Having bad credit puts you in an unenviable place financially. It is no fun at all. Being eligible for a home equity loan with bad credit can be problematic but it is not entirely impossible.
A home equity loan (HEL) is a kind of loan whereby the borrower uses the equity they have in their home as collateral to finance another type of loan or a major expense. The longer you have owned your home for the more equity you will have. Think of it as a lien against the borrower?s home.
In most cases only those with good credit will qualify for this type of loan. But it does not mean that these loans are not within reach of those with poor or bad credit. A home equity loan may actually be one of the few types of loans than will cost you less when your credit is less than perfect. This kind of loan is secured because it is tied into your home?s value.
What this translates to is the fact that interest rates are lower than they are on credit cards and other types of loans, such as auto loans or personal loans. The fact that it is a secured loan also means that the lender takes less of a risk on a borrower. That makes home equity loans with bad credit easier to be approved for.
Before you do another thing you need to figure out the value of your home. In other words, how much equity do you have in it. The housing market in the area you live in can influence the value of your residence.
However in most cases the value of a house goes up with the passage of time as opposed to down. To find out a house?s worth you need to have it appraised. This will have to be done if you wish to apply for a home equity loan, regardless of whether you have good credit or not. This is the equation for home equity.
It is the value of a residence minus the remainder left on the mortgage, including any debts or liens that are against the house. The loan you would qualify for with your home equity used as collateral would then be considered a secured loan.
If you wish to qualify for home equity loans with bad credit then it is imperative that you make regular payments on all of your bills and any debts you have. This establishes you as a responsible individual in terms of how you handle your money.
It will also help your credit score to start to rise instead of fall. It is also important that you have a steady enough income coming in that you can show the lender that you have enough money to pay the home equity loan payments as well as all of your current debts
Source: http://line-of-credit.net/home-equity-loans-with-less-than-perfect-credit/
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