Poor Credit Home Equity Loans – What are Your Options?

If your credit is less than perfect, you probably think that it is
impossible to get approved for a home equity loan. However, thousands of
people with poor credit are able to get loans. Because home equity loans
are secured loans, lenders are willing to offer money to those with bad
credit. There are several options available to those looking to get a
home equity loan.Pros and Cons of a Home Equity LoanThere are various reasons to get a home equity loan. However, there is
one important reason not to get one. For starters, home equity loans
are ideal for people who are hoping to consolidate their debts and
eliminate unnecessary expenses. Home equity loans have a low percentage rate,
but a shorter term than most first mortgages. The monthly payments on
home equity loans are very low. Those who use the loan to consolidate
debt are able to get out of debt by spending less money each month.The downside side to home equity loan is that these loans are secured
by your home. If you are unable to maintain regular payments, the lender
who granted your loan may foreclose your home. Thus, it is vital to
carefully evaluate your money situation. If you are not confident in your
ability to repay the home equity loan, avoid applying and accepting a
loan.How to Find a Home Equity Loan Lender?If you have poor credit, finding a good home equity lender may be
challenging. Nonetheless, it is possible. As you begin your search, contact
your mortgage lender and inquire about their home equity rates. Most
home equity loans are fixed rate mortgages. Thus, your monthly payments
are predictable. If your lender offers acceptable terms, request a
quote.Along with requesting a quote from your mortgage lender, complete a
quote request with an online mortgage broker. Broker companies will help
you find the best lender. If you have bad credit, your best option is to
choose a sub prime lender. These lenders offer the best home equity
rates for individuals with a low credit score. By using a broker, you will
receive at least four offers from various loan lenders. Quotes will
include rates, terms, and loan services. You pick the home equity loan
package with the best rate.

Secured Home Equity Loans – How Do They Work?

Home equity loans provide you with low rate credit based on the
security of your home’s value. Your home is your collateral, which reduces
your loan risk with creditors. Home equity loans also come in a variety of
terms, so you can pick what is best for your financial needs.Home Equity Loan BasicsYou can cash out all or part of your home’s equity with a second
mortgage or line of credit. Home equity loan rates are typically a couple of
points higher than a regular mortgage. In some cases, you can get a
better deal by refinancing your original mortgage and cashing out your
equity at that time.Your home equity loan lender does not have to be your original lender.
In fact, you should do comparison shopping on rates and fees to be sure
you are getting the best deal.More Options With Home Equity LoansBesides how your rates are structured, you have several options when it
comes to your home equity loan. Loan periods are flexible, and many
have refinancing options. You can opt to only pay interest only for a few
years, and then roll it over to a structured payment plan.With a line of credit, you only borrow what you need. So payments are
much like a credit card bill, with a minimum amount due. You could also
choose a lump sum payment, ideal for remodels or bill consolidation.Find The Right Loan For YouWith so many choices, it can be a bit intimidating to find the right
home equity loan for you. Start by selecting the loan terms that meet
your needs, whether that’s a large sum payment with a second mortgage or a
flexible line of credit.Next, research lenders based on your ideal loan terms. Ask for loan
estimates, but don’t give out your credit information just yet. Only give
permission for a lender to look at your credit score if you are serious
about applying for the loan. Otherwise your credit score will drop
needlessly because of multiple credit inquires.Try using one of ABC Loan Guide’s Recommended Secured Home Equity Loan Lenders.When comparing offers, look at the APR for the total loan cost. But
also read about any annual or miscellaneous fees. They can easily add up
to a couple of hundred of dollars a year.Within a day, you can find a competitive lender and be on your way to a
low rate equity loan.

Home Equity Loans – Basics

Your home is one of the most important assets you could ever have but putting it up for loan can be a risky decision since lenders can just confiscate the house if you fail to pay your monthly amortization. However, there are schemes such as home equity loan that you can apply to increase your home’s market value and at the same time protect it from getting liquidated.What Is Home Equity LoanHome equity loan is essentially the additional amount of money you can avail from the bank where you mortgaged your house. When you file for a mortgage loan, your payment plan would be determined by the net worth of your collateral, which is your home.Before the lenders release the amount being loaned, they will calculate the Annual Percentage Rate (APR), withhold a certain amount and pay the loan applicant a sum lower than the actual worth of the house being mortgaged. A mortgaged house cannot be subjected to another mortgaged unless you have covered all the payments.However, you can subject it to this loan if the property has increased its market value. As the property appreciates over time, it gets extra potential and can be obtained from the loan provider by applying for a Home Equity Line of Credit (HELOC).How to Apply for Home Equity LoanThe amount of your loan is determined by looking at the difference between the current worth of your home minus your standing payable amount to the bank. So if based on your recent appraisal your home is currently worth $100,000 and your standing overall payable amount is $75,000, the loan that you can apply for is $25,000.However, it is noteworthy that the amount for your loan would still be subjected to the APR chosen by the lender and banks or loan providers usually give out only 75%-80% of the total amount of the appraisal difference.Your payment history and FICO score will also matter in determining the amount of loan granted to you. Just make sure you know everything about it.The Difference of HEL and HELOCWith home equity loan, your payments can be averaged while HELOC has to be paid within a specific period. If you have a poor credit rating, get a credit repair program then apply for this line of credit.

Cash Out Refinance Vs Home Equity Loan – What’s the Difference?

The end of the second quarter of 2010 is almost at an end and mortgage interest rates are currently near historic lows. This is very encouraging for anyone looking to secure a new mortgage or to refinance an existing mortgage at a lower interest rate.Now might be a great time to consolidate some high interest bearing credit card debt, or to invest in a new addition to your home, or pay for an education. What ever the case may be, if you have equity in your home, there is a way to access that cash and spend it how you choose.Generally speaking, there are two options to tap the equity in your home: cash out refinancing or a home equity loan. To determine which option is best for you, it is important to know the differences between the two options.Cash out refinancing differs from a home equity loan in a few ways:A cash-out refinance is a replacement of your primary mortgage
A home equity loan is a separate loan in addition to your primary mortgage
Interest rates on a cash-out refinance are often times lower than what you are charged for a home equity loan, although not always
When you do a cash-out refinance, you will pay closing costs
Generally, you are not charged closing costs when you secure a home equity loanHome equity loans are generally better under the following circumstances:If you simply want to access a small amount of your available equity
You need access to an open line of credit
You plan to pay off the home equity loan before your primary mortgage loanA quick way to determine whether or not you should refinance is to compare your expected interest rate to your existing one. It never makes sense to refinance a higher amount at a higher rate. You should also pay attention to what you will be charged in closing costs if you decide to do a cash-out refinance since closing costs can often add up quickly, making the cost of refinancing too much to justify.Work with a lender you trust and ask them for advice given your specific situation. They will be able to help you determine all of the associated risks and benefits so you can make an informed and comfortable decision.Follow this link and find a reputable lender online to help with a cash-out refinance or a home equity loan.

Debt Consolidation: Second Mortgage or Unsecured Loan?

If you are like most Americans you’ve probably racked up considerable debt trying to keep up with the Smith and Jones families down the street. According to Cardweb.com, the leading online publisher of information pertaining to credit and other payment cards, you are not alone. In 2004, individuals who earned between $75,000 and $100,000 per year, and had at least one credit card, carried an average revolving balance of nearly $8,000. This does not even include other personal debts such as car loans, which can total in the tens of thousands.If credit card debt is keeping you up at night, you’re probably wondering what you can or should do about it. File for bankruptcy? Refinance? If you refinance, is a fixed mortgage rate or an adjustable rate mortgage better? What about a home equity loan? The simplest answer of course is to get a debt consolidation loan.What is a Debt Consolidation Loan?Simply put, a debt consolidation loan lumps all of your debts together and pays them off using a single new loan. The next question of course is how to go about getting a debt consolidation loan. Visit a loan shark? Take out a second mortgage on your home? Apply for an unsecured loan at the bank and hope for the best? For the majority of folks a visit to the local loan shark is not a viable option; but taking out a 2nd mortgage or obtaining an unsecured loan from the bank are both excellent choices.Whether you use a second mortgage or an unsecured loan to pay off credit card debt, often depends on several important factors including whether you actually own a home, what your credit rating is, and what the total dollar amount of the credit card debt is that you owe to various financial institutions. According to one expert we spoke to who used to work in the unsecured loan business but now runs his own mortgage broker business, “The most important consideration is the borrowers credit history.”2nd MortgageA second mortgage is a loan or mortgage that is taken out after a first mortgage. It is similar to a first mortgage in that it uses the equity built up in a home as collateral. Similar to a first mortgage, a second mortgage consists of a fixed dollar amount that is paid out in one lump sum and repaid over a period of time typically 15 or 30 years. A 2nd mortgage may be either a fixed rate or an adjustable rate mortgage.Sometimes called a junior mortgage or junior lien, a 2nd mortgage is subordinate to a 1st or primary mortgage. What this means is that in the case of default, the lender for the first mortgage gets paid before the lender who issued the second mortgage does. As such, a 2nd mortgage is considered to be a higher risk and lenders often charge a higher interest rate; however, this rate is generally lower than an unsecured loan or the interest charged on most credit cards.Second mortgages are tax deductible, a major advantage for most people. The payback period is over a fairly long period of time so monthly payments are lower and the total loan amount is generally larger. “There are some cons to consider when thinking about taking out a second mortgage,” explains Brett Bostwick, owner of Snowbird Mortgage Company. “It takes longer to get approved, there is more paperwork involved, and because it is a mortgage loan, there are closing costs such as appraisals and title searches,” he says.Unsecured LoanAn unsecured loan is a lump sum payout that is repaid at a fixed rate of interest in equal payments over a short period of time, typically 5 years or less. Unlike a second mortgage, collateral is not necessary to secure the loan. Loan amounts are relatively small, usually less than $15,000.Interest rates on unsecured loans, which are sometimes called signature or personal loans, are determined by whether you are considered a good credit risk. In other words, the higher the credit score, the lower the interest rate will be and vice versa. A bad credit score will earn you a higher interest rate, sometimes the same or higher than the credit card interest you are paying. This is compounded by the fact that an unsecured loan is considered a higher risk (no collateral), and lenders may charge interest rates that are often quite high, generally higher than the interest rate on a second mortgage would be, but usually less than that 18%-plus interest credit card debt you are trying to pay off.Unsecured loans have a couple of advantages over second mortgages in that approval process is much quicker and there are no additional costs involved. Because the loan period is shorter and the interest rates are higher, monthly payments are also higher. Nor is the interest is not tax deductible. However, if you default on the loan, it may damage your credit but you won’t lose your home.The Bottom LineIt really depends on your situation. What is best for a co-worker or neighbor might not be the best choice for you. Most experts advise getting a 2nd mortgage if you are paying off a larger amount of bills and you don’t mind paying closing costs or the longer approval process required for a second mortgage. If you need money quickly and only have a small amount of debt to consolidate, it’s probably better to go for the unsecured loan.Of course unless you exercise restraint, change your spending habits, and stop using those credit cards, you will fall right back into credit card debt. With a little hard work and perseverance however, you will remain credit card debt free…and able to keep more of those hard-earned dollars in your pocket instead of handing them over to the bank.

Home Equity Loan Comparison – Are All Home Equity Loans Equal?

Home equity loans are ideal for obtaining quick cash for debt consolidation, home improvements, etc. Homeowners can acquire loan approvals much quicker than non-homeowners. Because of rising home values, many homes have gained a significant amount of equity. Hence, homeowners are able to tap into this equity and access extra funds.What are Home Equity Loans?Home equity loans are similar to other types of loans offered by banks, credit unions, and other financial institutions. The only difference is that a home equity loan uses your property as collateral. Furthermore, equity loans are primarily based on the amount of equity your home has acquired.For example, if the original mortgage amount was $200,000, and the amount owed to the mortgage company is $130,000, the home has acquired $70,000 in equity. Thus, homeowners may obtain a home equity loan up to this amount. The money can be used for any purpose such as building a cash savings, paying off debt, or establishing a college fund.Different Types of Home Equity LoansHomeowners may select one of two different types of home equity loans. One type of home equity loan is a second mortgage. When homeowners obtain a second mortgage, they receive a lump sum of money from the lender. In turn, the property gains a second lien.Similar to first mortgages, homeowners are obligated to make monthly payments to the holder of the second lien. Because second mortgages are generally smaller than the initial mortgage, payments are considerably less.Homeowners also have the option of applying for a home equity line of credit. This type of home equity loan offers flexibility. Instead of receiving a one-time lump sum, homeowners gain access to an open line of credit. For an average length of ten years, homeowners may withdraw funds as needed. Unlike second mortgages, lines of credit do not have fixed monthly payments. Rather, payments are based on the amounts withdrawn from the account.Choosing the Right Home Equity OptionDeciding between a second mortgage and a home equity line of credit may be difficult. However, homeowners must access their personal needs. Second mortgages are more fitting for persons who need immediate cash for a one-time purchase, whereas lines of credit are more suitable for homeowners who require smaller cash amounts over an extended period.

How Much Can I Borrow on My Home Equity Loan?

What exactly is a home equity loan? How do I find the lowest rates for my home equity loan? How much can I borrow against my home equity anyway? These are the question many people are asking themselves while considering applying for it for one reason or another.So what is home equity loan? This is a line of credit you can get from different lending companies against the equity of your largest and most important asset – your house. It is fairly easy to get this type of credit due to number of reasons. You do not even necessarily need to have an ideal credit history.When you are applying for a home equity loan you must bear in mind that as any other type of credit you will need to repay this one back + the interest fee. This brings us to the next issue: Why is it so important to find the lowest rates for your home equity loan.Since there are so many lenders ready to give you this type of credit, you are in a favourable position of negotiating a lower interest rates on your loan. First of all you would have to do your homework: make a list of lenders. Check out their rates (on their web sites or call their representatives) and figure out which company might give you the lowest interest rates.Many people might wonder just how much money can they get on their home equity. This is pretty simple: take the amount of money your home is worth, subtract whatever sum you still owe on your mortgage. Whatever result you get would be the amount of money you may borrow on your home equity. For example, say your home is worth $600,000. You still need to pay $270,000 back to your bank. That means you may borrow $330,000.

Home Equity Loans for People with Poor Credit – Get a Hassle-Free Home Equity Loan

Even with poor credit, your options for getting a home equity loan are
numerous. Home equity loans are different from other types of personal
loans. For starters, these loans are secured. Lenders prefer this
factor because it’s easy for them to recoup their money if the loan
defaults.Understanding Home Equity Loan OptionsWhen applying for a loan using your home’s equity as collateral, there
are several options. Homeowners with poor credit may take advantage of
a home equity line of credit. Similar to credit card cash advances,
homeowners are approved for a line of credit up to a dollar amount not to
exceed their home’s equity. Homeowners are free to withdraw funds as
needed. The money can be used to payoff debts, repair an automobile, or
make home improvements.On the other hand, a home equity loan is disbursed as a lump sum of
cash. Similarly, the funds may be used for large expenses or major home
repairs. Both home equity options must be repaid. Home equity loans have
fixed terms, whereas home equity lines of credit are available for a
specific length of time.Pros and Cons of Home Equity Loan OptionsA home equity loan and line of credit are beneficial because they
provide extra cash when you need it. Furthermore, if you have bad credit,
maintaining regular payments will boost your credit score. If the funds
are used to consolidate debt, homeowners can get on the road toward
becoming debt free and boosting their credit score. In fact, many people
obtain a home equity loan as a means of improving their credit rating.The pitfall most common of home equity loans is the inability to repay
the money. Sadly, some people cannot handle credit or money
responsibly. Thus, once debts are consolidated or paid off, some people accumulate
additional debts. The smart maneuver would be to close paid accounts,
which would alleviate the temptation to use a credit card.After incurring additional debts, some people are powerless to continue
regular payments. If you acquire a home equity loan, there are multiple
liens against your house. Consequently, either lender may foreclose. By
defaulting on either loan, you risk losing your home.Current Mortgage Lender vs. Sub Prime LendersWhen choosing a mortgage lender, do not rely on your current lender to
offer the best rates. Getting a quote from your lender is ideal;
however, you should also request quotes from new lenders. Banks or credit
unions will not offer the lowest rates to persons with poor credit.
Nevertheless, you can attain comparable loan rates by using a lender that
specializes in bad credit loans. Sub prime lenders have convenient online
applications and instant approvals. If using a mortgage broker, you
will receive several sub prime loan offers within seconds.

Comprehending The Cash Back Home Refinance Loan – Money In Your Pocket

In any household there are certainly times when money is lacking or practically non-existent, but is still, no doubt, needed quite badly. Spur of the moment household emergencies and unexpected projects arise from all directions, from left to right and up and down. And usually, when these unplanned scenarios pop up, it means not only a substantial amount of time, but also, significant loads of money will be required. This is wherein the largest and most wide-spread problem lies for many a household – generating enough extra money for home upkeep and household emergency funding. But, don’t look at the obvious options or put your attention toward the standard places for getting that extra cash; you don’t have to seek a second job, sell some unwanted items at a garage sale or even join some pyramid money-building scheme.Looking For Added Money Where You’d Least Expect ItExactly where you need to look for extra funds is literally no further than the confines of your very home. Bringing forth money you so desperately need can be a simple process, one as easy as refinancing your mortgage.Specifically, a cash back home refinance loan can help significantly. And money can be had in quite large amounts as well. What happens in the case of a cash back refinance loan is a pay off and replacement of a smaller mortgage. For example, on that first mortgage, let’s assume you owe $150,000 and a replacement loan -this being the cash back home refinance loan- of $200,000 is put into action. This loan pays off that first mortgage. And if you do the math, you’re left with $50,000 dollars, all for your household or even personal financial discretion.Information On The Cash Back Home Refinance OptionThe above explanation does indeed sound very appealing, but before committing to a cash back refinance loan and reaping the benefits of some fat stacks, you should absorb a fair amount of knowledge. Firstly, it’s important to know that this type of loan depends on the strength of your home equity. In process, and as time naturally progresses, property values rise and mortgage balances drop, which your home equity benefits from completely; this can already place you in an eligible position for a cash back refinance.”But, Just How Much Can I Get Back?”Well, this all depends. What you need to figure out is how much your home is worth. Once you gain a figure from an appraiser all you need to do is crunch a few numbers. Taking your home value and multiplying it by 0.8 or 80 % will reveal the cash back home refinance number. Now, take into mind that the 80% calculation is just a standard and that if you need more money it can be attainable through purchasing PMI or private mortgage insurance.Now, take the cash back amount and subtract it from the existing mortgage balance. Your end figure here is what you can expect in terms of cash amounts back to you.Using The Gained Funds Toward, Well, AnythingThis newly gained cash can literally be put toward anything, whether it be for serious issues or more pleasureful wants. Ideally though, you should responsibly put it toward actions that will yield you a return down the line. For instance, opting to put that money back into your home is an option – doing remodeling, house additions and such. Or put this money toward getting your children the best education, as doing so will undoubtedly provide you with comfort and fulfillment in knowing your children will be able to get a profitable job, live well on their own and maybe even, help their parents (being you) out in future years.

100% Home Equity Loans With Bad Credit – 5 Tips For Fast Approval

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.