How To Get A Home Equity Loan With Bad Credit
A home equity loan, also known as a home equity line of credit or HELOC, is a line of credit that allows homeowners to user their property as collateral to finance major purchases such as home repairs or education, or can be used to pay off debts. Best of all, because your line of credit is based on the value of the home and property you are using as collateral, a home equity line of credit tends to offer lower interest rates and a more flexible approval rate than traditional loans or credit lines.
Looking to get a home equity loan, but have bad credit? Don’t worry, having bad credit won’t automatically disqualify you from getting a home equity loan. But, it may make things more complicated. That said, here are a few things you can do to boost your chances of securing a home equity loan:
- Know Your Credit Score. The first thing you’ll want to do is get a copy of your credit report. You are entitled to one free credit report per year from each of the three major credit reporting agencies – Trans Union, Equifax and Experian. Once you have a copy of the report, review your credit score. It may not be as low as you think. If your credit score is less than perfect, take time to carefully review the report. There may be inaccuracies in that are hurting your credit score. If you find any errors, or if something doesn’t look right, contact the creditor or petition the credit bureaus directly to have the inaccuracy corrected.
- Gather Your Financial Information. Before you go to the bank, make sure you’ve got everything you’ll need. Lenders will be looking for proof that you are financially stable, especially if you have bad credit. Be prepared to show a potential lender proof of your household income, investments and the amount of equity in your home.
- Apply For Credit With A Variety Of Lenders. There is no reason to apply for a line of credit with a single lender. Financial advisors recommend that borrowers apply for a home equity line of credit with at least three different lenders. This can improve the chances of getting approval. When applying for a home equity line of credit with multiple lenders make sure you have enough copies to go around. You’ll need copies of your credit report, mortgage information, proof of income and other documents for each of the lenders you apply with.
Once you’ve been approved for a home equity line of credit, be sure to look at the information from each lender and compare the interest rates, terms and fees to find the best deal. Pay attention to whether the home equity line of credit has a fixed or adjustable interest rate. Check the interest rate amount, extra fees, payment schedules, rate changes or opportunities for refinancing.
Ready To Apply For A Home Equity Loan/Line Of Credit?
If you’re considering applying for a home equity loan/line of credit, but are worried about your bad credit speaking with an experienced financial advisor can help. Contact Timmy Ostrom today and get help applying for the home equity line of credit you need!