When you are a homeowner, in the back of your mind you always remain aware that you own a very valuable asset. It is even more valuable if you have some equity in the home – meaning, your outstanding mortgage balance on the home is less than the home’s current market value.When you need cash in order to pay down high-interest debt, remodel your home, or pay for a large expense such as a wedding, it is good to know that you can potentially borrow against that equity.However, if you have a bad credit score, this can make things a bit more challenging. This is because the majority of lenders place a very heavy emphasis on the borrower’s credit score.If you are interested in qualifying for bad credit home equity loans and mortgages, here are the answers to 3 frequently-asked-questions (FAQs):1. How is a home equity loan different than a mortgage?A home equity loan is one whereby you borrow cash from the lender while using the equity (the portion you actually own) in your home as collateral. Meanwhile, a mortgage is a loan used to buy the home itself.However, notably, an equity loan is also sometimes called a second mortgage. The interest rate on a second mortgage will usually be higher than the rate on the first mortgage, since for the lender funding a second mortgage is a bit riskier.2. How is it different than an equity line of credit (LOC)?An equity line of credit (LOC), by contrast, is a bit like having your bank offer you a personal bank account with cash in it that you can withdraw at any time, either in cash or by writing a special check. The advantage of going this route is that, with a line of credit, you are not borrowing the entire amount at once. Rather, you just borrow what you need, when you need it. Then, you pay back the balance – with interest – as you can.3. How can I qualify for a loan if I have bad credit?If you have a bad credit score, you are going to want to completely pass up regular equity lending companies. Instead, seek out bad credit equity lenders. They specialize in assessing your creditworthiness in ways that standard lenders cannot. They do this by looking past your credit score and instead focusing on the details of your credit report, as well as other factors they deem relevant.Consider these answers to 3 frequently-asked-questions (FAQs) about bad credit home equity loan mortgages.
