For bad credit people who could not pay off previous loans in time and have other credit problems mentioned in their credit report, a loan may not come at easier terms. However, bad credit home equity loans are considered as easily approved for such borrowers for any purpose like home improvements, buying car, paying for wedding or holiday expenses or for debt consolidation.
The main reason for lenders approving bad credit home equity loans without worrying about bad credit is that the lenders take home as security of the loan. Not only that the loan amount is restricted to the amount of equity in home. This provides more security to the lender as in case of selling the home; lender is assured of recovering the loan amount. Equity in home is its current market value minus the amount yet to be paid off towards the loans taken for buying the home. The lenders will not approve bad credit home equity loan that is above equity in home. So this results in offsetting the factor of bad credit to larger extent. Assure the lender through a definite repayment plan that you are now in a good position of repaying the loan installments in timely manner. Tell the lender that one motive behind taking the loan is to improve your credit score.
Interest rate on bad credit home equity loans is a bit higher than offered to good credit people. But on comparing various lenders you can avail the loan at comparatively lower interest rate. The loan amount depends up on equity in home and so first find out your home’s current market value. The loan can be repaid in larger duration of 25 to 30 years or earlier as suits the borrower. pay off the loan installments so that your credit score improves and never fall in a debt trap again as the loan has given you an opportunity to start fresh in life.
By: Peter Taylor
Archive for December, 2009
How Home Equity Loans Work – Home Equity Loan Questions Answered
December 30th, 2009
Home equity loans are a great alternative if you need to borrow large sums of money or if your credit score is not that great. By putting up you home as collateral, you can borrow most of the equity you have built up over the years.
Banks like to write home equity loans because they know the value of your home and know that they can collect should you default on the loan. Of course you have a great incentive to keep your payments current because it is your home that is in risk.
The good points of home equity loans
· Usually a home equity loan is given at a lower interest rate than a new home loan or refinance loan.
· Most of the time the payments on a home equity loan are tax deductable. Consult with your CPA for more information.
· Typically a borrow can borrow up to 100% of the equity in the home.
· A home equity loan is easy to qualify for since it is your home already and the loan is for the equity only.
The bad about home equity loans
· You could lose your home if you default on the payments. Just like any other loan you will lose your home if you stop making the payments.
· There are many companies looking to offer home equity loans to people who really don’t need a loan. Sometimes the rates offered are way above what would be normal and before the home owner knows what hit them they are in financial ruinin.
How to get the best home equity loan
Make sure you shop around for the best rate and know the rules. Read the fine print and don’t get scammed. Make sure you get a fixed rate so that you know what your payments will always be. You might want to ask your friends and family if they have a home equity loan. If they do, find out if they are happy with the lender and terms. Be careful when making any financial decision concerning your home.
By: Max Suther
No Doc Equity Loan With No Income Verification
December 29th, 2009
Are you struggling to prove your income and need a home equity loan that does not force you to do so? There are options and one of them is called a no doc equity loan. This is a refinance type of mortgage loan that allows you to get all the benefits of a traditional refinance, but you will not have any income verification whatsoever. Here is how it works.
Basically you will be proving nothing. Some lenders call this a stated income program and you have to write a statement that says you make a certain amount, then sign it. There will be no paycheck stubs required and no taxes or bank statements required either. They will still check your credit just like normal and if you have bad credit it may be a bit difficult to get a no doc equity loan, but sometime it can still be done.
You will still want to compare lenders and shop your rate and fees around. Just about every mortgage company has some sort of no doc program so you need to make sure you are getting a good deal.
You can do this by getting a quote from a broker and a small handful of lenders. The broker will be able to give you the best quote for all the lenders they work with and the other one will give you quotes from just their programs. Compare these and when you find the best one send it to your broker and the other companies to give them a chance to match or beat it.
This type of loan is perfect for the self employed, tipped employee, independent contractors, or anybody that gets paid cash. If you work a traditional job and get paid a regular paycheck, then this type of program makes no sense. If your broker is trying to get you to qualify for a no doc equity loan and you don’t fit the mold, then you need to dump your broker.
By: Gressly Stevens
