Home Equity Loans With Bad Credit: Some Valuable Application Tips
Getting a home equity loan with bad credit involves some care when applying. But there is no reason why good terms cannot be secured, and there are some steps that can secure such terms.
There was a time when applying for something like a home equity loan with bad credit was considered a futile exercise. But this is no longer the case. With some carefully taken measures,
it is possible to better prepare for the application and improve the chances of approval.There is nothing that can create a scenario where guaranteed loan approvals exist, but it is possible to make some changes to your situation before filling out the forms. Simply by ensuring the credit score is accurate, and improving the score if it is, or by lowering the loan sum being sought, the chances of getting the green light on the home equity loan are greatly increased.Check Out your Score
A good place to start is to check out your own credit score and discover where the weaknesses in any application might lie. Unfortunately, more people fail to get approval for a home equity loan with bad credit because they were not fully prepared. In fact, sometimes a low score is presumed and so the application is not submitted at all.It is easy to get your credit report. Just apply for the report from one of the three credit agencies, TransUnion, Experian and Equifax, though it is a good idea to get all three. This is because each may have varying scores for varying reasons. This might be down to errors, and with a review the score might be improved - even get close to a guaranteed loan approval.However, the real value of knowing your own scores is the chance to accurately strategize the home equity loan application. If the score really is poor, then some time could be spent improve the score before finally submitting.Consider Lender Options
It is a mistake to believe that only one candidate lender can be considered. Applying for a home equity loan with bad credit complicates the whole process a little bit, with high interest rates something that is faced if a thorough lender search is not carried out. And with the amount of money involved, this can translate to thousands more paid in interest over the term of the loan.It is a good idea to consider both mortgage lenders and more traditional lenders. Neither will offer guaranteed loan approval, but both will provide contrasting possibilities. For example, while a normal lender will have rigid lending terms and conditions, a mortgage lender has a network of lending sources and usually can find better terms somewhere.Nevertheless, it is a good idea to draw up a shortlist of 4 or 5 candidate lenders before applying for a home equity loan and check out in great detail the terms each lender is willing to offer.Consider The Loan Sum
It is always tempting to look for a little extra when getting a loan, but when applying for a home equity loan with bad credit, budgeting should begin with the sum being sought. Work out what is really affordable before filling out the paperwork, and remember that approval will mean monthly repayment pressure.For example, the loan-to-value ratio is designed to protect lenders from seeing the security on the loan (the equity) fall below the sum owed. Arguably, the best way to secure a guaranteed loan approval is to seek less cash than the LVT too. For example, if 80% LVT is offered on an equity value of $100,000, that means a maximum loan of $80,000 is possible.However, seeking just $60,000 suggests that the borrower has a lot of common sense, and can therefore be trusted to take on the responsibility of repaying the home equity loan.
