subject: Home Equity Loan And Poor Credit - 3 Steps To Making It A Winning Combination [print this page] Home Equity Loan And Poor Credit - 3 Steps To Making It A Winning Combination
When you need cash to pay down high-interest bills, remodel your home, or pay for a wedding or another big expense, you may be able to take advantage of what a home equity loan has to offer. Of course, if you have a poor credit score, it can be difficult to qualify.
If you want to know how to make a home equity loan and poor credit a winning combination, check out these 3 steps to doing just that:
1. Know your home value and home loan facts:
Start by calculating how much equity you have in your home currently. The formula for this is simple: just take your estimated home value and subtract from that the amount you owe on your existing mortgage.
Also, be sure to research your interest rate on your existing mortgage. Reason: one option you may have is to refinance your existing first and second mortgages under a single loan. For that reason, it will be useful to know your credit score ahead of time.
2. Go over your current credit report very carefully:
Since you have poor credit, you will need to align yourself with a number of reliable poor credit home equity loan lenders. These lenders specialize in extending home equity loans (a.k.a. second mortgages) to people in your situation. This type of lender has found a way to figure out whether borrowers like you are credit-worthy by looking right past your credit score. Instead, they look at other factors - starting with your credit report.
So, do yourself a favor now and become very familiar with your credit report, line by line. Be ready to explain any negative items listed there, in particular. Often, backing up your past actions (or inability to make payments, for example) with a good story can be a way to convince a lender to extend you a loan.
3. Apply to multiple bad credit home equity lenders:
Most lenders do not consider themselves specialists in working with bad credit individuals. This is why it will be very important for you to be able to seek out and make a list of those lenders who do. They often go by the name "bad credit home equity loan lender," but they can go by other names as well. When you apply, be sure to apply to multiple lenders at once - at least 6-7, if possible. By doing so, you will be increasing your chances of qualifying for the right loan.
By following these 3 steps, you truly can make your poor credit score and a home equity loan a winning combination.
