Levetta Rivera asked:


A home equity loan allows you to cash-in on the equity you have built-up in your home. The funds you receive can be used for debt consolidation, home improvement, college education, investments or any purpose. With a home equity loan your home is used as collateral to secure the loan. If you default on the payment you can lose your home so it is important to insure that you can afford to take out the loan before you sign on the dotted line!

Many homeowners get a home equity loan to consolidate bills. This can be a great strategy if you are overburdened with high interest credit card and/or consumers loan debt. A home equity loan can usually be obtained at a lower rate and all or a portion of the interest you pay on the loan may be tax deductible. If you are considering a home equity loan to consolidate your debt it will be wise to cut up your credit cards and close out the accounts. The last thing you want is to take cash-out of your home and end up back where you started from because you did not have the discipline to stop using your credit cards!

A home equity loan can also be a great source for obtaining cash to make home improvements. Next to debt consolidation, home improvements are the 2nd most widely used reason that consumers obtain home equity loans. Depending on what kind of home improvements you are making, it can increase the value of your home which may help to justify the added monthly payment expense you incur when you obtain a home equity loan.

A home equity loan can either be in the form of a fixed-rate loan or an adjustable-rate line of credit. With a fixed-rate home equity loan you receive all of your money in one lump sum and the amount of your monthly payment is the same for the duration of the loan term. With an adjustable-rate home equity line of credit you are approved for a credit line amount in which you can draw from as needed. In most cases you will only pay interest on the outstanding amount and your interest rate is subject to change. As such your monthly payments may vary depending on the outstanding loan amount and interest rate in any given month.

There are many home equity loan lenders online who will lend to people with good or bad credit. You may want to compare the rates and programs of several lenders before making your decision to increase your chance of getting the best possible deal. Also, consult with your tax advisor to see how much of your home equity loan interest will be tax deductible.



Tom

Chunky Monkey asked:


lets say my house was worth 2 million, fully paid off. and then i take out a loan of 100 thousand. if i don’t pay the bank a dime of the loaned money, could they take my house away? and if yes, would they give me what’s left of the house’s value(1.9mil)?

Caroline

Thomas Lonsdale asked:


Bad credit home equity loans are special home equity loans available to people with a low credit score. If you have been eyeing a new home or wish to take a new loan to pay off high interest debts, then bad credit home equity loans are something you should consider applying for.

Fixing Of Interest Rates

Your credit score or FICO score is used to determine the interest rate you will have to pay. You gain FICO points depending on your ability to repay loans, your salary and assets. You lose points when you default, make late payments or file for bankruptcy. Scores range from 350 to 850 points.

Those who have a high credit score pay low interest rates. People who have a score of less than 600 are usually asked to pay a high rate of interest or denied loans. However, they can always avail of bad credit home equity loans.

What Is A Bad Credit Home Equity Loan?

Originally, home equity loans were designed to pay for renovations and add on structures to your home. However, as lenders never check where the money is going, you can use it for almost any purpose. People with low credit scores usually go in for bad credit home equity loans to pay off their debts. The only difference between bad credit home equity loans and regular home equity loans is the slightly higher rate of interest.

Lending companies and banks are always ready to dole out cash as bad credit home equity loans. As the loan is secured by a mortgage on your house, the lender faces very little risk. If you are unable to pay the loan in the future, they simple repossess your house to recover their dues. Plus the high interest rates and loan charges make it quite profitable for them.

Advantages To People With Bad Credit

Bad credit home equity loans are extremely useful to people who are stuck in a cycle of debt or in a debt crisis. If you have multiple high interest rate arrears like credit card debts, then it makes sense to use a low interest home equity loan to pay it off. The advantages are -



You will have to deal with just one creditor – the home equity loan company.

You will make smaller monthly payments



 

As you pay off the previous loans, your credit rating will increase. This debt consolidation function of bad credit home equity loans is the reason why it is become so popular today.

 



Helen

Ram asked:


He has job that pays 120k. He spent more than he made during last few years and now he is in bad shape. What he can do ?

Norma

Brian asked:


The big issue we have is that we have bad credit due to myself getting injured and not being able to work for a few years. Also, right before my injury we purchased a house, had a baby that had a disability so medical bills added up, and we had to file chapter 13 about 4 years ago. We purchased our house in the year 2000. Our house is paid off as we more than doubled payments and put extra money we had at the time towards it while we were both working. Our bankruptcy was discharged over 3 years ago. We currently have no credit cards, no auto loans, and no 2nd mortgage or equity loan. The current debts we have are some medical bills with some in collection. Our credit scores are around 590 which I know is very low. We are wanting to get a equity loan or second mortgage to help pay for extensive dental work our son needs and also to get him extra care such as speech and occupational therapy that insurance does not cover. Our house is worth around $135,000 which is paid off. Is it possible to be able to get a home equity loan or second mortgage with such a horrible credit score? My wife is a teacher and I am a union boilermaker now so we do make a decent income. I’m also thinking but do not know for sure that a loan will help improve our credit. Since we have no loans or credit cards I don’t see how we could improve our credit which is one of our main goals. We just want to get back on our feet but has been difficult with all of the money we spend to help our son which is our number one priority. Also, if anyone knows of a certain loan company that would work with us that would be great. Making the monthly payment would not be a problem now that I’m back to work. We have been paying off the medical debt quite quickly now but just do not want anymore to go to collection. So I guess my question boils down to will it be difficult to get a home equity loan for around $20,000 or so with our house being paid off and no other debts with poor credit? Thank you so much for your help in this matter. I just think this could get us back on our feet and improve our credit. Any help is greatly appreciated!
Thank you all for the wonderful replies and links!

Love Presley..Do they accept borrowers with poor credit. In my question I did mention we have poor credit for reasons mentioned above. I have now been back to work for over a year as a union boilermaker and my wife is a teacher so we do have a steady decent income now. We just need a way to help get our medical debts paid and are hoping a loan will help improve our credit since we currently have no loans. My son also needs extensive dental work on top of speech and occupational therapy so are looking for some extra money for that and some to put in savings for emergencies.
Thank you all for being so kind and not judging. I am quite embarrassed for the situation we are in! But my son is number one in my life and will do anything to help him even if it means spending my last penny for that extra speech class! I’m not saying we are bad off, just need a way to get back on our feet and improve our credit and think a equity loan will do it
To Stan C,
Will my local bank be able to help someone with poor credit. It seems they are far and few between. The one thing that I feel will truly help even with a poor credit score is that our house is paid off in full. Estimated value I’m guessing is around $135,000 and we are thinking of trying to get around $25000. I have heard that if your house is paid in full the minimum you can borrow is $50,000. If so I guess I could just put half of that back towards the loan as long as there is no early payoff penalty. Could you please give me your thoughts getting a equity loan with poor credit with our house being paid off in full?
Thank you kindly Sir!

Glen

stgennesse asked:


Talked with a Countrywide rep about getting a $25,000 equity loan (not line of credit). I was adamant that there be no or very small ($500) prepayment penalty. He said it would be no problem as my credit is solid. I get the truth in lending agreement and the only thing I can find that say anyything about pre-payment is in the loan description where it states “fixed2nd equity 30 year/ 18.57%/Prepay. I am assuming this is some type of pre-payment penalty. If so the Countrywide rep is either incompetent or unethical.
Anyone have a clue if this 18/57% is the prepayment penalty? I’ve called them and left a message but have not been contaced yet. Thanks in advance.

Viola

Andy M asked:


Home equity loan is one among the most popular home loans available today. It is a second mortgage loan with characteristic properties of a secured loan. The popularity of the home equity loan has attracted many people to home equity loan. In general, equity loans does not have arise much complaints from the people. However as any other coin, home equity loan also have two sides. Hence, the detailed analysis of the loan is essential to differentiate the features of the home equity loan. The cross analysis of the pros and cons of the home equity loan helps to avoid stepping in to the home loans with false expectations.

The pros of the home equity loans include the advantages that a borrower can enjoy from the home equity loan. The benefits of the home equity loan usually outweigh other secured and unsecured loans since it is a risk free loan for the lender. The home equity loan provides maximum amount, in proportionate to the value of the equity. For good houses situated in the real estate booming locations, home equity loan lenders used to provide high appraisal of even 125%. In most cases at least 80% appraisal is always provided. The attractive interest rate is another advantage of the home equity loans. Usually the interest rate of the home equity loan is selected in fixed rates.

Among the pros of the home equity loan, the most pronounced benefit is the tax deduction. The amount taken as home equity loan below $100,000 is exempted from the tax payment. Hence, the equity loan can be used to raise money for any purpose such as emergencies, debt consolidation, medical loan, home improvements, education or any personal reasons. The repayment schedule of the home equity loan can be conveniently selected as 10 years or more, which can be even extended up to 30 years. Moreover, the home equity loan processing has become easy and less time consuming with the introduction of internet and online lenders. The verification of the title deed and the credit score are usually the time consuming steps. However, in the online processing these verifications has become limited and the home equity loan approval is done with in minimum period of time.

However the home equity loans are not devoid of cons. One of the major cons associated with home equity loan is the risk of losing your favorite home, if you make any default in the payment. The lenders will not be bothered much about the repayment as they will be focused to foreclosure the property. Hence the borrower is advised not to take large amount as home equity loan. Home equity loan is also not advantageous for persons, who are in the beginning of their career since they cannot easily shift their position, if they have a liability. However, the people in the proximity of the pension also cannot manage a long run home equity loan. In the home equity loans, the borrowers have to keep in mind the fact that the long repayment schedule will cost you more interest. To add on, if you are unlucky the home prices will slashes down and when you are about to sell the home, it will be a loss.

In brief analysis of the pros and cons of the home equity loan, it is clear that home equity loan will be advantageous for the larger loan amount. However, you have to be careful about interest rate and other conditions involved in the deal.



Vanessa

MIKE SELVON asked:


Home equity loans can be a wonderful resource for homeowners who need to get their hands on cash for an emergency or for a big purchase. These loans open the door for borrowers with equity to be able to take out a loan either in the form of a lump sum or as a revolving line of credit that can be used at the homeowner’s discretion.

Because equity loans are secured against what the lending industry considers to be the best and most stable type of asset a person can have, their home, the interest rates are lower. In general, the only borrowings that will carry a lower interest rate are original mortgages. Depending on the market, and the terms of the original mortgage, people can still walk away with a home equity loan that is at a lower interest than their first mortgage home loan.

Home equity loans are generally widely available to all homeowners, even to those who have had some negative marks on their credit reports and need to seek out bad credit loans. When evaluating a borrower for a home equity loan, the most important thing to the lender is how much equity there is in the home.

Secondly, a lender that offers equity borrowings will also look at the condition of the house to be sure that it has not undergone some type of damage that would lessen the value, and therefore reduce the amount of growth in the home. They will also require the property to have a current appraisal to determine how much the house has appreciated since the original home financing was done and to understand the market trends.

But, equity loans are not only approved on the basis of the growth in the property, the condition of the home, and the real estate market situation. The borrower must also be able to prove that they have the ability to make the payments on the loan as well.

In the case of a homeowner who has a good deal of growth in their home, but is unemployed or unable to work because of illness, it might be difficult to secure any equity loans. If they do, the interest rate will probably be very high because part of the calculation on loan rates includes the risk of the borrower defaulting on the borrowing.

This brings up an aspect of equity loans that some people will overlook, especially if they have difficult financial circumstances to deal with and are almost desperate to find a way to borrow money. The problem is that borrowing against the growth in the home puts the house in jeopardy of being lost to foreclosure.

Many people think that as long as they are making the payments on their original mortgage home loan that their house would not be in peril from equity loans which are “second mortgages” or in “second position.” But if the borrower is not able to make the payments on the equity borrowing, then the lender can start foreclosure proceedings. There have been instances where people who were struggling to meet their monthly obligations failed to make the payments and ended up losing their house because they were unaware of this danger.

With that word of warning in mind, home equity loans can still be the best option for people who have damaged credit and who also have the ability to repay the borrowing. The lenders not only have their loan secured against an asset that is growing in value, they also know that most people will do everything in their power to avoid losing their house, so the risk is lower and therefore, so are the interest rates.

When people clearly understand the full ramifications and risks associated with home equity loans, they can be one of the most useful financial options that homeowners have. Not only can they save money with these loans because the interest offered is as low as you can get aside from a new mortgage, but in most instances the interest is even tax deductible.



Roberto

Andrew Obidowsk asked:


If you are a homeowner and are in need of some extra cash, you may want to consider getting a home equity loan. Equity is the amount of value you have paid off on your property. For instance, if your home mortgage is worth $150,000 and you have paid off $50,000 of your mortgage, you have $50,000 in equity on your home. With this equity you have in your home, you can take out a home equity loan on this money.

There are two types of home equity loans available; Standard Home Equity Loans and Home Equity Lines of credit. With a Standard Home Equity Loan, your loan is assured by the amount of equity you have in your home. This is the type of loan option you should choose if you are in need of a very large loan. A Home Equity Line of Credit is akin to a credit card. With this option, you can withdraw money from an equity account that has been set up with your equity amount. This is a better option for you if you are not needing a large amount of money.

A Standard Home Equity loan generally is a little more difficult to obtain, only because it has a more complex process. These loans generally have a fixed term to them, meaning you will have a pre-determined number of payments over a set period of time. They generally will also have a fixed interest rate and fixed monthly payment. The amount of the loan you receive will be provided to you in one lump sum.

With a Home Equity Line of Credit, an account is set up for the money to be placed into. You can then make withdraws on the money as you need it, and then make payments back into the account. These types of loans generally have a fluctuating rate of interest, however you will only have to pay this interest if you have a balance on your account from the money you have borrowed.

There are many reasons why a person may choose to take out a Home Equity Loan. Many people take out these kinds of loans if their home is in need of repair or reconstruction. If there are large changes they want to make, such as a new heating and cooling unit or new windows, they will take out a home equity loan to pay for them. Others will use a home equity loan as a means to get out of other debts. They will use their Home Equity loan as a form of debt consolidation, to pay off some of their other debts and only have to make one monthly payment. And still others may take out a loan to pay for a new car, or even a large family vacation.

There are countless reasons why a person may choose a home equity loan. Once you get the money, it’s up to you what you choose to do with it. Just keep in mind that this is a loan you will have to pay back, and if you fail to do so, it could very well cost you your home and all of your equity.



Heather