Home Equity Loan For People With Bad Credit
Getting a home equity loan can be next to impossible if you have bad credit. Of course, finding a lender who will work with you for your loan is the main challenge, but there are a surprising amount of lenders who are willing to compromise and take a leap of faith to help others get a home equity loan for people with bad credit. Of course, before you go this route there are plenty of things you should consider so you know whether or not it is a good decision.
The first thing you should consider is the interest rate. Because you are a risk to the lender, you will probably pay a much higher rate compared to someone who does not have poor credit. The interest rate you are assigned depends on how bad your credit is and how generous the lender is feeling, but it could be as high as 15%.
Of course, making a budget to guide you through the process is probably
the most important thing you can do. You want to be sure you have the
money to pay back the loan as well as the interest, so that you are not
left further in debt for taking out the loan.
Knowing the exact value of your house is recommended as well. The best way to do this is to have your house appraised so you know exactly how much equity it has. The unfortunate news of this is that with the current economic climate, real estate is the first business to take a plunge. Thus, your home might not be worth what it was if you purchased or renovated during a good economic climate.
After considering all of these points, if you feel a home equity loan is something you should consider since you will be able afford it and the interest in the given amount of time, the next step is to shop around for a lender. Larger lenders will probably refuse you a loan due to credit history, but there are some smaller lenders whose specialty is helping people in your situation. Remember to always be honest with your lender. This will prevent you getting a lower starting interest rate, only to have your lender raise it higher once it is discovered how bad your credit history is.
The best way you can verify if your prospective lender is a decent choice is to check with the Better Business Bureau. This step is very important since there are a wide variety of shady lenders who look to take advantage of people in a bad situation who are looking for help. Just remember the golden rule of doing business, that if the deal is too good, then you should probably step away from it.
No comments yet.