Bad Credit Home Equity Loan
Most people with bad credit do not realize that if they own their own home and are paying off a mortgage, they can qualify for a home equity loan. Even with bad credit, a home equity loan is a possibility, because the home itself is collateral. If you default on the payments, you will lose your home, just as you will by not making your mortgage payments. As long as you have been making every effort to keep the payments on your home up to date, most lenders will approve a loan based on the equity you have built up over time.
You do need to have 20 percent or more of your mortgage paid off. If this fits your situation, even though you have bad credit by not making other payments on time or by missing them altogether, with your bad credit, a home equity loan is possible. You also have to provide proof of your income and ownership of the home. The lender will also require an appraisal to determine the exact value of your home and thereby determine the amount of equity you have. The equity is the difference in what you owe on your home and the amount of money you would get if you sold it.
If you have bad credit, a home equity loan would be about 80% of the equity. Although there are lenders who will give loans for 125 percent of the equity, if you have bad credit, it is not likely that you would qualify for this larger amount. The lender will also want to know how you plan to spend the money. If your answer is that you want to consolidate your debts and make improvements to your home, then the chances are high that you will be approved.
With bad credit, home equity loan lenders want to make sure you will repay the money. With the bad credit rating that you have, they are taking a risk lending you a large amount of money. Therefore, the interest rate you pay on the loan will be higher. There are closing costs associated with getting this type of loan, but they are not as high as getting a regular mortgage. Just like with getting a mortgage, you can have these costs included in the loan, so you dont have to come up with money up front.
There are many lenders with an online presence where you can apply from home. It is best that you apply to several lenders and then you can compare the rates, terms offered and the payment amounts. By applying to several lenders over the space of a few days won’t damage your credit record. Any creditors who check your record will see that you are checking out which lender can give you the best deal. Using the money from the home equity loan to pay off your outstanding debts is a good idea. When you make your payments on the loan on time, your credit rating will start to rise. You will not notice the difference immediately, but after six months or a year, there will be a significant difference.
Watch the video related to bad credit home refinance loans
Quicken Loans clients, the Rodriguez family from New Mexico, discuss in this video testimonial about how Quicken Loans helped them refinance their mortgage, allowing them to invest in beautiful New Mexico property, update their kitchen and home, and pay off high-interest debt. They were amazed at the ease of getting their mortgage online and the outstanding customer service and advice they received from their Quicken Loans banker. They recommend Quicken Loans to anyone who wants to get a …
Help answer the question about bad credit home refinance loans
Bad credit to good credit, home refinance?I am buying a house with my husband but our credit is less than stellar. We were approved for a loan but with a nominally high (6.75) interest rate and the monthly payment is doable but will have us paying more than 3 times the value of the home over the course of the mortgage. Our credit is at such a state that it will be repaired in about a year or two and we will be back to the excellent credit scores we had before my husband lost his job. What exactly is refinancing? Does it involve a lender paying back the entire principal of the loan and clearing our name with the current lender, and then relending us the money with more attractive numbers? If so, what are the chances of us being able to do that? How does it work?
About Author
Richard Cunningham is a successful entrepreneur and publisher of several profitable websites including http://www.4loanranger.com and HomeownerInsuranceQuoteRanger.com
Tags: Affordable-Quicken, home, loan, loans, Making, modification, refinance
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September 22nd, 2009 at 3:10 am
If you have bad credit, you are less likely to be approved for a loan, or if you are approved, you may have to pay a higher interest rate.
Part of the decision will be based on what % the $80k in equity is of the value of your home. If your home is worth $800k and you have $80k (10%) in equity and bad credit, you are unlikely to be approved for a home equity loan. On the other hand, if your home is worth $160k and you have $80k (50%) in equity and bad credit, there is a good chance that you will be approved for a loan.
This is because the bank looks at how much they could realize from your house if they had to foreclose, and if you only have 10% equity, almost all of that could be eaten up by foreclosure costs, so the bank would lose money if they loaned you the $80k and then had to foreclose.
September 22nd, 2009 at 3:32 am
With you owning the home outright you should be able to get money. You didn't say if you were trying to get a signature loan, mortage or line of credit. All three have different requirements and also have different APR rates. You could also try with an on line corporation. Try something like Ditech, run by GM, Stay away from the get cash quick places like FAST CASH with ads with garry coleman. Those rotten companies charge up to 99% Stick with a good company and check with the BBB.pp
September 22nd, 2009 at 2:06 am
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September 22nd, 2009 at 3:07 am
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September 22nd, 2009 at 5:00 pm
I'm sorry, but I won't recommend a lender. You need to deal with the deeper issue first.
Your cavalier "these things happen" attitude toward paying your bills guarantees that you'll repeat your mistakes.
You have home equity. I'm guessing that's your only asset. Don't spend it. Preserve it.
Get your financial house in order. Improve your credit. THEN consider sucking out equity.
September 22nd, 2009 at 11:00 pm
No, you aren't a good risk to lenders.
September 22nd, 2009 at 11:48 pm
You may be able to.
Also you may obtain a home improvement loan with a longer term. This may mean that you will have a line of credit from which to draw as work progresses.
You'll have to speak to a loan officer and possibly consolidate the debts on cards into the loan.
The house sounds like ample collateral.
September 23rd, 2009 at 1:42 pm
Then why do you want to put the house at risk by using it as an ATM machine?
You DO NOT save any money paying off bills with the house…all you do is take unsecured debt and turn it into secured debt.
Having a free and clear home is one of the most important assets a person can have.
Please work an extra job or something to save up money for what you want to spend money on. I would highly, highly recommend that you not go that route, especially when you aren't even married…b/c marriage gives you LEGAL protections that you simply do not have, when you are living together.
September 25th, 2009 at 12:17 pm
September 25th, 2009 at 1:25 pm
Wow, with a house that is cash you really should not have that much trouble. Amazing how banks are changing so rapidly.
Keep trying, but maybe ask banks for a 5 year mortgage for the amount you need. They don't advertise this, but banks DO offer short term mortgages, with fixed rates no games.
If you have time go to annualcreditreport.com
and fix anything that is incorrect or outdated if you haven't already done so. Things become outdated after 7 to 8 years.
Also get one credit card, and pay it in full each and ever month for top notch credit. Carrying a balance reduces credit.
Keep trying, there is no reason you should be getting turned down if your house has no mortgage. If you are asking for 20% value they should be throwing it at you.
Try a credit union.
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