Qualifying for a home equity loan with bad credit is not as difficult as you think. Many homeowners with poor credit think their credit will prevent them from qualifying for a loan. This is simply not true, especially when it comes to home equity loans. Home equity loans are secured by your home just like your primary mortgage, and are the perfect vehicle for rebuilding your credit.
Having poor credit means you will pay more for the financing on your home equity loan. It is especially important for homeowners with poor credit to shop around for the most competitive home equity loan from a variety of lenders. When you compare home equity loan offers compare all fees for the loans you consider, not just the interest rate or annual percentage rate. Depending on the type of home equity loan you choose you will be required to pay many of the same fees you paid when you took out your mortgage. These fees vary widely from one lender to the next, so it pays to shop around.
Home equity loans come in two varieties: second mortgage loans and home equity lines of credit. Both options have advantages and disadvantages depending on your financial situation and the reasons for borrowing equity. Because you have poor credit you can expect to pay a higher interest rate and lender fees than a borrower with good credit; however, this does not mean you will pay outlandish fees. This is why comparison shopping for the best loan is important. When you comparison shop from a variety of lenders you can easily spot the ones that are trying to take advantage of you with excessive fees and interest rates.
You can learn more about your home equity loan options by registering for our free Underground Mortgage Videos.