Applying For A Bad Credit Home Equity Loan

What Is A Bad Credit Home Equity Loan?

bad credit home equity loanHaving bad credit can certainly be a bummer especially if you are trying to apply for a loan.  Aside from the difficulty of finding a willing lender, you would also be facing higher monthly payments and interests.  Thankfully, there’s a bad credit home equity loan. A home equity loan is a type of second mortgage, which can be used for debt consolidation, financing a new home, remodeling and improving your primary residence, and other pursuits, which need financing.   Even if you have a bad credit history, filing for this kind of loan is possible.

In a bad credit home equity loan, the home itself is the collateral.  This is what makes the loan possible even if your credit score is low.  If you don’t make mortgage payments, then you would lose your home.  However, as long as you exert regular efforts in keeping the payments on the home, there will be lenders who’d be willing to approve your loan.  Basically, they will decide based on the equity you’ve established over time.


What To Know When Applying For A Bad Credit Home Equity Loan

When applying for a home equity loan, it is important to have paid at least 20 percent of your mortgage.  Proof of income and proof of home ownership are also necessary.  Once all of these have already been submitted to the lender, an appraisal would be done to exactly determine the value of your house.  As you already know, the home value would determine the amount of your equity—the difference in your debt and the amount you would get when you sell the property.

Individuals with bad credits often get 80% of the equity when they apply for the loan.  There may be lenders out there who would be willing to approve loans as high as 125% of the equity, however, they will normally not offer it to borrowers with bad credit history.  Lenders will also ask where you intend to spend the cash.  Debt consolidation and home improvement projects often get high possibility of loan approval.

In a bad credit home equity loan, it is just natural that lending companies would want to ensure that you will repay the money they are letting you borrow.  Lending you a big amount of cash is also a big risk for them.  Thus, you will be asked to pay higher interest rates.  There may also be closing costs involved in this type of loan although they are generally lower than those that come with regular mortgages.   You can also have these extra costs included in the loan so there won’t be a need to pay up front.

You Can Apply For A Bad Credit Home Equity Loan Online

There are companies that offer a bad credit home equity loan online.  Transacting via the Internet can be favorable because it’s convenient and time-efficient.  You won’t have to go out and jump from one lending company to another.  When applying online, it is best to apply to a number of lenders so you can compare their payment terms as well as their interest rates.  Logically, you should choose the lender that suits your needs and priorities best.

Bad Credit Home Equity Loan