To secure a home equity loan using a property title, homeowners must first establish sufficient equity by paying down the mortgage or increasing home value. They should contact a licensed mortgage lender to assess eligibility, compare loan terms, and submit documentation including proof of income, property valuation, and a clear title. Lenders typically require a credit score above 620 and a debt-to-income ratio below 43% to qualify. Once approved, the lender places a lien on the property, transferring partial ownership to secure the loan.

Home equity loans rely on property title as collateral, making lenders more willing to offer favorable terms due to reduced risk. According to the Federal Reserve’s 2022 Survey of Consumer Finances, 72% of U.S. homeowners with equity accessed home equity lines of credit (HELOANs) or loans for major expenses. Lenders prefer clear titles to minimize title disputes, which can delay funding or increase costs. Data from the Consumer Financial Protection Bureau (CFPB) shows that homeowners with credit scores above 780 secure loans at average rates 1.5% lower than those with scores below 620. Additionally, 65% of lenders require title insurance to protect against ownership claims, as noted by the American Land Title Association (ALTA). Securing a loan this way allows homeowners to leverage their largest asset while maintaining flexible repayment options, though default rates rise by 20% if the property title has liens or encumbrances, per the Urban Institute.