One of the smartest ways to get access to cash as a homeowner is to borrow against the equity in your home. Equity, of course, is that portion of your home that you actually own. You can calculate your equity by simply subtracting your current mortgage’s outstanding loan principal from the value of your home. If the number is greater than zero (meaning your home is not “under water”), then you have equity in your home.Home equity loans are a good choice when it comes to looking for a money resource in order to pay off debt or make a large purchase. Since these loans require that you use your equity as collateral against the loan itself, the lender can afford to offer the loan at a lower interest rate than might otherwise be possible.For example, borrowing against a credit card or taking out a personal loan usually requires that the borrower pay much higher interest rates than they would through an equity loan.If you have equity in your home against which to borrow – but you have a bad credit score – you may be hesitant about taking about this type of loan. Maybe you have been rejected before. It helps to know how to work with bad credit lenders.If you are looking for 100% home equity loans with bad credit, here are 5 tips for getting fast approval:1. Understand what loan-to-value (LTV) means:Different lenders offer a different selection of home equity loan products. One of the key details that sets them apart is something called loan-to-value (LTV). For example, you may come across a home equity loan that is 70% LTV or 80% LTV.Loan-to-value simply means the ratio between the total amount borrowed on the home (including the first mortgage and the new home equity loan) and the home’s value. The higher the LTV, the more you can potentially borrow.2. Calculate your current LTV:Here is how to calculate your current LTV: first mortgage outstanding loan principal / appraised home value. Note that if you do not have access to your home’s appraised value, you can just use an estimate based upon neighborhood values.3. Determine how much you are able to borrow for a home equity loan:Some lenders offer 100% LTV home equity loans. If this is the type of loan you would like to go after, figure out how much you can borrow. To do so, just subtract your current mortgage principal from your estimated value. For example, if your home is worth $200,000 and your mortgage principal is $150,000, under a 100% LTV loan you could borrow $50,000 against your remaining equity.4. Find out your current credit score:Run your credit report with Equifax, Experian and TransUnion or visit a free credit report-type website. Find out your current score.5. Talk with more than one bad credit home equity loan lender:Now, it is time to work to get quotes from multiple lenders. Remember, you should not just approach any home equity lender you come across. Rather, be sure to approach those that specialize in working with bad credit individuals. They have ways of looking beyond your credit score in order to assess your credit-worthiness.Take these 5 tips for fast loan approval into account as you look for 100% equity loan with bad credit.
