property’s confidence score is too low, you can hide the borrowing power from those account holders.
- Property size or type: Further refine eligibility by excluding certain property types or sizes that do not meet your lending criteria.
Exclusions help ensure that only relevant, qualified users see their Home Borrowing estimates, closely aligning with your lending policies.
2. AVMs, ranges and labels
Once the global settings are in place, you can customize how home borrowing power is displayed to users. This ensures that the information is clear, engaging, and aligned with your institution’s visual and functional preferences.
Setting your range and labels
Home Borrowing Power is displayed as an estimated range, which gives you a few options for how to set it up. Examples
- Displaying as a low-to-high estimate using the Low Range Chimney Estimate and High Range.
- Present it as what's available with or with an appraisal, where the low end represents the max amount you will lend with an AVM, and the high range is your overall maximum home equity loan (implying that an appraisal is required)
Once, you've decided on how the range will be configured, you can adjust the minimum and maximum loans for each range, as well as the labels to reflect the information.
- Minimum/maximum loan amounts: Specify the minimum or maximum loan amounts that a homeowner can borrow.
- Labels and descriptions: Customize the label for home borrowing power (e.g., “Your borrowing power”) and add descriptive text to clarify how the number is calculated and what it means for the user.
Selecting your AVMs
Once you've decided on how the range will be set up, you can can select the underlying home value that influences the borrowing power calculation. Chimney provides a highly accurate valuation model, of which you can choose from three options as well as tax assessed value:
- Chimney Estimate (AVM):
- Standard Range: The standard the proprietary Chimney Estimate AVM model, which pulls from real estate data and is updated monthly.
- Low Range
- High Range
- Tax assessed value: If your institution prefers, you can configure borrowing power based on tax-assessed values.
Example Configurations
Summary
Home borrowing power is a powerful tool for both homeowners and financial institutions. It provides an actionable estimate of how much equity homeowners can borrow, aligned with your lending criteria. With easy-to-configure settings and real-time updates, home borrowing power helps institutions deliver a personalized and engaging experience that encourages account holders to explore home equity financing opportunities.