Bad Credit & Home Equity
In a home equity loan, a borrower uses the equity in his home as collateral. It is beneficial for those who are suffering from a poor credit score and who want a big sum of loan money. It creates a lieu against your real properties and reduces the actual home equity. The home loan amount obtained can be used for various purposes like home repairs, medical bills or college education.
Bad Credit and Home Equity
If you have bad credit and are looking for some home equity, you can opt for a bad credit home equity loan. A free credit report can indicate your credit score which needs to be 500 or above. However, if your scores are lower, then it becomes quite difficult to get approval and you might have to pay more interest rates. It is specially designed for those who do not have a perfect credit score and are looking for money to sort their financial problems and fix or change their homes. Though it is quite difficult to get bad credit home loans through traditional lenders, there are a few who specialize in offering these kinds of loans.
Getting a Bad Credit Home Equity Loan
A low credit score does not indicate that you should opt for a bad credit home loan which offers extremely high interest rates. You can negotiate the rates for a poor credit home equity loan. As different lenders offer different plans, choose the lender who offers the best deal and go for a loan that does not have any hidden costs involved in it. Another important aspect is that you should be careful of the collateral you are going to use to get this kind of loan. If you enter into an agreement that you cannot meet, you will end up losing your home along with whatever else you have used as collateral.
Applying For a Bad Credit Home Equity Loan
You should follow a few simple steps while considering a bad credit home equity loan which include:
Step 1: Analyze the equity you have in your home
You can evaluate the equity of your home by calculating the selling price of the property or its appraisal value. You should then check the latest home mortgage loan statement to understand your current loan balance. Then subtract the current loan balance from the value of your home.
Step 2: Decide the loan amount
Once you are sure of the equity of your home, you can decide on the bad credit personal loan you can borrow against your home equity. You should analyze your current credit score and your financial situation prior to that. If your credit rating is low, you should be sure that you will be able to repay your loan. As your interest rates will be higher, you should evaluate your monthly income and expenses. Usually the interest rates for bad credit home equity loan are in the range of 8% to 15%, depending on the credit scores of the borrowers.
Step 3: Find the right lender
The next step is to find a lender who can offer you the best price for your home equity loan irrespective of your poor credit score. You should do a little bit of shopping around to get a specialized mortgage lender who can offer you the best deal.
The major benefit of a bad credit home equity loan is that as you start repaying your loan, you can take steps to rebuild your credit and revive your scores. Get one today!